Virgin Galactic Stock Slumps as Flight Investigation sends investors fleeing

The Virgin Galactic stock price came under heavy fire on Friday as the US Federal Aviation Administration (FAA) halt further space flights for now. Virgin Galactic Holdings Inc (NYSE: SPCE) closed down 6.60% on Friday following the news that US regulators have grounded its SpaceShipTwo aircraft until an investigation into its last voyage is concluded.

This is a severe setback for Virgin Galactic and potentially puts the planned flights this month and next in jeopardy. As a result, Virgin Galactic was overcome with selling towards the end of the week, reversing more than 15% from Thursdays $28.77 high.

This is likely to see SPCE encounter even more selling when the market opens today after the three-day break. And whilst for many, the four-day trading week will be shorter than most, for holders of Virgin Galactic, it could be a very long indeed.

SPCE Price Chart (Daily)

The daily chart shows the stock reversed from horizontal resistance around $28.60 on Thursday. Furthermore, Friday’s leg lower has now forced the price out of its recent uptrend. The trend at $25.30, formerly support, now becomes the first resistance level. Moreover, if the stock comes under more pressure this week, a logical target becomes the May low at $14.27.

However, that would represent a serious deterioration. And on that basis, SPCE is unlikely to fall that much unless the investigation takes a turn for the worse. But in saying that, until the FAA conclude their probe, investors will likely stay skittish.

The forecast will remain negative until such a time the stock recovers trend resistance at $25.30. Only this would negate the bearish view.

Virgin Galactic Stock Price Chart (daily)

Virgin Galactic stock

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