Is Virgin Galactic Stock a Good Buy at These Prices?

On Dec. 7, Virgin Galactic stock rose by 17.6 percent and closed at $33.80 with a market cap of $7.9 billion. The stock rose after its low-orbit rocket was connected to its mothership ahead of the launch on Dec. 11. Is SPCE stock a buy or sell at this price?

On Dec. 11, Virgin Galactic plans to launch its first human spaceflight from Spaceport America. The company paused the plans earlier this year amid the COVID-19 pandemic.

Virgin Galactic stock rose about 18 percent on Dec. 7 after the company announced that it's still preparing for a critical test flight. On Dec. 1, the company announced that it wants to launch a flight as soon as Dec. 11, pending technical readiness and good weather. The launch will be Virgin Galactic’s first manned test flight. The test was postponed in November due to increasing coronavirus cases.

On Dec. 7, Virgin Galactic tweeted, “SpaceShipTwo Unity is mated to our mothership, VMS Eve, as preparations continue for our first spaceflight from Spaceport America, New Mexico.”

Virgin Galactic stock has become a major talking point on social media platforms. One of the investors on Stocktwits thinks that the chances of space tourism becoming a reality are very high. The success of SpaceX is a precursor in this new emerging industry.

As of 7:35 a.m. ET in pre-market trading on Dec. 8, Virgin Galactic stock was up about 4 percent at $35.15. The stock has risen by 19.2 percent in the last five days and 276.8 percent in the last year. The stock is trading 20.5 percent below its 52-week high of $42.49 and 286.3 percent above its 52-week low of $8.75.

According to estimates compiled by CNN, Virgin Galactic’s median target price of $26 is 23.1 percent below its current stock price. Among the nine analysts tracking Virgin Galactic stock, eight recommend a buy and one recommends a hold. None of the analysts recommend a sell. The highest target price of $35 is 3.6 percent above the stock's current price, while the lowest target price of $19 is 43.8 percent below the stock's current price.

Virgin Galactic stock isn't a buy at these high prices since there are considerable risks. The addressable market for Virgin Galactic looks massive. Many wealthy people can afford the company’s service. However, space flights are inherently risky and Virgin Galactic has faced several tragic accidents in the past. The company needs to come up with advanced processes and technologies to scale space flights. As a result, investors should sit on the sidelines right now because the launch could be a failure.

Virgin Galactic stock trades on the NYSE under the symbol "SPCE." To buy SPCE stock, investors can open a stock trading account with brokers like Robinhood, SoFi Invest, and Vanguard.