Virgin Galactic (SPCE)

Valuentum Retail Equity Research Visit us at www.valuentum.com Ratings as of 10-Sep-2021 Data as of 10-Sep-2021

Richard Branson, founder of Virgin Galactic, recently flew up to space in one Investment Considerations of the company's test flights, a milestone for the firm and the nascent private DCF Valuation FAIRLY VALUED space industry. Relative Valuation NEUTRAL Stock Chart (weekly) ValueCreation™ POOR ValueRisk™ VERY HIGH 2,000,000,000 57.00 ValueTrend™ NEGATIVE 52.00 Cash Flow Generation WEAK 1,500,000,000 47.00 Financial Leverage LOW 42.00 37.00 Growth AGGRESSIVE 1,000,000,000 32.00 Technical Evaluation BEARISH 27.00 Relative Strength WEAK 500,000,000 22.00 Money Flow Index (MFI) NEUTRAL 17.00 Upside/Downside Volume (U/D) BEARISH 0 12.00 Near-term Technical Resistance, 10-wk MA 27.00 DCF = Discounted Cash Flow; MFI, U/D = Please see glossary. MA = Moving Average

Business Quality ValueCreation™ The week with the highest trading volume out of the last 30 weeks was a week of heavy selling, or distribution (red bar). ValueRisk™ Very Poor Poor Good Excellent Company Vitals Investment Highlights Low Market Cap (USD) $5,561 • Virgin Galactic is an aerospace entity that is Avg Weekly Vol (30 wks) 122,932 pioneering space flight, not just for astronauts, but for Medium 30-week Range (USD) 14.27 - 57.51 everyday private individuals like you and me. Its space Valuentum Sector Next Generation vehicles will allow customers a multi-day flight to High 5-week Return -0.8% experience weightlessness and view the Earth from space. The Virgin brand is a key asset when it may 13-week Return -30.0% come to capital raising. Very High 1 30-week Return -48.4% Firms that generate economic profits with little operating variability score near the top right of the matrix. Dividend Yield % 0.0% • Our fair value estimate range is huge because Virgin Dividends per Share 0.00 Galactic is a risky stock with hard-to-predict future Relative Valuation Forward P/E PEG Price / FV Forward Dividend Payout Ratio 0.0%forecasts. Operating costs to fly into space may be Monster Beverage 36.3 2.7 95.4% Est. Normal Diluted EPS 0.32uneconomical, and one tragedy similar to the Roku 720.3 NMF 97.3% Challenger disaster could derail the entire business. P/E on Est. Normal Diluted EPS 79.0 Wayfair 60.1 7.5 86.7% Est. Normal EBITDA 177 Zoom Video 64.5 3.5 83.0% • According to the US Chamber of Commerce, as Forward EV/EBITDA -15.1noted in Virgin Galactic's regulatory filings, 'the Peer Median 62.3 3.5 91.0% EV/Est. Normal EBITDA 27.5 commercial space market is expected to grow 6% per Virgin Galactic -17.8 NMF 84.6% Forward Revenue Growth (5-yr) 573.0% year, from $385 billion in 2017 to at least $1.5 trillion Price / FV = Current Stock Price divided by Estimated Fair Value Forward EPS Growth (5-yr) -212.6% by 2040, reaching 5% of US gross domestic product Financial Summary ----- Actual ----- Projected NMF = Not Meaningful; Est. = Estimated; FY = Fiscal Year (SPCE 10-K). The company is investing heavily, but Fiscal Year End: Dec-19 Dec-20 Dec-21 barriers to success are enormous. Returns Summary 3-year Historical Average Revenue 4 0 3

Return on Equity -154.5%• The market for commercial human spaceflight for Revenue, YoY% 32.7% -93.7% 1173.1% Return on Assets -60.6%private individuals is brand new, with fewer than 600 Operating Income -213 -275 -336 ROIC, with goodwill Negative ICpeople ever having traveled into space. Virgin Galactic Operating Margin % -5640.4% ######### -11100.9% ROIC, without goodwill Negative ICsees a huge opportunity for high net worth individuals Net Income -211 -273 -328 ROIC = Return on Invested Capital; NMF = Not Meaningful to provide a spaceflight experience. Tickets now cost Net Income Margin % -5576.9% ######### -10813.1% ~$450,000 each. Leverage, Coverage, and Liquidity Diluted EPS -1.08 -1.25 -1.42 In Millions of USD • Other companies are trying to do what Virgin Diluted EPS, YoY % 52.1% 14.8% 14.3% Total Debt 0Galactic is attempting. Blue Origin (private). SpaceX Free Cash Flow (CFO-capex) -229 -250 -361 Net Debt -679and Boeing are others. The current reality for Virgin Free Cash Flow Margin % -6044.0% ######### -11918.0% Total Debt/EBITDA 0.0 Galactic is that it continues to rack up losses and its In Millions of USD (except for per share items) future success is far from likely, in our view. Net Debt/EBITDA NMF MID-CAP EBITDA/Interest Excellent Structure of the Aerospace and Defense Industry GOOD Current Ratio 6.3 The global commercial aerospace duopoly is being challenged by encroaching international competitors who are intent on Quick Ratio NA increasing market share, but Boeing and Airbus continue to dominate the large commercial aircraft segment. Long-term NMF = Not Meaningful demand for commercial aircraft is cyclical and depends on the health of the credit markets, airline customers, and lessors, but massive backlogs and a strong multi-decade demand outlook are reasons for confidence. The defense industry has strong competition in all market segments and remains dependent on government funding decisions and competing budget priorities.

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected]. Page 1 Valuentum Retail Equity Research (10=best) Data as of 10-Sep-2021

ValueCreation™ POOR Return on Invested Capital (ROIC) The best measure of a firm's ability to create value for shareholders is expressed by 1693.4% comparing its return on invested capital (ROIC) with its weighted average cost of 2000.0% capital (WACC). The gap or difference between ROIC and WACC is called the firm's 1500.0% economic profit spread. Virgin Galactic' 3-year average invested capital (without 1000.0% 766.6% goodwill) is negative, making it difficult to calculate a true economic profit spread. 558.7%

However, earnings (EBI) last year were weak, indicating that the potential for economic 500.0% 124.7%159.9% profit creation is POOR for the company. In the chart to the right, we show the probable 195.2% path of ROIC in the years ahead based on the estimated volatility of key drivers behind 0.0% WACC, 11.8% the measure. The solid grey line reflects the most likely outcome, in our opinion, and -500.0% represents the scenario that results in our fair value estimate. -1000.0% ROIC - WACC Spread, 3-year historical average NMF -1500.0% ROIC - WACC Spread, 5-year projected average -549.8% These spreads equal the firm's annual average ROIC (excluding goodwill) less its WACC. -2000.0%

ValueTrend™ NEGATIVE -2500.0%

-3000.0% The firm's invested capital is often negative, and earnings last year declined from the -3500.0% year before, indicating deteriorating fundamentals. We expect ROIC (excluding goodwill) to be in the ballpark of about 160% by the end of our discrete forecast period.

Weighted Average Cost of Capital (WACC) The graph above shows the firm's ROIC (excluding goodwill) compared with historical averages and its WACC. ROIC Calculation ------Actual ------Capital Structure 0.0% Equity Fiscal Year End: Dec-18 Dec-19 Dec-20 Debt Preferred Earnings before Interest Operating Income after Depreciation -167 -213 -275 - Adjusted Taxes (at 2% of EBIT) -3 -4 -6 + Amortization 0 0 0 100.0% + Non-cash Operating Items -13 4 0 - Minority Interest 0 0 0 Earnings before Interest -177 -205 -270

Cost of Equity Invested Capital Risk Free Rate Assumption4.3% Inventories - - - Fundamental Beta (ERP multiplier)1.2 + Receivables - - - Estimated Equity Risk Premium6.5% + Current Deferred Income Taxes - - - Cost of Equity Assumption 11.8% + Other Current Assets 38 44 49 + Property, Plant and Equipment, Net 34 49 53 After-tax Cost of Debt + Goodwill, Net (Cost in Excess) 0 19 20 Risk Free Rate Assumption4.3% + Intangibles - - - Synthetic Credit SpreadNA + Non Current Deferred Income Taxes - - - Cost of Debt AssumptionNA - Accounts Payable - - - Cash Tax Rate Assumption2.0% - Other Current Liabilities 106 116 115 After-tax Cost of Debt Assumption NA Invested Capital, with goodwill -32 -3 10 Cost of Preferred Stock Invested Capital, without goodwill -32 -22 -10 Preferred Dividends 0 Value of Preferred Stock 0 Return on Invested Capital, with goodwill 558.7% 1182.5% -7722.1% Cost of Preferred Assumption NA Return on Invested Capital, without goodwill 558.7% 766.6% 1693.4% In Millions of USD

Weighted Average Cost of Capital (WACC) 11.8% Note: Valuentum may provide an adjusted ROIC measure to better reflect the economic substance ERP = Equity Risk Premium of a company's operations, as in the case of companies with negative invested capital.

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected]. Page 2 Valuentum Retail Equity Research (10=best) Data as of 10-Sep-2021

Revenue Growth AGGRESSIVE Projected Revenue (in millions of USD) Source: Company Filings, Valuentum Projections Last Fiscal 6,000 Year 3-year Historical 5-year Projected 5,338 Revenue CAGR CAGR 5,000 Virgin Galactic USD 0 -48.6% 573.0%

Monster Beverage USD 4,599 10.9% 11.3% 4,000 Roku USD 1,778 51.4% 36.3% 3,285 Wayfair USD 14,145 44.2% 10.9% 3,000 Zoom Video USD 2,651 159.6% 31.4%

2,000 Peer Median 47.8% 21.4%

Industry Median 21.3% 18.9% 1,232 Virgin Galactic' revenue expansion has trailed the median of both its peer group and its 1,000 industry group during the past three years. We expect the firm's revenue expansion to 340 outpace the median of its peer group and industry group during the next five years. Our 0 growth assessment of each firm is based on the firm's 5-year forward revenue CAGR. Virgin Galactic' future pace of revenue growth is AGGRESSIVE, in our opinion.

In the chart above, we show our baseline forecast for revenue as well as potential upside and downside cases.

EBITDA Growth Projected EBITDA (in millions of USD) Source: Company Filings, Valuentum Projections Last Fiscal Year 3-year Historical 5-year Projected 1,200

EBITDA CAGR CAGR 1,000 981 Virgin Galactic USD -265 25.7% -223.8% 800 772 Monster Beverage USD 1,694 10.7% 13.4% 563 600 Roku USD 67 -267.4% 78.8% 400 Wayfair USD 780 -276.2% 9.7%

Zoom Video USD 793 384.4% 38.6% 200

Peer Median -128.3% 26.0% 0 -161 -206 -265 Industry Median 10.5% 13.0% -200 Virgin Galactic' EBITDA expansion has been greater than that of both its peer group -400 and industry group during the past three years. We expect the firm's pace of EBITDA growth to fall below that of both its peer group and industry group during thenextfive -600 years.Roku sports the highest expected EBITDA growth rate among peers.

In the chart above, we show our baseline forecast for EBITDA as well as potential upside and downside cases.

Net Income Growth Projected Net Income (in millions of USD) Source: Company Filings, Valuentum Projections Last Fiscal Year Net 3-year Historical 5-year Projected 1,000 Income CAGR CAGR 800 817

Virgin Galactic USD -273 25.5% -218.2% 630 600 442 Monster Beverage USD 1,410 19.8% 11.5% 400 Roku USD -18 -34.3% -321.0%

Wayfair USD 185 -191.1% 21.1% 200

Zoom Video USD 672 -533.7% 40.5% 0 -138 -211 -273 Peer Median -112.7% 16.3% -200

Industry Median 8.5% -23.2% -400

Virgin Galactic' net income expansion has been greater than that of both its peer group -600 and industry group during the past three years. We expect the firm's pace of net income growth to fall below that of both its peer group and industry group during thenextfive years. Zoom Video sports the highest net income growth rate among peers. In the chart above, we show our baseline forecast for net income as well as potential upside and downside cases.

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected]. Page 3 Valuentum Retail Equity Research (10=best) Data as of 10-Sep-2021

Virgin Galactic SPCE FAIRLY VALUED Buying Index™ 3 Value Rating Economic Castle Estimated Fair Value Fair Value Range Investment Style Sector Industry Unattractive $30.00 $15.00 - $45.00 MID-CAP BLEND Next Generation Disruptive Innovation Cash Flow and Financial Leverage Analysis

Cash Flow Generation WEAK Financial Leverage LOW Cash from Operations Capital Expenditures Free Cash Flow 3.5 3 11 19 17 2.5 2 1.5 -146 1 Virgin Galactic - normalized 0.5 -209 leverage, 0.00 -156 -233 0 12/31/2018 12/31/2019 12/31/2020 -229 -250 Virgin Galactic- annual leverage Virgin Galactic - normalized leverage Dec-18 Dec-19 Dec-20 Medium Threshold HighThreshold

The bars above show the firms operating cash flow, capital expenditures, and free cash flow, respectively. The bars above show the firm's annual debt-to-EBITDA. The red line shows the firm's normalized measure. Firms that generate a free cash flow margin (free cash flow divided by total revenue) Firms that exhibit high leverage tend to be more risky than firms with relatively low above 5% are usually considered cash cows. Virgin Galactic' free cash flow margin has debt loads, all else equal. We measure financial leverage by taking a firm's current averaged about -38857.3% during the past 3 years. As such, we think the firm's cash total debt load and dividing it by the firm's trailing average 3-year annualEBITDA. flow generation is relatively WEAK. The free cash flow measure shown above is Firms that are over 3 for this metric, we rate as having high leverage. Companies that derived by taking cash flow from operations less capital expenditures and differs from have less than 1.5 turns of leverage (or a measure below 1.5), we rate as having low enterprise free cash flow (FCFF), which we use in deriving our fair value estimate for leverage. Virgin Galactic' normalized debt-to-EBITDA measure of about 0 puts it in the company. For more information on the differences between these two measures, the LOW camp. please visit our website at Valuentum.com. At Virgin Galactic, cash flow from operations decreased about 60% from levels registered two years ago, while capital expenditures expanded about 61% over the same time period.

Cash Flow from Operations Projected Operating Cash Flow (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal 3-year Historical 5-year Projected 1,200

Year CFO CAGR CAGR 1,000 945 Virgin Galactic USD -233 19.5% -226.5% 800 563 754 Monster Beverage USD 1,364 11.3% 14.5% 600 Roku USD 148 -195.5% 58.2% 400 Wayfair USD 1,417 112.2% 8.9% 200 Zoom Video USD 1,471 323.1% 26.2% 0 -146 -209 -233 Peer Median 61.8% 20.4% -200 Industry Median 12.2% 17.7% -400 Virgin Galactic' cash flow from operations expansion has trailed that of its peer group but has been greater than that of its industry group during the past three years. We expect the firm's pace of cash flow from operations growth to fall below that of both its peer group and industry group during the next five years. Roku sports the highest In the chart above, we show our baseline forecast for CFO as well as potential upside and downside cases. expected cash flow from operations growth rate among peers.

Free Cash Flow (CFO-capital expenditures) Projected Free Cash Flow (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal 3-year Historical 5-year Projected 800

Year FCF CAGR CAGR Source: Company Filings, Valuentum Projections 600 611 Virgin Galactic USD -250 16.9% -214.5% 372 491 400 Monster Beverage USD 1,315 13.7% 14.3%

Roku USD 66 -346.5% 76.4% 200

Wayfair USD 1,231 -355.0% 6.1% 0 -156 -229 Zoom Video USD 1,391 293.1% 26.3% -250 -200

Peer Median -166.4% 20.3% -400 Industry Median 12.1% 17.1% -600 Virgin Galactic' free cash flow expansion has been greater than that of both its peer group and industry group during the past three years. We expect the firm's pace of free cash flow growth to fall below that of both its peer group and industry group during the next five years. Roku sports the highest expected free cash flow growth rateamong In the chart above, we show our baseline forecast for free cash flow as well as potential upside and downside cases. peers.

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected]. Page 4 Valuentum Retail Equity Research (10=best) Data as of 10-Sep-2021

Valuation Assumptions Valuation Breakdown In Millions of USD (except for per share items) 5-year Projections In the chart below, we show the build up to our estimate of total enterprise value for Revenue CAGR % 573.0% Virgin Galactic and the break down to the firm's total equity value, which we Avg. EBIT Margin % -2277.4% estimate to be about 6.49USD billion. The present value of the enterprise free cash Avg. Cash Tax Rate % 2.0% flows generated during each phase of our model and the net balance sheet impact is Earnings Before Interest CAGR % -218.4% displayed. We divide total equity value by diluted shares outstanding to arrive at our Earnings Per Share CAGR % -212.6% $30 per share fair value estimate. Free Cash Flow to the Firm CAGR % -212.3% Earnings before interest = Net operating profits less adjusted taxes Long-term Projections Phase II --> III FCFF CAGR % 8.2% (II) 3% (III) 7,000 Cost of Equity % 11.8% 679 6,000 After-tax Cost of Debt % NA Discount Rate (WACC) % 11.8% 5,000 2,083 Synthetic credit spread = 1.29% Results 4,000 Phase I Present Value -138 6,493 Phase II Present Value 3,870 3,000 Phase III Present Value 2,083 2,000 3,870 Total Firm Value 5,814 1,000 Net Balance Sheet Impact 679 0 -138 Total Equity Value 6,493 Yr 1-5 Yr 6-20 Perpetuity Net Balance Sheet Equity Value -1,000 Impact Diluted Shares Outstanding 219.1 Fair Value per Share $30.00 In Millions of USD

DCF Valuation Summary Enterprise Free Cash Flow ------Actual ------Fiscal Year End: 12/31/2018 12/31/2019 12/31/2020 We think Virgin Galactic is worth $30 per share with a fair value range of $15.00 - Earnings before Interest -177 -205 -270 $45.00. The margin of safety around our fair value estimate is driven by the firm's + Depreciation 6710 VERY HIGH ValueRisk™ rating, which is derived from an evaluation of the historical - Capital Expenditures 11 19 17 volatility of key valuation drivers and a future assessment of them. Our near-term - Change in Working Capital 0-36 operating forecasts, including revenue and earnings, do not differ much from consensus - Acquisitions 0 0 0 estimates or management guidance. Our model reflects a compound annual revenue Enterprise Free Cash Flow (FCFF) -182 -214 -282 growth rate of 573% during the next five years, a pace that is higher than the firm's 3- In Millions of USD year historical compound annual growth rate of -48.6%. Our model reflects a5-year Our future forecasts for key valuation drivers result in a future free enterprise cash projected average operating margin of -2277.4%, which is above Virgin Galactic's flow stream. Above, we show how we calculate enterprise free cash flow and the trailing 3-year average. Beyond year 5, we assume free cash flow will grow at an annual historical performance of the metric for Virgin Galactic. Over the next five years, we rate of 8.2% for the next 15 years and 3% in perpetuity. For Virgin Galactic, we use a expect the firm's enterprise free cash flow to expand at about a -212% compound 11.8% weighted average cost of capital to discount future free cash flows. annual growth rate. During years 6 through 20, we expect the measure to grow at a 8.2% rate. Beyond year 20 (in perpetuity), we grow the firm's free cash flow at inflation (3%).

Source: Company Filings, Valuentum Projections Company Metrics versus Peer and Industry Medians

Price/Earnings-to- 5-year Forward 3-year Hist Avg Stock Price / Valuentum Buying Forward Price-to- P/E on Est. Normal Diluted Growth (PEG), 5- EV/Est. Normal Earnings per ROIC, without Dividend Yield Fair Value Company Name Index™ Earnings EPS year Forward EV/EBITDA EBITDA Share CAGR goodwill % Estimate

Virgin Galactic 3 -17.879.0 NMF-15.1 27.5 -212.6% Negative IC 0.0% 84.6%

Monster Beverage 7 36.325.9 2.726.4 19.9 13.7% 62.9% 0.0% 95.4%

Roku 3 720.3146.2 NMF225.5 65.2 -300.2% -64.0% 0.0% 97.3%

Wayfair 3 60.149.0 7.524.0 20.5 19.3% 42.7% 0.0% 86.7%

Zoom Video 3 64.541.7 3.552.9 33.5 38.3% Negative IC 0.0% 83.0%

Peer Median 3.0 62.345.3 3.539.7 27.0 16.5% 42.7% 0.0% 91.0%

Industry Median 5.0 32.741.8 2.421.7 26.1 -26.0% 22.0% 0.0% 96.3% View back of report for a full list of industry constituents covered by Valuentum. VBI: Valuentum's ranking for the attractiveness of this investment at the date of the report.

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected]. Page 5 Valuentum Retail Equity Research (10=best) Data as of 10-Sep-2021

Range of Potential Outcomes ValueRisk™ VERY HIGH $30 Virgin Galactic receives a ValueRisk™ rating of VERY HIGH based of the historical volatility of key drivers of economic value creation. The fair value range sets the margin of safety around our fair value estimate of the firm's shares. Revenue Volatility Greater than 50% Gross Margin Volatility Greater than 50% $15 $45 Earnings (EBI) Volatility 17.6% Cash Flow (FCFF) Volatility 18.2% Fair Value Range 50.0% The Fair Value Range sets the premium or discount on our estimate of the firm's fair value.

Upside and Downside Probabilities Probability (fair value < $0) 2.28% -40 -20 0 20 40 60 80 100 Probability (fair value > 2x current share price) 8.32%

Our discounted cash flow process values each firm on the basis of the presentvalueof We strive to answer a few questions that investors often ask: 1) What are the chances all future free cash flows. Although we estimate the firm's fair value at about $30 per of a total loss of investment in this company? and 2) What is the chance that the share, every company has a range of probable fair values that's created by the company is really worth twice what I paid for it? The probability (fair value<0) uncertainty of key valuation drivers (like future revenue or earnings, for example). After strives to answer the first question. It indicates the chance that the firm may all, if the future were known with certainty, we wouldn't see much volatility in the encounter insolvency based on the characteristics of its cash flow stream, capital markets as stocks would trade precisely at their known fair values. Our ValueRisk™ structure, and risk profile. The probability (fair value > 2x current share price) strives rating sets the margin of safety or the fair value range we assign to each stock. In the to answer the second question. It is our best estimate of whether investors are graph above, we show this probable range of fair values for Virgin Galactic. We think participating in a half-off sale by buying the company's shares at current prices. the firm is attractive below $15 per share (the green line), but quite expensive above $45 per share (the red line). The prices that fall along the yellow line, which includes our fair value estimate, represent a reasonable valuation for the firm, in our opinion.

Future Path of Fair Value We estimate Virgin Galactic' fair value at this point in time to be about $30 per share. As time passes, however, companies generate cash flow and pay out cash to $70 $63 shareholders in the form of dividends. The chart to the right compares the firm's current share price with the path of Virgin Galactic' expected equity value per share over the $60 next three years, assuming our long-term projections prove accurate. The range between the resulting downside fair value and upside fair value in Year 3 represents our best $50 estimate of the value of the firm's shares three years hence. This range of potential outcomes is also subject to change over time, should our views on the firm's future cash $42 flow potential change. The expected fair value of $42 per share in Year 3 represents our $40 existing fair value per share of $30 increased at an annual rate of the firm'scostof Current Share equity less its dividend yield. The upside and downside ranges are derived in the same $30 Price, $25 way, but from the upper and lower bounds of our fair value estimate range.

$20 $21

$10

$0 Current Share Price Yr 1 Fair Value Yr 2 Fair Value Yr 3 Fair Value

The graph above shows the expected future fair value of the firm's shares relative to its current stock price.

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected]. Page 6 Valuentum Retail Equity Research (10=best) Data as of 10-Sep-2021

Technical Evaluation BEARISH Money Flow Index (MFI) NEUTRAL

48 90 80 Overbought Line 43 70 38 60 63 50 13-week Moving 33 Average 40 28 30 27 Stock Price 20 Oversold Line 23 5-week Moving 10 Average 18 0

The firm's near-term moving average (5-week, grey line) and medium-term moving The Money Flow Index (MFI) is an oscillator that uses price and volume to measure average (13-week, red line) are shown in the chart above. Typically, when a shorter- buying and selling pressure. Chartists often look for overbought (above 80) and term moving average crosses a medium- or longer-term moving average from below, it oversold (below 20) levels to warn of unsustainable near-term price extremes. Virgin represents a bullish signal. If the short-term moving average crosses from above, traders Galactic' MFI of 27 (green line) is neutral, suggesting the firm's stock is neither often view this as bearish. Virgin Galactic' 5-week moving average is below its 13- overbought nor oversold at this time. However, a score below 50 tends to favor bears. week measure, indicating a BEARISH trend. This activity further confirms the The MFI can also be used to gauge the strength or weakness of a firm's price trend. In company's 30-week downtrend. Virgin Galactic' case, its stock price and money flow neither reveals a bullish nor bearish divergence, further supporting our neutral view on its money flow action.

30-week Price and Volume Chart (weekly)

- 10-week Moving Average Relative Price Strength WEAK 2,000,000,000 57 52 A firm's relative price strength can be assessed over any number of time horizons. We 1,500,000,000 47 show the firm's performance over the past 5 weeks, 13 weeks, and 30 weeks below. 42 In arriving at our relative strength rating for each company, we assess the past 13 37 1,000,000,000 weeks, which includes the market's reaction to the firm's most recently reported 32 27 quarter, where applicable, and other more recent economic events. During the past 13 500,000,000 22 weeks, Virgin Galactic' shares returned -30%, while the market benchmark returned 17 7.5%. We think Virgin Galactic' 13-week relative price performance is WEAK. 0 12

5-week Company Performance -0.8% In the chart above, we pinpoint the heaviest accumulation or distribution week of the 5-week Market Benchmark Performance 2.6% firm, determined by the week with the highest trading volume during the past 30 weeks. 5-week Relative Performance vs. Market Benchmark -3.5% A heavy accumulation (buying) or distribution (selling) week often determines the 13-week Company Performance -30.0% future near-term direction of the firm's share price, as money managers continue to 13-week Market Benchmark Performance 7.5% move in or out of the stock in the days and weeks ahead driving the stock up or down, respectively. For Virgin Galactic, the week with the highest trading volume out of the 13-week Relative Performance vs. Market Benchmark -37.5% last 30 weeks was a week of heavy selling, or distribution (red bar). Such market 30-week Company Performance -48.4% activity could indicate a reversal of an uptrend or further confirmation of a downtrend. 30-week Market Benchmark Performance 17.5% 30-week Relative Performance vs. Market Benchmark -66.0%

Upside/Downside Volume BEARISH Timeliness Matrix™ Equity Valuation 3.0 Relative Strength Overvalued Fairly Valued Undervalued

2.5 Strong 2.0 1.5 Neutral 1.2 Average, 1.3 1.0 0.8 0.5 Weak 1

0.0 Firms that are undervalued and currently showing near-term pricing strength score near the top right of the matrix. Companies that are undervalued and showing near-term relative price strength could represent timely buys, as the stock may be attractive to both value and momentum The level and trend of the Upside/Downside (U/D) volume ratio reveals whether investors. A cross section of the firm's equity valuation and its relative share price institutional participation has been bullish or bearish as of late. Virgin Galactic' U/D strength is shown in the matrix above. We tend to prefer undervalued stocks that have volume ratio of 0.8 is not only less than 1 but also is lower than its trailing average, strong pricing momentum, also called Valuentum stocks. indicating BEARISH institutional interest during the past several weeks.

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected]. Page 7 Valuentum Retail Equity Research (10=best) Data as of 10-Sep-2021

Total Revenue 304 3 57

Cost of Goods Sold 102 0 0

Selling, General and Administrative Expenses 5182 117 144 102

Other Operating Expenses 118133 158 195 138

Operating Income (167)(213) (275) (336) (184)

Unusual items 000 0 0

Operating Income, including unusual items (167)(213) (275) (336) (184)

Interest Expense 000 0 0

Other Non-operating Income 292 2 2 2

Pre-tax Income (138)(211) (273) (334) (182)

Income Taxes 000 (7) (4)

Income after tax (138)(211) (273) (328) (178)

Minority Interest and Equity Income 000 00

Net Income, excluding extra items (138)(211) (273) (328) (178)

Income Available to Common, excluding extra items (138)(211) (273) (328) (178)

Diluted Earnings per Share, excluding extra items (0.71)(1.08) (1.25) (1.42) (0.74)

Diluted Weighted Shares Outstanding 193.7194.4 219.1 230.1 241.6

Source: Company Filings, Xignite, Valuentum Projections

Note: Pro forma data in discounted cash-flow valuation may reflect significant adjustments from GAAP accounting data, including cash (not effective) tax rates and other analytical adjustments on a backward-looking and forward-looking basis. No individual data, by itself, found in this report should be used to make any investment decision.

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected]. Page 8 Valuentum Retail Equity Research (10=best) Data as of 10-Sep-2021

Assets Total Cash (including marketable securities) 81493 679 585 648 Inventory --- - - Accounts Receivable --- -- Other Current Assets 3844 49 49 49 Total Current Assets 119537 728 634 697 Gross Fixed Assets 6284 96 147 224 (Accumulated Depreciation) (28)(35) (43) (55) (84) Net Property, Plant, and Equipment 3449 53 92 140 Goodwill, Net 02019 20 20 Intangibles, Net --- -- Other Long-term Assets 331 33 Total Assets 156606 804 749 860

Liabilities Accounts Payable --- - - Other Current Liabilities 106116 115 110 106 Current Portion of Long-term Debt 000 00 Total Current Liabilities 106116 115 110 106 Long-term Debt 000 00 Other Long-term Liabilities 82622 26 26 Total Liabilities 114138 141 136 132

Preferred Stock 000 00

Shareholders' Equity Common Stock and Additional Paid in Capital 41589 1,057 1,335 1,627 Retained Earnings 0(122) (395) (723) (901) Other Equity 010 11 Total Shareholders' Equity 42468 663 614 727

Total Liabilities and Shareholders' Equity 156606 804 749 860

Source: Company Filings, Xignite, Valuentum Projections

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected]. Page 9 Valuentum Retail Equity Research (10=best) Data as of 10-Sep-2021

Cash from Operations Net Income (138)(211) (273) (328) (178) Depreciation and Amortization 6107 12 29 Deferred Income Taxes --- -- Operating Gains Or Losses (13)4 0 00 Changes in Working Capital 06(3) 53 Cash Flow from Operations (146)(209) (233) (310) (146)

Cash from Investing Purchase of Property, Plant, Equipment (11)(19) (17) (51) (77) Other Investing Cash Flows 000 00 Cash Flow from Investing (11)(19) (17) (51) (77)

Cash from Financing Issuance (Retirement) of Stock --- 278 292 Issuance (Retirement) of Debt --- 00 Dividends Paid 000 00 Other Financing Cash Flows 157634 436 00 Cash Flow from Financing 157634 436 278 292

Foreign Exchange 000 0 0

Net Change in Cash 0406 186 (83) 69

Source: Company Filings, Xignite, Valuentum Projections

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected]. Page 10 Valuentum Retail Equity Research (10=best) Data as of 10-Sep-2021

Disruptive Innovation FAIRLY VALUED 98% We think the Disruptive Innovation industry is fairly valued at this time. The industry's 96% 96.3% market cap is trading between 80% and 120% of our estimate of its fair value based on 94% our DCF process. Although we use a firm-specific ValueRisk™ measure to determine 92% whether a firm is undervalued or overvalued based on our DCF process, we consider an 90% 91.0% industry to be undervalued if it is trading below 80% of our estimate of its fair value 88% and overvalued if it is trading at over 120% of our estimate of its fair value. We think 86% these fair value ranges are appropriate given the diversification benefits of holding a 84% 84.6% basket of stocks. Although there may be individual opportunities within the Disruptive 82% Innovation industry, we don't find the industry as a whole attractive basedsolelyon 80% valuation. 78%

Virgin Galactic Peer Median Disruptive Innovation

The above bar chart reveals the price/fair value of the company, its peers, and the industry as a whole.

Shaded blue denotes that the firm has earned the highest rating for that respective category.

Market Cap (USD- Company Name Ticker mil)Investment Style DCF ValuationRelative Valuation ValueCreation™ ValueRisk™ ValueTrend™ Technicals Relative Strength

Beyond Meat BYND 7,011MID-CAP GROWTH FAIRLY VALUEDNEUTRAL VERY POOR HIGH POSITIVE BEARISH WEAK

Boston Beer SAM 6,871MID-CAP BLEND FAIRLY VALUEDATTRACTIVE EXCELLENT MEDIUM POSITIVE NEUTRAL WEAK

Carvana Co. CVNA 21,372LARGE-CAP GROWTH FAIRLY VALUEDNEUTRAL VERY POOR HIGH POSITIVE VERY BEARISH STRONG

CRISPR Therapeutics CRSP 7,865MID-CAP BLEND FAIRLY VALUEDNEUTRAL VERY POOR HIGH NEGATIVE BEARISH WEAK

Crocs CROX 9,525MID-CAP BLEND FAIRLY VALUEDNEUTRAL EXCELLENT HIGH NEGATIVE BULLISH STRONG

DocuSign DOCU 52,611LARGE-CAP BLEND FAIRLY VALUEDUNATTRACTIVE EXCELLENT MEDIUM POSITIVE VERY BEARISH NEUTRAL

ETSY ETSY 29,423LARGE-CAP GROWTH FAIRLY VALUEDNEUTRAL EXCELLENT HIGH POSITIVE BULLISH STRONG

First Solar FSLR 10,378LARGE-CAP VALUE FAIRLY VALUEDATTRACTIVE VERY POOR MEDIUM NEGATIVE BULLISH STRONG

Fiverr International FVRR 5,929MID-CAP BLEND FAIRLY VALUEDUNATTRACTIVE VERY POOR MEDIUM POSITIVE BEARISH WEAK

GameStop GME 11,784LARGE-CAP CORE OVERVALUEDNEUTRAL EXCELLENT VERY HIGH NEGATIVE VERY BEARISH WEAK

Global Payments GPN 52,206LARGE-CAP VALUE FAIRLY VALUEDATTRACTIVE EXCELLENT LOW NEGATIVE NEUTRALWEAK

IntercontinentalExchange ICE 66,689LARGE-CAP CORE FAIRLY VALUEDATTRACTIVE EXCELLENT LOW NEGATIVE BULLISH NEUTRAL

JD.com JD 124,765LARGE-CAP BLEND FAIRLY VALUEDATTRACTIVE POOR MEDIUM NEGATIVE BULLISH STRONG

Lululemon LULU 55,059LARGE-CAP GROWTH FAIRLY VALUEDNEUTRAL EXCELLENT MEDIUM NEGATIVE BULLISH STRONG

Mercadolibre MELI 93,682LARGE-CAP BLEND FAIRLY VALUEDUNATTRACTIVE EXCELLENT MEDIUM POSITIVE BULLISH STRONG

Monster Beverage MNST 50,498LARGE-CAP BLEND FAIRLY VALUEDATTRACTIVE EXCELLENT MEDIUM POSITIVE BULLISH WEAK

NASDAQ NDAQ 33,037LARGE-CAP CORE FAIRLY VALUEDATTRACTIVE EXCELLENT LOW POSITIVE BULLISH STRONG

Palo Alto PANW 45,204LARGE-CAP GROWTH FAIRLY VALUEDUNATTRACTIVE EXCELLENT MEDIUM NEGATIVE NEUTRAL STRONG

Penn National PENN 11,247LARGE-CAP GROWTH FAIRLY VALUEDUNATTRACTIVE POOR MEDIUM NEGATIVE BULLISH STRONG

Pinterest PINS 32,866LARGE-CAP BLEND FAIRLY VALUEDUNATTRACTIVE VERY POOR MEDIUM NEGATIVE BEARISH WEAK

Proto Labs PRLB 1,999SMALL-CAP VALUE FAIRLY VALUEDATTRACTIVE EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

Roku ROKU 41,488LARGE-CAP BLEND FAIRLY VALUEDUNATTRACTIVE VERY POOR MEDIUM POSITIVE BEARISH WEAK

ServiceNow NOW 131,649LARGE-CAP GROWTH FAIRLY VALUEDNEUTRAL EXCELLENT MEDIUM POSITIVE NEUTRAL STRONG

Slack Tech WORK 17,512LARGE-CAP BLEND FAIRLY VALUEDNEUTRAL VERY POOR MEDIUM POSITIVE BULLISH STRONG

Snap SNAP 109,606LARGE-CAP BLEND FAIRLY VALUEDUNATTRACTIVE VERY POOR MEDIUM POSITIVE BULLISH STRONG

Splunk SPLK 24,783LARGE-CAP BLEND FAIRLY VALUEDNEUTRAL GOOD MEDIUM NEGATIVE NEUTRAL STRONG

Stitch Fix SFIX 3,960MID-CAP BLEND FAIRLY VALUEDUNATTRACTIVE EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

Teradyne TER 22,335LARGE-CAP CORE FAIRLY VALUEDATTRACTIVE EXCELLENT MEDIUM POSITIVE BEARISH WEAK

Uber UBER 70,098LARGE-CAP BLEND FAIRLY VALUEDNEUTRAL VERY POOR VERY HIGH POSITIVE BEARISH WEAK

VeriSign VRSN 25,504LARGE-CAP GROWTH FAIRLY VALUEDATTRACTIVE EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

Verisk VRSK 33,942LARGE-CAP CORE FAIRLY VALUEDATTRACTIVE EXCELLENT MEDIUM POSITIVE NEUTRAL STRONG

Virgin Galactic SPCE 5,561MID-CAP BLEND FAIRLY VALUEDNEUTRAL POOR VERY HIGH NEGATIVE BEARISH WEAK

Wayfair W 26,700LARGE-CAP BLEND FAIRLY VALUEDUNATTRACTIVE EXCELLENT MEDIUM POSITIVE BEARISH WEAK

Zoom Video ZM 90,828LARGE-CAP BLEND FAIRLY VALUEDUNATTRACTIVE GOOD MEDIUM POSITIVE BEARISH WEAK

B Valuentum Buying Index (VBI) C Valuentum Value Rating (VVR) D Investment Considerations Provides insight into the timeliness Indicates whether we think a firm Evaluates firms on 12 is undervalued, fairly valued, or different measures, from the DCF Valuation of an investment opportunity. We A rank firms from 1 to 10 based on overvalued on the basis of our firm's growth and cash flow Shows whether the rigorous fiancial, valuation, and DCF process. generation to the stock's firm is undervalued, money flow index and fairly valued, or technical analysis. A 10 represents one of our top picks. upside/downside volume. We overvalued based on VBI Sco re Action reveal technical support and our DCF process 10 Top Pick resistance levels. and by how much. 9 We'd Consider Buying 6 to 8 Constructive (add/trim) 3 to 6 Less Exciting (add/trim) 1 to 2 We'd Consider Selling

E 30-week Price and Volume Action A B C Displays the last accumulation or H Business Quality distribution week of D Summary of the firm's the stock and ability to create value historical price and for shareholders volume action. compared wth the E underlying risk of its operations.

H G J Investment Highlights G Company Vitals Our opinion of the Shows sector, company, including industry and other analysis of its financial and technical strengths relevant company J information. and weaknesses. K I

N Relative Valuation K Comparison of the L firm's PE, PEG, and Price/FV ratios versus I Normalized EPS peers. and EBITDA M Estimation of the firm's normalized earnings measures and the corresponding valuation mutliples.

Returns Summary L N Financial Summary 3-year averages of M Leverage, Coverage, A summary of the the firm's key return and Liquidity proforma financial measures, including A snapshot of the statements found in return on invested company's financial the extended report. capital, with and health. without goodwill.

@Valuentum, we strive to stand out from the crowd. Most Our analysis doesn’t stop there. We also offer a technical investment research publishers fall into a few camps, evaluation of the stock as well as other momentum whether it be value, growth, income, momentum, chartist indicators. We not only want to reveal to readers which or some variant of the aforementioned. We think each in firms may be undervalued, in our view, but we also want its own right holds merit, but we think the combination of to provide readers with information to help them assess these approaches can be even more powerful. After all, entry and exit points. Most research publishers focus on stock price movements aren’t just driven by investors of arriving at a target price or fair value estimate, but may the value or growth variety, but by all market participants. fall short of providing a technical assessment to bolster Therefore, we look at stocks from a variety of investment buy and sell disciplines. We strive to go the distance and perspectives in order to better understand and identify provide readers with answers--not half the story. ideas. We want to provide relevant information. An explanation of our approach would not be complete if The core of our process is grounded in rigorous discounted we didn’t describe our ideal stock idea. We’re looking cash flow analysis and incorporates the concept of a for companies that are undervalued--both on a DCF basis margin of safety. We offer a fair value estimate for each and versus peers--have strong growth potential, have a company and provide a relative valuation assessment in solid track record of creating economic profits for the context of a company’s industry and closest peers. A shareholders with reasonable risk, are strong cash flow cross section of our ValueCreation™ and ValueRisk™ generators, have manageable financial leverage, and are ratings provides a financial assessment of a company’s currently showing bullish technical and momentum business quality, while our ValueTrend™ rating offers indicators. For dividend growth ideas, we look for insight into the trajectory of a firm’s economic profit companies that have both the capacity and willingness to creation. The Economic Castle rating measures the keep raising the dividend. magnitude of future economic value generation, and the Dividend Cushion ratio assesses the financial capacity of a Can such stock ideas exist? Subscribe to Valuentum to company to keep raising its dividend. receive our best investment ideas and analysis on hundreds of stocks, dividends, ETFs and more.

Valuentum Value Rating (VVR) UNDERVALUED

Financial Discounted Cash FAIRLY VALUED Financial ValueRisk™ Statement Flow Valuation Forecasts Analysis Model Rating OVERVALUED

Historical firm-specific Full annual forecasts of income A complete three-stage free The volatility of key valuation The firm's stock price is compared financial data generates our statement, balance sheet, and cash flow to the firm valuation drivers are estimated and a to the suggested margin of safety. ValueCreation™, ValueRisk™, cash flow statement items. Firm- model generates an estimate margin of safety is If a firm's stock price falls below and ValueTrend™ ratings. The specific cost of equity, cost of of the firm's equity value per determined. the lower bound of our estimated data provides the basis for our debt, weighted average cost of share based on estimated fair value range, it receives financial forecasts. capital, and long-term growth future free cash flows. • Revenue Volatility Valuentum's highest Value Rating. and profitability measures • Margin Volatility estimated. • Earnings Volatility • Cash Flow Volatility

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected]. Page 13 Methodology for Picking Stocks - Valuentum Buying Index™ (VBI)

'bullish' technicals. The firm would need a ValueCreation™ rating of 'good' or 'excellent', exhibit Valuentum, we like to look at companies from a @ 'high' or 'aggressive' growth prospects, and generate at number of different perspectives. The Valuentum Buying least a 'medium' or 'neutral' assessment for cash flow Index (VBI) combines rigorous financial and valuation generation, financial leverage, and relative price strength. analysis with an evaluation of a stock's technicals to derive a rating between 1 and 10 for each company. The VBI This is a tall order for any company. Stocks that don't places considerable emphasis on a company's discounted make the cut for a 10 are ranked accordingly, with the cash-flow (DCF) valuation, its relative valuation versus least attractive stocks, in our opinion, garnering a rating peers (both forward PE and PEG ratios), and its technicals of 1 ("We'd sell"). Most of our coverage universe in order to help readers assess entry and exit points on the registers ratings between 3 and 7, but at any given time most interesting ideas. there could be large number of companies garnering either very high or very low scores, especially at market Let's follow the red line on the flow chart below to see lows or tops, respectively. how a company can score a 10, the best mark on the index (a "Top Pick"). First, the company would need to be The Best Ideas Newsletter portfolio puts the VBI into 'undervalued' on a DCF basis and 'attractive' on a relative practice. value basis. The stock would also have to be exhibiting

Initial Index Score

DCF Fairly DCF Overvalued DCF Undervalued Valued

Relative Value Relative Value Relative Value Relative Value Relative Value Relative Value Unattractive/Neutral Attractive Unattractive/Neutral Attractive Unattractive/Neutral Attractive

Technicals Technicals Technicals Technicals Bullish: 7 Technicals Bullish: 4 Bearish: 3 Bearish: 6 Bearish: 1

Technicals Technicals Neutral: 2 Neutral: 8 Technicals Technicals Bullish: 6 Bearish: 4 Technicals Technicals Bearish: 3 Bullish: 7

Technicals Technicals Technicals Bullish: 9 Bullish: 7 Technicals Bearish: 3 Neutral: 5

Technicals Technicals Neutral: 4 Neutral: 6

VBI Score Action Technicals >= Bullish 10 Top Pick ValueCreation(TM) >= Good Growth >= High 9 We'd Consider Buying Cash Flow Generation >= Medium 6 to 8 Constructive (add/trim) Financial Leverage <= Medium Relative Strength >= Neutral 3 to 6 Less Exciting (add/trim) Final Score: 10 1 to 2 We'd Consider Selling

The information contained in this report is not represented or warranted to be accurate, correct, complete, or timely. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected]. Page 14 Glossary

Estimated Fair Value. This measure is our opinion of the fair equity value per share of Investment Style. Valuentum uses its own proprietary stock-classification system. the company. If our forecasts prove accurate, which may not always be the case, we Nano-cap: Less than $50 million; Micro-cap: Between $50 million and $200 million; may expect a firm's stock price to converge to this value within the next 3 years. Small-cap: Between $200 million and $2 billion; Mid-cap: Between $2 billion and $10 billion; Large-cap: Between $10 billion and $200 billion; Mega-cap: Over $200 billion. Blend: Firm's that we think are undervalued and exhibit high growth Fair Value Range. The fair value range represents an upper bound and lower bound, prospects (growth in excess of three times the rate of assumed inflation). Value: between which we would consider the firm to be fairly valued. The range considers our Firm's that we believe are undervalued, but do not exhibit high growth prospects. estimate of the firm's fair value and the margin of safety suggested by the volatility of Growth: Firms that are not undervalued, in our opinion, but exhibit high growth key valuation drivers, including revenue, gross margin, earnings before interest, and prospects. Core: Firms that are neither undervalued nor exhibit high growth enterprise free cash flow (the determinants behind our ValueRisk™ rating). prospects.

DCF Valuation. We opine on the firm's valuation based on our DCF process. Firms Company Vitals. In this section, we list key financial information and the sector and that are trading with an appropriate discount to our fair value estimate receive an industry that Valuentum assigns to the stock. The P/E-Growth (5-yr), or PEG ratio, UNDERVALUED rating. Firms that are trading within our fair value range receive a divides the current share price by last year's earnings (EPS) and then divides that FAIRLY VALUED rating, while firms that are trading above the upper bound of our quotient by our estimate of the firm's 5-year EPS growth rate. The estimated fair value range receive an OVERVALUED rating. normalized diluted EPS and estimated normalized EBITDA represent the five-year forward average of these measures used in our discounted cash flow model. The P/E Relative Value. We compare the firm's forward price-to earnings (PE) ratio and its on estimated normalized EPS divides the current share price by estimated normalized price/earnings-to-growth (PEG) ratio to that of its peers. If both measures fall below the diluted EPS. The EV/estimated normalized EBITDA considers the current enterprise peer median, the firm receives an ATTRACTIVE rating. If both are above the peer value of the company and divides it by estimated normalized EBITDA. EV is defined median, the firm receives an UNATTRACTIVE rating. Any other combination results as the firm's market capitalization plus total debt, minority interest, preferred stock in a NEUTRAL rating. less cash and cash equivalents.

ValueCreation™. This is a proprietary Valuentum measure. ValueCreation™ indicates the firm's historical track record in creating economic value for shareholders, Business Quality Matrix. We compare the firm's ValueCreation™ and ValueRisk™ taking the average difference between ROIC (without goodwill) and the firm's ratings. The box is an easy way for investors to quickly assess the business quality of estimated WACC during the past three years. The firm's performance is measured along a company. Firms that generate economic profits with little operating variability the scale of EXCELLENT, GOOD, POOR, and VERY POOR. Those firms with score near the top right of the matrix. EXCELLENT ratings have a demonstrated track record of creating economic value, while those that register a VERY POOR mark have been destroying economic value. Timeliness Matrix. We compare the company's recent stock performance relative to the market benchmark with our assessment of its valuation. Firms that are experiencing near-term stock price outperformance and are undervalued byour ValueRisk™. This is a proprietary Valuentum measure. ValueRisk™ indicates the estimate may represent timely buys. historical volatility of key valuation drivers, including revenue, gross margin, earnings before interest, and enterprise free cash flow. The standard deviation of each measure is Range of Potential Outcomes. The firm's margin of safety is shown in the graphic calculated and scaled against last year's measure to arrive at a percentage deviation for of a normal distribution. We consider a firm to be undervalued if its stock price falls each item. These percentage deviations are weighted equally to arrive at the along the green line and overvalued if the stock price falls along the red line. We corresponding fair value range for each stock, measured in percentage terms. The firm's consider the firm to be fairly valued if its stock price falls along the yellow line. performance is measured along the scale of LOW, MEDIUM, HIGH, and VERY HIGH. The ValueRisk™ rating for each firm also determines the fundamental beta of each Return on Invested Capital. At Valuentum, we place considerable emphasis on firm along the following scale: LOW (0.85), MEDIUM (1), HIGH (1.15), VERY HIGH return on invested capital (both with and without goodwill). The measure focuses on (1.3). the return (earnings) the company is generating on its operating assets and is superior to return on equity and return on assets, which can be skewed by a firm's leverage or ValueTrend™. This is a proprietary Valuentum measure. ValueTrend™ indicates the excess cash balance, respectively. trajectory of the firm's return on invested capital (ROIC). Firms that earned an ROIC last year that was greater than the 3-year average of the measure earn a POSITIVE Technical Evaluation. We evaluate a firm's near-term and medium-term moving rating. Firms that earned an ROIC last year that was less than the 3-year average of the averages and money flow index (MFI) to assign each firm a rating along the measure earn a NEGATIVE rating. following scale: VERY BULLISH, BULLISH, NEUTRAL, BEARISH, and VERY BEARISH. Cash Flow Generation. Firms' cash flow generation capacity are measured along the scale of STRONG, MEDIUM, and WEAK. A firm with a 3-year historical free cash Stock Price Relative Strength. We assess the perfomance of the company's stock flow margin (free cash flow divided by sales) greater than 5% receives a STRONG during the past quarter, 13 weeks, relative to an ETF that mirrors the aggregate rating, while firms earning less than 1% of sales as free cash flow receive a WEAK performance of constituents of the stock market. Firms are measured along the scale rating. of STRONG, NEUTRAL, and WEAK. Companies that have outperformed the market index by more than 2.5% during this 13-week period receive a STRONG Financial Leverage. Based on the firm's normalized debt-to-EBITDA metric, we rank rating, while firms that trailed the market index by more than 2.5% during this 13- firms on the following scale: LOW, MEDIUM, and HIGH. Companies with a week period receive a WEAK rating. normalized debt-to-EBITDA ratio below 1.5 receive a LOW score, while those with a measure above 3 receive a HIGH score. Money Flow Index (MFI). The MFI is a technical indicator that measures buying Upside/Downside Volume. Heavy volume on up days and lower volume on down days and selling pressure based on both price and volume. Traders typically use this suggests that institutions are heavily participating in a stock's upward advance. We use measure to identify potential reversals with overbought and oversold levels. We use a the trailing 14-week average of upside and downside volume to calculate an 14-week measure to rank firms along the following scale: EXTREMELY informative ratio. We rank each firm's U/D volume ratio along the following scale: OVERBOUGHT (>90), OVERBOUGHT (80-90), NEUTRAL (20-80), OVERSOLD BULLISH, IMPROVING, DETERIORATING, and BEARISH. (10-20), EXTREMELY OVERSOLD (0-10).

To send us feedback or if you have any questions, please contact us at SPCE Rating History Price Fair Value VBI [email protected]. We're always looking for ways to better serve your 10-Sep-21 $25.38 $30.00 3 investment needs and improve our research. 20-Nov-20 $23.31 $25.00 6

Copyright (c) 2017 by Valuentum, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means. The information contained in this report is not represented or warranted to be accurate, correct, complete, or timely. This report is for informational purposes only and should not be considered a solicitation to buy or sell any security. No warranty or guarantee may be created or extended by sales or promotional materials, whether by email or in any other format. The securities or strategies mentioned herein may not be suitable for all types of investors. The information contained in this report does not constitute any advice, especially on the tax consequences of making any particular investment decision. This material is not intended for any specific type of investor and does not take into account an investor's particular investment objectives, financial situation or needs. This report is not intended as a recommendation of the security highlighted or any particular investment strategy. Before acting on any information found in this report, readers should consider whether such an investment is suitable for their particular circumstances, perform their own due-diligence, and if necessary, seek professional advice. The sources of the data used in this report are believed by Valuentum to be reliable, but the data’s accuracy, completeness or interpretation cannot be guaranteed. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report and accepts no liability for how readers may choose to utilize the content. In no event shall Valuentum be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document. Investors should consider this report as only a single factor in making their investment decision. Valuentum is not a money manager, is not a registered investment advisor, and does not offer brokerage or investment banking services. Valuentum has not received any compensation from the company or companies highlighted in this report. Valuentum, its employees, independent contractors and affiliates may have long, short or derivative positions in the securities mentioned herein. Information and data in Valuentum’s valuation models and analysis may not capture all subjective, qualitative influences such as changes in management, business and political trends, or legal and regulatory developments. Redistribution is prohibited without written permission. Readers should be aware that information in this work may have changed between when this work was written or created and when it is read. There is risk of substantial loss associated with investing in financial instruments. Valuentum's company-specific forecasts used in its discounted cash flow model are rules-based. These rules reflect the experience and opinions of Valuentum's analyst team. Historical data used in The High Yield Dividend Newsletter portfolio, the Best Ideas Newsletter portfolio and Dividend our valuation model is provided by Xignite and from other publicly available sources including Growth Newsletter portfolio are not real money portfolios. Any performance, including that in the annual and quarterly regulatory filings. Stock price and volume data is provided by Xignite. No Nelson Exclusive publication, is hypothetical and does not represent actual trading. Past performance warranty is made regarding the accuracy of any data or any opinions. Valuentum's valuation model is not a guarantee of future results. is based on sound academic principles, and other forecasts in the model such as inflation and the equity risk premium are based on long-term averages. The Valuentum proprietary automated text- Valuentum is an investment research publishing company. generation system creates text that will vary by company and may often change for the same company upon subsequent updates. Valuentum has not owned and does not own any shares of stocks mentioned on its website or in this Valuentum uses its own proprietary stock investment style and industry classification systems. Peer report. President of Investment Research Brian Nelson does not own any shares of stocks mentioned companies are selected based on the opinions of the Valuentum analyst team. Research reports and on Valuentum's website or in this report. Majority share owner of Valuentum, Elizabeth Nelson, data are updated periodically, though Valuentum assumes no obligation to update its reports, currently has exposure to HON in her retirement account. opinions, or data following publication in any form or format. Performance assessment of Valuentum metrics, including the Valuentum Buying Index, is ongoing, and we intend to update If an independent contributor or employee mentions a stock he or she owns, we disclose it in the investors periodically, though Valuentum assumes no obligation to do so. Not all information is article/report that mentions the security. Please view individual articles on Valuentum's website for available on all companies. There may be a lag before reports and data are updated for stock splits additional disclosures. Contact us to learn more about Valuentum's editorial policies. and stock dividends. Past simulated performance, whether backtested or walk-forward or other, is not a guarantee of future results. For general information about Valuentum's products and services, please contact us at [email protected] or visit our website at www.valuentum.com.

Page 16