Shares of space tourism company Virgin Galactic (SPCE 0.34%) tumbled 10% through 10:10 a.m. ET on Wednesday after the company reported mixed earnings for its fiscal Q4 2023 last night.
No one expected Virgin Galactic to earn a profit last quarter. (No one expects Virgin Galactic to be profitable for quite a long time, in fact.) It was still a pleasant surprise last night, though, to see that the company lost a bit less money ($0.26 per share) than analysts had feared it would lose ($0.30 per share). On the minus side, revenues came in a bit short of the expected $3 million, with Virgin Galactic collecting only $2.8 million.
NYSE: SPCE
Key Data Points
Virgin Galactic missed on sales in Q4
And that's the good news. The bad news is that Virgin Galactic looks set to report an even bigger "miss" on sales in Q1 2024 -- even as its losses were still pretty bad in Q4.
Granted, Virgin Galactic put things in the best possible light when reporting its "earnings" last night. Rounding numbers so that they appeared to hit Wall Street's target, management said Virgin recorded revenue of $3 million, compared to $1 million in the fourth quarter of 2022. But the company's income statement later confirmed that sales were only $2.8 million.
More substantively, management noted that its operating costs came down significantly in Q4, declining to just $117 million. This helped Virgin achieve lower losses than expected -- and indeed, the company cut its losses roughly in half, from $0.55 per share to just $0.26 per share.
Virgin Galactic will miss on sales again in Q1
That said, it's worth pointing out that a big reason the company's loss per share was lower was that Virgin Galactic issued a lot more shares and was therefore able to spread its losses out among a much bigger share count.
On the one hand, the company's net loss shrank by 31% year over year. On the other hand, its share count grew 45%, from 275 million a year ago to nearly 400 million shares today. It was a combination of these two factors -- smaller total losses and more shares among which to divide up the losses -- that ultimately cut per-share losses in half.
The problem that investors are noticing today, I fear, is that companywide revenues are a bit harder to fudge than per-share profits and losses. And Virgin Galactic disappointed investors mightily when it forecast that instead of the $4.1 million in Q1 revenue that Wall Street was expecting, it plans to generate revenue of only about $2 million this quarter.
For investors who've been investing in Virgin Galactic on the hope that it will be a growth stock, this must have come as a shock. My hunch is that it's a big part of the reason Virgin Galactic stock is down today.
