Virgin galactic is having a bit of a rough week, it's close to being down 20 with such a notable decline. It's fair to wonder: is this an opportunity to buy the dip, or should your losses be cut? What's going on my fellow space cowboys and cowgirls, my name is matt and in this video i will be discussing the recent news related to virgin galactic and i will also be doing a technical breakdown of its chart. So you have a better idea of what support and resistance to be watching for if you're interested in these type of stock updates join the party by hitting the subscribe button. Don't forget to turn on your notifications, so you don't miss any of the new videos.

Alrighty then it's time to rock and roll, so the story starts on august 3rd, which is when virgin galactic released its earnings. As you can see here, there was some excitement coming in to start the month, but as soon as their earnings were released, the stock dropped. Just under 14 as the week continued, the stock continued to fall and it is now down just below 20. So if you're bullish on the commercial space flight industry, you might be wondering what's going on and what's going to happen next, let's take a deeper look at virgin.

Galactic's earnings report virgin galactic reported a q2 loss of 30 cents. A share on zero revenue. Analysts were expecting a loss of 28 cents per share when a company misses expectations, it's not commonly meant by bullish sentiment in this particular case. I don't think this miss of two cents was the main thing that prompted the stock to drop.

I think the reason for the fall was twofold. The first is that they're behind schedule. If their test flights go according to plan virgin, galactic will see its first commercial flight in q1 of 2020. This is a slight deviation from their original plan, because their founder, richard branson, was planning to be on their first commercial flight in the year 2020.

in general. When plans like this get delayed, the stock market doesn't typically react in a favorable fashion. With that in mind, i think the second reason is a lot more important virgin galactic announced a 20.49 million stock offering to raise 460 million dollars, in other words, stock, dilution and quite a bit of it in a time where you increase the supply. But the demand is under question: it's no surprise that the stock would fall, so this was all announced on august 3rd and then on august 5th.

They followed through with it. They flooded the market with 23.6 million shares of common stock at a public offering of 19.50 per share. On top of that, there is a 30-day option to purchase up to an additional 3.5 million shares. The gross proceeds from the offering are expected to be 460.2 million dollars already.

So if everyone knows that this would push the stock down, why would they possibly do it? The answer to that is in their financials. Their total revenues and gross profit are small relative to what they're trying to do. Obviously they wish they could be bringing in more money, but these numbers aren't that surprising, because the company is still pretty new. The issue comes up when you look at their net income since 2017, when the company first became public virgin, galactic has been operating at a loss and up until now the loss has been getting larger.

That's not the full story, though. Let's take a look at their balance sheet from 2017. Until now, their total cash has been growing, as you could probably deduce, though, an extra 460 million dollars will really help them up their operations. Their total current assets is 415 million dollars and their total current liabilities is 114 million.

This means that in the short term, virgin galactic doesn't have a lot of debt over its head. It's a similar situation with their long-term assets of 491 million and their long-term debt of 136 million. Both of these ratios are pretty solid, and i would argue that you don't have to worry about virgin galactic, making any rash decisions because of staggering debt. In my personal opinion, the money will most likely be used in development and operations to help the company reach their goals earlier, so we've talked about virgin galactic, missing their earnings being behind schedule and diluting their stock, but there are some positive things going on.

They completed their first and second glide flight. The second one achieved a glide speed of mach 0.85. They cleared three new faa verification and validation elements, bringing the total number of elements cleared to date to 27 out of 29.. They completed numerous structural and mechanical installations.

On a second spaceship ii vehicle and completed over 75 of parts fabrication for a third sst vehicle on top of that, they entered into two different agreements with nasa virgin galactic also received 700 refundable deposit payments from prospective passengers. I personally think that this showcases, the public's interest in virgin galactic and their mission, which i can only assume, will help them in the future. To top it all off virgin galactic has now partnered with rolls-royce rolls-royce will be focusing on engine propulsion technology for a future commercial plane expected to travel at mach 3.. Honestly, i have no clue how fast that is, but it sounds pretty damn fast.

Also, the design of this aircraft looks pretty sleek anyway, rolls royce will handle the future engine propulsion technology and virgin galactic will continue to design the aircraft virgin galactic aims to take the plane to speeds three times the speed of sound or mach 3. Oh so yeah, it is really fast at 60 000 feet and plans to look at carrying up to 19 passengers at a time at speeds. Up to 2 300 miles per hour, the plane could cut a coast to coast u.s trip to just 90 minutes. To me.

This sounds downright awesome and i really do hope that they're successful in terms of being an investor you have to understand that virgin galactic is a pre-revenue company. This means that you should be putting more emphasis on their potential rather than their fundamentals. To give you a better idea of what levels you should be looking for in the short and medium term: let's do a technical breakdown of the chart. This yellow line represents the price of the new stocks from the recent dilution.

It's really no surprise at all that the stock made a mini nose dive right to this value from the start of this year. The stock is currently up 65. At one point in february it was up an incredible 263 percent and then at one point in march it was down 22. If you don't currently have a position in virgin galactic whose ticker symbol is sp ce, you should be buying as close to support as possible.

The first support would come just below 18. This is acted as resistance on two occasions: support on one and also an area of consolidation. If the stock is pushed below this level, i would then be looking for the low in june at 14.21. If the bull camp can't hold this line, i would then be looking for the reach target of 12.

On the flip side, i would expect the first resistance to be at 21 and 53 cents if the bulls pushed the stock. Above that, you could then look for the high of august at 24. If the bears can't defend this line, i would then be watching for the high of july at 27, 27.55 and, of course, anything above this could potentially set up a test of the all-time high. At 42.49, whether you're, bullish or bearish, you should be entering your trades as close to support and resistance as possible.

So you can optimize your risk to reward from an investment standpoint. I'm pretty neutral on the company. Don't get me wrong. I definitely want the company to succeed, but the current state of their performance, financials and really the overall world economy doesn't do the best job in convincing me to invest.

My money, virgin galactic does have a considerable amount of potential, so i think it's reasonable to invest a small portion of your funds, but please please don't let your risk get out of hand if you made it this far in the video you're honestly, a true supporter And i really appreciate it if you have an idea for what i should cover next or a question or if you just want to say hi. Let me know in a comment below i promise i will respond to all of you. My goal is to provide some value in each video, so if you enjoyed this one, let me know by hitting the like button, if you enjoy this type of content subscribe to the channel and don't forget to turn on your notifications, thanks for watching and until next Time best of luck in the markets.