The nature of investing is that you win some, and you lose some. Anyone who held Virgin Galactic Holdings, Inc. (NYSE:SPCE) over the last year knows what a loser feels like. To wit the share price is down 66% in that time. At least the damage isn't so bad if you look at the last three years, since the stock is down 28% in that time. On the other hand, we note it's up 8.6% in about a month. However, this may be a matter of broader market optimism, since stocks are up 5.3% in the same time.
It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.
Because Virgin Galactic Holdings made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In just one year Virgin Galactic Holdings saw its revenue fall by 50%. That's not what investors generally want to see. The share price drop of 66% is understandable given the company doesn't have profits to boast of. Having said that, if growth is coming in the future, the stock may have better days ahead. We have a natural aversion to companies that are losing money and shrinking revenue. But perhaps that is being too careful.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
If you are thinking of buying or selling Virgin Galactic Holdings stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Virgin Galactic Holdings shareholders are down 66% for the year, falling short of the market return. Meanwhile, the broader market slid about 15%, likely weighing on the stock. Shareholders have lost 9% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. It's always interesting to track share price performance over the longer term. But to understand Virgin Galactic Holdings better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Virgin Galactic Holdings you should know about.
We will like Virgin Galactic Holdings better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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