Virgin Galactic Stock Investors Pull Back: A Technical Analysis

Bullish sentiment in Virgin Galactic Holdings Inc SPCE dwindled after it was reported March 5 that Chamath Palihapitiya sold his personal stake in the company.

In April, the company's founder Sir Richard Branson shed $150 million worth of his holdings, which was followed by Cathie Wood selling off 275,204 shares from her Ark Space Exploration and Innovation ARKX fund.

Shares of Virgin Galactic are down 67% from its Feb. 10 all-time high of $62.85 as of Monday, and traders and investors shouldn’t be expecting much from earnings, as the company has yet to take a single tourist to space.

Virgin Galactic does have one piece of news that could help it get a boost off the ground, however: the date of its much-anticipated test flight, which has repeatedly been delayed.

The company desperately needs to pull something positive out of its capsule, because Virgin Galactic lost another key support following a Friday press release stating the company has delayed its earnings release to May 10.

“The restatement is due solely to the accounting treatment for the warrants of Social Capital Hedosophia Holdings Corp. that were outstanding at the time of the Company’s business combination on October 25, 2019,” it said in the press release.

Virgin Galactic was originally expected to report its earnings on Tuesday after the closing bell.

The Virgin Galactic Chart: On Monday afternoon, Virgin Galactic’s stock was trading down over 8% from Friday’s close and lost a support level at $21.25.

The stock is trading below the 200-day simple moving average (SMA) and below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day EMA, all of which are bearish.

On a positive note, Virgin Galactic’s stock has two gaps above, left behind on Feb. 21 and April 15, and since gaps fill 90% of the time, it’s likely Virgin Galactic will make it back into the Ichimoku cloud in the future.

Bulls want to see Virgin Galactic follow through on its promised plans without further delays and for bullish volume to return to the stock. Virgin Galactic needs to reclaim the $21 level to make its way back towards overhead resistance at $27.80.

Bears want to see the eight-day EMA continue to push the stock south towards its next support level at $17.33. If Virgin Galactic’s stock loses that level it has no meaningful support until the $15 mark.

Photo courtesy of Virgin Galactic.