Investing.com – Virgin Galactic stock (NYSE:SPCE) traded below $20 for the first time since May 21 after UBS (NYSE:UBS) downgraded it to sell.
The downgrade follows the company’s decision to push the launch of its first commercial flight to the fourth quarter of 2022 from the third. The delay is due to a planned upgrade that will boost its spaceship’s durability.
Analyst Myles Walton pegs the stock to hit $15. It hit a low of $19 so far in the session underway today, down more than 4%.
According to Walton, the event path for the stock is now disjointed for the better part of the next year and with 24% of outstanding shares (32% of the float) exiting their lock-up period at the end of October, the stock would come under pressure.
Walton said that while it doesn't seem like a lot, a cumulative delay of 2.5 years that is longer than the time the company has been public – it debuted on NYSE on October 28, 2019 – will challenge investor optimism on flight cadence.
Walton said the key to Virgin Galactic turning profitable is the Delta class spaceship, without which the annual passenger revenue is topped out around $30 million compared to the company's $225 million to $250 million annual cash burn.
The company currently has one mothership, Eve, and one spaceship, Unity. It is developing its Delta-class spaceship, which will have a shorter one-week turnaround time.