Shares of
Virgin Galactic
fell Wednesday, the day after the space-tourism pioneer reported a smaller-than-expected loss for the fourth quarter. Better cost control is great, but investors want to see more revenue.
On Tuesday evening, Virgin Galactic reported a loss of 26 cents per share on sales of $2.8 million for the quarter. Wall Street had expected a loss of 30 cents per share on sales of $3 million, according to FactSet.
On Wednesday, shares closed down 7.9% at $1.75, while the
S&P 500
and
Nasdaq Composite
dropped 0.2% and 0.6%, respectively.
Virgin Galactic is still young and growing. Sales are more important than earnings at this point, and the outlook matters more than the prior quarter’s sales. Looking ahead, the company expects first-quarter revenue of about $2 million, while Wall Street had expected $3.6 million.
The company completed one space flight in January and has another scheduled for the second quarter.
Cash balance remains an asset for the company, finishing the year at almost $1 billion. Analysts project cash use of just under $500 million in 2024.
KeyBanc analyst Michael Leshock wrote Tuesday that the company’s long-term initiatives are “intact.” Virgin Galactic’s larger Delta-class spaceships are on track to enter service in 2026. Those ships carry six passengers compared with the current Unity-class ships’ capacity of four. The company also believes it has enough cash to bring two Delta-class ships into service, and those ships are expected to fly about eight times a month.
Leshock rates Virgin Galactic stock at Hold, and doesn’t have a price target. Overall, two out of 11, or 18%, of analysts who cover Virgin Galactic stock have Buy ratings. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Virgin Galactic shares is about $2.80.
Coming into Wednesday trading, shares were down about 67% over the past 12 months.
Write to Al Root at allen.root@dowjones.com
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