Virgin Galactic (SPCE, $23.07) shares jump on short-sellers' comment

Spaceflight company Virgin Galactic Holdings  shares climbed Tuesday, after short seller Jim Chanos reportedly said he would go long on any space company that has gone public.

Jim Chanos, president and founder of Kynikos Associates of New York, made the comment at Grant’s Fall 2020 conference in New York City, (Reuters reported.)

In interviews, Chanos has described his investment strategy focused on fundamental failures in market valuation, from underestimated or unreported failings in the business or the market of a particular stock.

On Monday, Virgin Galactic President Mike Moses told New Mexico state lawmakers that the first test space flight from Spaceport America will take place sometime this fall. That step is expected to be the final step towards taking paying customers into space, (according to KOB News).

In August, Virgin Galactic reported  a net loss of -$63 million, or -30 cents a share, compared to the year-ago period’s  loss of -$41 million, or -23 cents a share. Analysts polled by FactSet had expected a loss of -26 cents a share.

Tickeron's analysis shows: a 'Buy' rating for SPCE.

Momentum Indicator for SPCE turns positive, indicating new upward trend

SPCE saw its Momentum Indicator move above the 0 level on September 28, 2020. This is an indication that the stock could be shifting in to a new upward move. Traders may want to consider buying the stock or buying call options. Tickeron's A.I.dvisor looked at 13 similar instances where the indicator turned positive. In 13 of the 13 cases, the stock moved higher in the following days. The odds of a move higher are at 90%.

Current price $23.12 is above $20.77 the highest resistance line found by A.I. Throughout the month of 09/17/20 - 10/19/20, the price experienced a +33% Uptrend. During the week of 10/12/20 - 10/19/20, the stock enjoyed a +11% Uptrend growth.

Technical Analysis (Indicators)

Bullish Trend Analysis

The Moving Average Convergence Divergence (MACD) for SPCE just turned positive on September 28, 2020. Looking at past instances where SPCE's MACD turned positive, the stock continued to rise in 6 of 7 cases over the following month. The odds of a continued upward trend are 86%.

SPCE moved above its 50-day Moving Average on September 28, 2020 date and that indicates a change from a downward trend to an upward trend.

The 10-day Moving Average for SPCE crossed bullishly above the 50-day moving average on October 05, 2020. This indicates that the trend has shifted higher and could be considered a buy signal. In 3 of 3 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 90%.

Following a +5.45% 3-day Advance, the price is estimated to grow further. Considering data from situations where SPCE advanced for three days, in 53 of 57 cases, the price rose further within the following month. The odds of a continued upward trend are 90%.

The Aroon Indicator entered an Uptrend today. In 51 of 64 cases where SPCE Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 80%.

Bearish Trend Analysis

The 10-day RSI Indicator for SPCE moved out of overbought territory on October 09, 2020. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 8 similar instances where the indicator moved out of overbought territory. In 6 of the 8 cases, the stock moved lower in the following days. This puts the odds of a move lower at 75%.

The Stochastic Indicator has been in the overbought zone for 2 days. Expect a price pull-back in the near future.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where Apple declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 84%.

SPCE broke above its upper Bollinger Band on September 28, 2020. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Tickeron has a positive outlook on this ticker and predicts a further increase by more than 4.00% within the next month with a likelihood of 74%. During the last month, the daily ratio of advancing to declining volumes was 2.42 to 1.

The Tickeron PE Growth Rating for this company is 3 (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Price Growth Rating for this company is 43 (best 1 - 100 worst), indicating steady price growth. SPCE’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Valuation Rating of 99 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: SPCE's P/B Ratio (13.55) is slightly higher than the industry average of (2.69). P/E Ratio (433.86) is within average values for comparable stocks, (190.53). Projected Growth (PEG Ratio) (0.00) is also within normal values, averaging (2.02). Dividend Yield (0.00) settles around the average of (0.63) among similar stocks. SPCE's P/S Ratio (4511.81) is very high in comparison to the industry average of (96.30).

The Tickeron SMR rating for this company is 100 (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. SPCE’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 72, placing this stock worse than average.

Contributor

Sergey Savastiouk|Expert

Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.

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