The central theses
- Analysts estimate earnings per share at $ 0.27 versus $ 0.30 for the first quarter of fiscal 2020.
- Revenue is expected to increase year-over-year after not posting any revenue for three consecutive quarters.
- Virgin Galactic expects to launch customer flights into space in early 2022.
Virgin Galactic Holdings Inc. (SPCE) recently unveiled its newest spacecraft – the VSS Imagine – to complete testing of its first generation spacecraft, the VSS Unity. Founded in 2004 by billionaire Richard Branson, the aerospace and space tourism company plans to launch regular customer flights into space in early 2022 after years of setbacks and delays.
Investors will be looking for signs that Virgin Galactic is making progress in achieving consistent sales and profitability when the company reports earnings for the first quarter of fiscal 2021 on May 10, 2021. Analysts expect the company to post another, albeit slightly lower, loss per share than in recent quarters. The company is also expected to generate its first revenue since the first quarter of fiscal 2020.
Virgin Galactic faces major financial challenges. In the past eight quarters alone, net losses of more than $ 484 million have been reported.
Virgin Galactic stocks had a volatile year compared to the rest of the market. The stock is currently underperforming after a massive surge from early November that peaked in mid-February. The stock has since returned all of those gains. Virgin Galactic shares returned 25.7% total return over the past year, underperforming the S&P 500’s total return of 43.6%.
Virgin Galactic Earnings History
The stock had fallen ahead of FY 2020 fourth quarter results in late February and continued to fall after they were released. Virgin Galactic posted a net loss per share of $ 0.31 and continued its streak of losses through at least the first quarter of fiscal 2019. The company failed to generate sales for the third quarter in a row. Virgin Galactic noted that its cash position remained strong with cash of $ 666 million.
In the third quarter of fiscal 2020, Virgin Galactic continued its losing streak with a loss of $ 0.34 per share. This was the company’s largest loss per share since the final quarter of fiscal 2019. The company reported no revenue for the second straight quarter. Virgin Galactic said there had been persistent delays in doing business due to COVID-19, affecting planning and cost-effectiveness.
Analysts expect the losses to continue into the first quarter of fiscal 2021. However, they anticipate the company will return to revenue and forecast an 11.9% increase over the same quarter last year. For the full year of 2021, analysts expect an annual loss per share of USD 1.00, which is the lowest loss per share in at least three years. Revenue is expected to grow twenty-fold to $ 4.1 million.
With Virgin Galactic not yet commencing customer flights, its main source of income has been shipping payloads for scientific commercial research and development on its space systems and providing engineering services to the US government. The company believes it will generate most of its revenue from selling tickets for flights to space. As of December 31, 2020, there have been 600 reservations and deposits greater than $ 80.0 million.
|Virgin Galactic Key Stats|
|Estimate for the first quarter of 2021 (GJ)||Q1 2020 (GJ)||Q1 2019 (GJ)|
|Earnings per share ($)||-0.27||-0.30||-0.22|
|Revenue ($ M)||0.3||0.2||1.8|
Source: Visible alpha
However, Virgin Galactic must pass its flight tests before customers can fly into space. The company plans to fully reopen ticket sales after testing its VSS Unity starship with Branson on board sometime this month. The test flight was originally scheduled for December last year, but technical complications resulted in a postponement to February and further complications resulted in the date being postponed again, this time to May.
The urgency to complete tests and officially launch the service for customers increases as space tourism rival Blue Origin (AMZN) Founder and former CEO Jeff Bezos recently announced that he will soon start selling tickets for rides on his New Shepard rocket. Blue Origin announced that further details on the sales would be released on May 5th.