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Prepare for Hard Landings if You Own These 2 Stocks

The Fed’s aggressive rate hikes and the increasing odds of a recession have kept the stock market under pressure. Although the space sector’s long-term prospects look bright, looming supply chain disruptions and inflation could dampen its performance in the near term. Thus, we think it could be wise to avoid space stocks Virgin Galactic (SPCE) and Astra Space (ASTR), given their bleak fundamentals. Read on…

The Consumer Price Index (CPI) rose 8.3% year-over-year in August, surpassing economists’ estimates. Therefore, a third consecutive 75-bps interest rate hike could be on the way, which would take the benchmark rates to 3.00%-3.25%, the highest since early 2008.

Although rapid research and development, increased focus on advanced manufacturing technologies, and deployment of smart factories make the space sector’s long-term prospects bright, several companies operating in this space have been witnessing turbulence due to rising interest rates, skyrocketing inflation, and supply chain disruptions. Moreover, investments in this sector dropped 45% year-over-year in the second quarter.

Given this backdrop, we think fundamentally bleak space stocks Virgin Galactic Holdings, Inc. (SPCE) and Astra Space, Inc. (ASTR) should be best avoided now.

Virgin Galactic Holdings, Inc. (SPCE)

SPCE develops, manufactures, and operates spaceships and related technologies for conducting commercial human spaceflight and flying commercial research and development payloads into space. 

SPCE’s revenue decreased 37.5% year-over-year to $357 thousand in the fiscal quarter ended June 30. Operating loss increased 48.5% from the prior-year period to $109.72 million. The company’s net loss came in at $110.72 million, up 17.7% from the prior-year period, while its net loss per share was $0.43.

For the fiscal quarter ending September 2022, Street revenue estimate of $94.62 thousand reflects a 96.3% year-over-year decrease. Also, the consensus EPS estimate of negative $0.41 indicates a 117.5% decrease year-over-year in the same period.

The stock has slumped 78.3% over the past year and 62.9% over the past nine months to close the last trading session at $5.31.

SPCE’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

SPCE also has an F grade in Growth, Stability, and Sentiment and a D for Value and Quality. In the 31-stock Airlines industry, it is ranked last.

To see the additional POWR Ratings for Momentum for SPCE, click here.

Astra Space, Inc. (ASTR)

ASTR designs, tests, manufactures, launches, and operates space products and services. Its customers primarily include satellite operators, satellite manufacturers, government agencies, and prime defense contractors.

For the fiscal quarter ended June 30, 2022, ASTR’s operating loss increased 176.3% year-over-year to $82.61 million. Net loss for the period increased 163% from the prior-year quarter to $82.30 million. Loss per share came in at $0.31 in the same period.

The consensus EPS estimate for the fiscal quarter ending September 2022 stood at a negative $0.18. Also, Street EPS estimate of negative $0.84 for the ongoing fiscal year represents a 25.7% year-over-year decline.

The stock has declined 92% over the past year and 80.1% over the past six months to close the last trading session at $0.75.

It’s no surprise that ASTR has an overall F rating, which translates to Strong Sell in our POWR Ratings system. Also, the stock has a Stability grade of F and a Growth, Sentiment, and Quality grade of D. In the same industry, it is ranked #30.

Click here to see the additional POWR Ratings for ASTR for Value and Momentum.


SPCE shares were trading at $5.27 per share on Monday afternoon, down $0.04 (-0.75%). Year-to-date, SPCE has declined -60.61%, versus a -18.25% rise in the benchmark S&P 500 index during the same period.



About the Author: Komal Bhattar

Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.

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