Virgin Airlines was a growth stock turned sour. Even with fuel hedging and increase in revenue the market still does not approve VA and hence cause it's decline since it's high at december.
Technical: Based on the chart, there are 2 anomalies that one should take note when trading this.
1) Between $30(green line) and $26.42 (blue horizontal line), the price has found support. This is a crucial zone and it is absolutely crucial that you do not enter the trade unless you are very very sure of the fundamentals else you will be catching a falling knife. This is known as the accumulation/distribution phase where thousands of shares are being exchanged with no prior direction. It is also where liquidity is highest and many "big boys" are either unloading or loading up stock. Do check insider transactions for more info
2) The descending triangle is marked by the same support level and a decreasing resistance. Based on bulkowski's formula that sets price target based on probability. I have marked where the predicted price would go.
Fundamentals: Simplywall.st did DCF calculations and found it's fair value at around $14. This is close to Bulkowski's formula's prediction. VA is overvalued based on cash flow studies. However based on traditional ratio metrics VA is undervalued. P/E stands at 6.52. PEG stands at 0.26. P/S stands at 0.81 and EV/EBITDA stands at 4.67. They do have quite a bit of debt but their cash flow could easily pay it off.
Story: Investors believe oil and the Zika virus would affect sales of this stock heavily and hence they are bearish about it.
Would I go long? Yes! Once the price exited the $30 zone.
Would I go Short? Also yes!. Only of the price drops below $26.42!
Would I do anything now? No! I'm not catching a falling knife. Market is ??? about this stock. So trade after breakouts.
Technical: Based on the chart, there are 2 anomalies that one should take note when trading this.
1) Between $30(green line) and $26.42 (blue horizontal line), the price has found support. This is a crucial zone and it is absolutely crucial that you do not enter the trade unless you are very very sure of the fundamentals else you will be catching a falling knife. This is known as the accumulation/distribution phase where thousands of shares are being exchanged with no prior direction. It is also where liquidity is highest and many "big boys" are either unloading or loading up stock. Do check insider transactions for more info
2) The descending triangle is marked by the same support level and a decreasing resistance. Based on bulkowski's formula that sets price target based on probability. I have marked where the predicted price would go.
Fundamentals: Simplywall.st did DCF calculations and found it's fair value at around $14. This is close to Bulkowski's formula's prediction. VA is overvalued based on cash flow studies. However based on traditional ratio metrics VA is undervalued. P/E stands at 6.52. PEG stands at 0.26. P/S stands at 0.81 and EV/EBITDA stands at 4.67. They do have quite a bit of debt but their cash flow could easily pay it off.
Story: Investors believe oil and the Zika virus would affect sales of this stock heavily and hence they are bearish about it.
Would I go long? Yes! Once the price exited the $30 zone.
Would I go Short? Also yes!. Only of the price drops below $26.42!
Would I do anything now? No! I'm not catching a falling knife. Market is ??? about this stock. So trade after breakouts.