Virgin Galactic Burned Less Cash Than Expected. The Stock Fell Anyway.

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Space tourism pioneer

Virgin Galactic

posted first-quarter results were a little better than expected. The stock fell Friday anyway.

Sales and earnings aren’t the most important thing right now for the space start-up. Investors want to see paying customers flying to space. They’re going to have to wait a little longer for that.

Virgin Galactic (ticker: SPCE) reported a loss of 36 cents a share in the first quarter from $319,000 in sales. The company burned through about $68 million in the quarter.

Wall Street was looking for a slightly narrower loss, but earnings don’t matter all that much. Virgin Galactic is, essentially, pre-sales. Cash burn was lower than analysts had forecast.

The stock closed down anyway, falling about 9.3% Friday. The

S&P 500
and

Dow Jones Industrial Average
futures were down about 0.6% and 0.3%, respectively.

The issue is the start date for commercial service service slipped one quarter, to the first quarter of 2023 from the fourth quarter of 2022.

“The one-quarter delay to the start of commercial service is largely tied to raw material delays and engineering labor constraint,” wrote Melius analyst Robert Spingarn in a report.

He rates shares Hold and has a $15 price target on the stock. He didn’t change his price target, but others did following the quarterly results. Canaccord Genuity analyst Austin Moeller slashed his target price to $8 from $36. Moeller”s rating went to Hold from Buy.

Moeller’s was the only downgrade after earnings. Now three out of 12 analysts covering the stock rate shares Buy. The average analyst price target is now about $13 a share, down from $15.50 from just before the quarterly report.

Virgin Galactic shares might not be down more because they are already badly beaten up. Coming into Friday trading, shares had fallen about 44% year to date and are down almost 88% from their 52-week high of more than $57 a share.

The descent has been significant and swift. Virgin Galactic has run into delays, but stock in many startup companies has been hammered in recent months amid rising interest rates and volatile stock markets.

The

Defiance Next Gen SPAC Derived
ETF (SPAK), which holds many start up stocks like Virgin, is down about 28% year to date and off about 44% from its 52-week high in June 2021.

Write to Al Root at [email protected]