- Virgin Galactic’s stock price has been soaring in recent weeks.
- The company initially claimed it would be sending tourists to space by summer. But management seems to be backpedaling.
- Virgin Galactic’s murky financials are cause for concern. Investors should be cautious about the stock.
Virgin Galactic (NYSE: SPCE) is a stock that investors want to believe in. It’s a pioneer in space tourism. And it’s the only publicly-traded game in town since Blue Origin and SpaceX are both private.
That’s why the startup has seen its market cap rocket to $ 6.6 billion despite having massive operating losses and negligible revenue.
Something Is Fishy About Virgin Galactic Stock
Virgin Galactic’s recent move upward coincides with CEO George Whiteside’s public appearance on CNBC’s “Squawk Alley,” where he spoke about the company progress towards sending its first tourists to space.
While Whitesides, a former chief of staff at NASA, seemed optimistic, he stopped decidedly short of giving a timeline for commercial operations.
) When asked if Virgin Galactic will be ready to take tourist to space by summer, he hesitated:
In this business, we have to take every step – step by step and do it safely. Yesterday’s flight was huge in the sense that we took our beautiful spaceship down to spaceport America and it was a really important flight. And now what we can do is we’ll check out the vehicle and we’ll start moving through our progression of tests.
This cautious commentary is prudent. But it is in stark contrast to the forecasts the Virgin Galactic put out when it first went public.
In a corporate presentation that is now suspiciously absent from Virgin Galactic’s website , management claimed that they could start commercial operation by June . They further projected a % jump in revenue from $ 067 million to $ (million between fiscal and , as well as EBITDA profitability by
Is management walking back the projections they made for
Unfortunately, the red flags don’t stop with the vanished presentation. The details of Virgin Galactic’s public offering raise more suspicions.
Instead of a traditional initial public offering (IPO), (Virgin Galactic went public through a reverse merger with a blank check company called Social Capital Hedosophia.
That name alone is creepy, but the weirdness does not end there. By going public in this way, Virgin Galactic may have bypassed some of the strict listing requirements for the New York Stock Exchange.
according to Tim Fernholz of Quartz, this type of offering allows Virgin Galactic to hide years of financial data .
What could they be hiding?
Expect Dilution
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Last modified: February
. , 4: PM UTC
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