If you thought Tesla (TSLA) was explosive, take a look at Virgin Galactic Holdings (SPCE).
Since Dec. 2019, shares have rocketed from a low of $7.22 to $34.80 a share, with no resistance. It’s literally gone into orbit. The company, which promises to take tourists to the edge of space and back, is up more than 200% to date.
Daily trading volume has been pushing aggressively higher over the last week, as well. At the moment, volume is up to 38.8 million shares, as compared to average volume of 9.8 million. It’s now pushed the stock to a $6.65 billion market cap.
According to TD Ameritrade, the stock was “among the top names bought by retail investors” in Jan. 2020, as quoted by CNBC. Fidelity said the stock was bought more than any other stock earlier this week, topping Apple and Tesla.
However, retail investors may be getting way ahead of themselves.
In fact, from the looks of it, the stock is running on nothing more than blind momentum. After all, it’s fundamentally difficult to value a company generating no revenue. Two, it’s considerably overbought at its upper Bollinger Band (2,20), with over-extension on relative strength (RSI), MACD, and Williams’ %R.
However, it does have two strong catalysts.
One, it’s backed by billionaire Richard Branson. Two, interest in space is growing rapidly.
In fact, “the past decade has seen nearly $25 billion in private capital invested in space companies, according to investment firm Space Angels, and Virgin Galactic is expected to be just the first of a new generation to join the currently small group of public, pure-play space companies,” notes CNBC.
Three, the company has 2020 goals to get the company’s New Mexico facilities up and running. The company also hopes to scale operations in 2021 when it will reportedly have two spacecraft and a potential increase in revenues.
For a stock to balloon this fast on blind momentum, caution may be required. The stock could also see sizable profit taking after this monster run.
