KeyBanc Capital Markets said Virgin Galactic Holdings Inc.'s first commercial flight was an important milestone for the company, but a full ramp of its operations remains years away.
The Galactic 01 mission carried three crew members from the Italian air force and the National Research Council of Italy into space to conduct research on microgravity.
This flight was a critical step as the Company moves closer to ramping commercial service, Gibbs said in a note published Thursday by KeyBanc Capital Markets. SPCE's next commercial flight, Galactic 02, is planned for early August and it plans to establish a monthly flight cadence thereafter. We believe investors could view the successful flight as a sell-off the news event, as a full ramp of its commercial operations via its next-generation Delta class fleet under development remains years away, Gibbs said.
Virgin Galactic's stock SPCE fell 10.8%, ending a two-day winning streak in the build-up to the landmark launch. The stock is down 1% Friday and has dropped 3.5% in the last five days, compared to the S&P 500 index's SPX, 2.1% gain.
We believe establishing a monthly flight cadence beginning in August will be critical for SPCE to display the consistency and practicality of its operations, which would makeSPCE a more attractive investment should it seek to raise capital in the future we estimate $100 M - $600 M needed over the next 2 - 3 years, Gibbs said.
In a filing Thursday, the spacecraft manufacturer said it is seeking to raise $400 million to develop its spaceship fleet and infrastructure and increase its market presence.
Virgin Galactic reported a significant drop in its most recent quarter, compared to expectations of a larger-than-expected loss.