SPCE stock price forecast: why Virgin Galactic is soaring and why it may crash

Virgin Galactic NASDAQ:SPCE stock has gone parabolic, reaching its highest point since June 2024 as investors piled into space-related companies. SPCE jumped to $8.85, up by over 300% from its lowest point this year, with its market capitalization soaring to nearly $700 million.

Why the Virgin Galactic stock is soaring

Richard Branson’s Virgin Galactic stock has gone parabolic in the past few days. This surge has coincided with the ongoing rally of space-related companies, including Rocket Lab (NASDAQ: RKLB), Planet Lab (NYSE: PL), Intuitive Machines (NASDAQ: LUNR). These stocks have soared ahead of the upcoming SpaceX IPO.

Elon Musk’s SpaceX will be the biggest IPO in the world as it will value the company at over $1.78 trillion. Traders on Polymarket believe that the company’s valuation will eventually jump to over $2 trillion after going public. This enthusiasm has pushed more investors to companies in the industry.

Virgin Galactic is also soaring as investors react to its recent decision to hike prices for its spaceflights. The company is now offering the tickets to $750,000 per person, up by $100,000 from the previous period. That is an admission of potential demand and the fact that operational costs have surged in the past few years.

The company aims to launch its commercial flights later this year, with the trips set for ramping up after that. This will be a turning point for a company that has been incinerating cash for decades.

The most recent results showed that it made a net loss of $65 million from $84 million in the same period last year. This improvement was driven by its lower expenses. Its adjusted EBITDA was a net loss of $55 million compared to the previous $72 million.

READ MORE: What SpaceX IPO really means for Virgin Galactic stock

SPCE stock price faces major risks ahead

Still, the ongoing Virgin Galactic stock price faces some major risks ahead. For example, there is a risk that space stocks will plunge after the SpaceX IPO as investor sell the news. It is common for stocks to jump ahead of a major event and then plunge after it happens.

There is also a risk that the company will take the advantage of the soaring stock price to raise capital through its at-the-money (ATM) offerings. It generated $52 million in cash through this approach in the last quarter. It ended the quarter with $251 million in cash and short-term investments.

Virgin Galactic stock chart | Source: TradingView

The daily chart shows that the SPCE stock price has surged in the past few days, reaching a high of $8.80, its highest point since 2024. This surge started after the stock spent months in a consolidation phase. As such, the ongoing surge is a sign that it has moved to the markup phase of the Wyckoff Theory.

This phase is usually followed by the distribution or markdown stages where stocks normally drop. Also, the Relative Strength Index (RSI) has moved to the extremely overbought level of 90.

Therefore, the stock will likely continue rising in the near term, potentially to $10, and then retreat sharply in the coming weeks. If this happens, it may retreat to the key support level at $5.20, its highest point on October 15.