The Chinese rocket wasn’t the only thing to crash to earth this week. The Virgin Galactic share price has been on a similar trajectory of late.
2020 was a good year for investors in the commercial aerospace company. Shares in the US Listed, Virgin Galactic (SPCE) had enjoyed a rocket-powered rally. This continued into February 2021, when the Virgin Galactic share price traded to its all-time high of $62.80.
Sadly, since then, the price has continued to lose altitude. The stock has seen 75% wiped from its valuation in the last four months, as the bad news keeps piling up. The stock currently trades at a lowly $16.18.
The initial sell-off from the highs was caused by the much-anticipated test-flight of its SpaceShipTwo spaceplane being delayed until May.
As if this wasn’t enough, the revelation that Chairman Chamath Palihapitiya had sold his entire personal holding piled even more pressure on the Virgin Galactic share price.
Closely followed by founder Richard Branson who also reduced his holding.
On Monday, the company reported its Q1 earnings. Investors who were hoping for a ray of light were sorely disappointed. The data missed on both revenue and earnings per share as the company revealed a wider than expected loss.
In light of the poor data, the stock was downgraded by Cowen analyst Oliver Chen who reduced his price target from $40 to $23.
Virgin Galactic Share Price Outlook
In the last few sessions, the technicals of the stock have turned even more negative.
The 50-Day Moving Average has crossed below the 200-Day. This is considered a bearish signal and suggests that downside momentum is accelerating.
Furthermore, the price has broken below the long-term trendline support. The trend, in place from November 2019, currently sits at $17.57.
At some stage, the Virgin Galactic share price will attract buyers. However, there is no indication that this will be happening any time soon. Having said that, if the price closes back above the trend, it may offer a buying opportunity.
If the stock closes above $17.57, it may well follow through to the 50 and 200-Day Moving averages, both located around $26.00. Momentum buyers should then look to place a stop back below the trend line, offering a good risk vs. reward trade.