Virgin Galactic share price: why the rise and will it fall?

Virgin Galactic has experienced a meteoric rise in recent weeks. Learn about some possible reasons behind the rise, and why it could be a speculative bubble.

Why is the Virgin Galactic share price rallying?

There are a few significant factors that could be leading to the rise in value of Virgin Galactic stock.

Firstly, investors are getting more and more excited about the possibility of commercial human spaceflight. This excitement has spilled over onto various internet message boards and trading forums, which have been filled with traders posting their market success with SPCE in recent weeks.

Secondly, Virgin Galactic is currently the only publicly listed company that is exploring commercial human spaceflight. If other space exploration companies such as Elon Musk’s SpaceX or Jeff Bezos’s Blue Origin were publicly traded, Virgin Galactic might not have experienced such a dramatic rise.

Thirdly, Virgin Galactic recently moved one of its orbital planes – SpaceShipTwo – to the company headquarters in New Mexico. The move led to speculation that the first commercial spaceflight was becoming a real possibility.

Finally, the company is scheduled to announce fourth-quarter (Q4) results on 25 February 2020. Market participants could be pouring into the stock before the announcement to capitalise on the fallout of any positive news.

Find out how to trade Virgin Galactic shares

Will the Virgin Galactic share price fall?

Despite the recent stock market success, Virgin Galactic has never posted a profitable year, and it looks unlikely to do so until at least 2021.

Analysts at Morgan Stanley have questioned whether the gain has been ‘too much too soon’ before going on to mention ‘we must acknowledge that the move in the stock price of late appears to be driven by forces beyond fundamental factors’.

For the time being, the rally continues. But, if Virgin Galactic’s Q4 results are disappointing, the stock could fall heavily – assuming there’s a wide market sell-off.

Virgin Galactic share price: technical analysis

By Chris Beauchamp, IG chief market analyst

Virgin Galactic has been gaining steadily since December and has seen little in the way of pullbacks. The daily chart has seen the price push through the 50-, 100- and 200-day moving averages (MAs), while apart from a wobble in late January and early February daily moving average convergence/divergence (MACD) has been uniformly positive. Rising trendline support on the daily chart is found around $21.80, while a move below $20.00 would signal that the bounce has run its course for now.

On the hourly chart, the picture is very similar, with dips towards the rising 50-hour MA to $23.83 and oversold readings on daily stochastics likely to point towards possible entry points.

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