Please ensure Javascript is enabled for purposes of website accessibility

Why Virgin Galactic Stock Gave Back 10% This Morning

By Rich Smith - Jan 23, 2020 at 12:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

What went up just came back down.

What happened

There's no two ways about it: Virgin Galactic stock has had an incredible run.

Since Morgan Stanley announced its support for Virgin Galactic stock a little over a month ago, and described how a move from space tourism to point-to-point hypersonic jet travel could result in a $22 share price for Virgin, the stock has very nearly made that prediction come true. In just six short weeks, Virgin Galactic stock has nearly tripled from $7.26 a share to $19.72 as of yesterday's close.

But did Virgin rise too far, too fast?

It's a reasonable question -- and one sparked by today's price action, where we saw Virgin Galactic (SPCE -2.08%) stock tumble more than 10% in early trading. (The stock's still down 6.1% as of 11:20 a.m. EST, by the way).

Virgin Galactic's SpaceShipTwo rocketing towards space

Image source: Virgin Galactic.

So what

When Morgan Stanley made its prediction last month, it was predicting a target price of $22 a share a year from now. That would imply steadily improving news flow out of the company, as Virgin Galactic reported consecutive quarters of perhaps lower losses than expected, of customer acquisitions, steady progress toward commercial operations -- maybe even an actual flight carrying paying passengers to space!

None of that has happened yet, of course. And yet, by yesterday, Virgin Galactic had already moved to within striking distance of Morgan Stanley's target price.

Now what

With a whole series of events -- none certain -- already baked into Virgin Galactic's stock price as if they were certain to happen, perhaps Virgin Galactic's stock price had in fact gotten a bit ahead of itself, claiming nearly as much price gain in a month and a half as it was expected to realize in a year.

It's still up mightily from December's nadir, however. And if the stock's recent gains were not sparked by any good news over the past few weeks, then investors today can perhaps take comfort in this fact: Today's losses aren't due to any bad news, either.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Virgin Galactic Holdings, Inc. Stock Quote
Virgin Galactic Holdings, Inc.
$6.55 (-2.08%) $0.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.