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Why Virgin Galactic Stock Just Popped 12.5%

By Rich Smith – Feb 28, 2020 at 12:18PM

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What happened

Stock markets are in free fall again as we close out the week this Friday. The Dow is down 2.9% in noonday trading, the Nasdaq off 1.6%, and the S&P 500 -- probably the best gauge of the overall health of the market -- is somewhere in the middle, down 2.3%.

But the news isn't all bad. Shares of space tourism pioneer Virgin Galactic (SPCE 3.07%) stock are finally breaking their losing streak and bouncing back a solid 12.5%.

Why?

Virgin Galactic SpaceShipTwo rockets heavenward.

Image source: Virgin Galactic.

So what

With just $4.5 million in trailing revenue and not a profit to be seen anywhere (but, as a consequence of that, no P/E ratio to criticize, either), Virgin Galactic stock remains today a play on hope for what the company might do in the future. It doesn't take a lot to move Virgin Galactic stock either up or down.

Indeed, sometimes it takes no more than a tweet.

And a tweet it was indeed that seems to be moving Virgin this morning. Specifically, the company's tweeted announcement two hours ago that would-be space tourists "can now take One Small Step" toward reserving a flight on a Virgin Galactic spaceplane by clicking on a link.

Now what

Do that, and you'll be taken to a Virgin Galactic website inviting you to pay a small $1,000 deposit (fully refundable) to register and secure your place in line to rent a seat on an upcoming space launch -- "when [ever such seats] become available."

Do that, and you'll eventually be contacted by Virgin's marketing department to extend "a firm Giant Leap offer" -- at a price not yet named.

But don't worry about those details. "Registrations are limited," said Virgin Galactic, introducing a scarcity argument for buying its services. If the gambit works, Virgin Galactic should soon be rolling in piles of prepaid ticket cash.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of Virgin Galactic Holdings Inc. The Motley Fool has a disclosure policy.

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Virgin Galactic Holdings, Inc. Stock Quote
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