The equity also posted wider-than-expected first-quarter losses
Virgin Galactic Holdings Inc (NYSE:SPCE) is attracting negative analyst attention this morning, after the space travel concern delayed its commercial spaceflight launch until the first quarter of 2023, due to supply chain and labor constraints. In response, Cowen and Company cut its price target to $12 from $15. Virgin Galactic also posted a wider-than-expected first-quarter loss, but managed a revenue beat.
Last seen down 10.1% to trade at $6.74, the shares earlier fell to a fresh all-time low of $6.35, landing promptly on the short sale restricted list (SSR). The security has struggled with overhead pressure at its 80-day moving average since August, with the trendline more recently capping SPCE's late-March rally. In the past nine months, Virgin Galactic stock has shed 80%.
The brokerage bunch is mostly optimistic towards the equity, though, with four of seven analysts in coverage calling it a "strong buy," while the 12-month consensus target price of $12.76 is a 88% premium to current levels. This means additional price-target hikes and/or downgrades may be on the horizon.
Meanwhile, short sellers have been building their positions. In fact, the 50.42 million shares sold short account for a whopping 24.4% of Virgin Galactic stock's available float.
An unwinding of optimism in the options pits would pressure SPCE even lower. This is per the security's 10-day call/put volume ratio of 3.32 at the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 82% of readings from the last 12 months. This means there has been a penchant for bullish bets lately.
Drilling down to today's options activity, 16,000 calls and 9,661 puts have crossed the tape so far, or quadruple the volume that is typically seen at this point. Most popular is the weekly 5/6 6.50-strike put, where new positions are being opened. In simpler terms, these traders expect more downside for SPCE by today's close, when these contracts expire.
In addition, its Schaeffer's Volatility Scorecard (SVS) sits at a high 94 out of a 100, indicating that the equity has tended to exceed said expectations -- a boon for buyers.