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Why Virgin Galactic Stock Just Popped 15%

By Rich Smith – Updated Jul 16, 2020 at 5:58AM

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Virgin Galactic confirms it's interested in more than just up-and-down elevator trips to space.

What happened

Instead of following the market lower, shares of space tourism company Virgin Galactic (SPCE -0.25%) shot to the moon this morning, jumping 3% out of the gate and not deigning to look back.

As of 11 a.m. EDT, Virgin Galactic stock was sighted roaring past a 15% gain.

SpaceShipTwo rocketing towards space.

Image source: Virgin Galactic.

So what

That seems like a pretty big move in response to what's essentially a memo from HR. Last night, after close of trading, Virgin Galactic announced that its current CEO George Whitesides will be stepping aside from his post to become Virgin's "chief space officer" instead.  

Taking his place will be ex-Disney exec Michael Colglazier, who previously ran Disneyland and Disney Parks International. The transition will take place On Monday, July 20, according to the company.

Now what

Which half of this news are investors reacting to today? Perhaps both. On one hand, tapping a Disney exec to run a company that will be offering essentially a space camp at Spaceport America, where customers first learn to become astronauts and then take their rides to space and back, is a brilliant move for Virgin Galactic. Who better than a Disney veteran, after all, to figure out how to make the experience maximally entertaining?

At the same time, Virgin is keeping close hold of Whitesides, assigning him the task of "developing the Company's future business opportunities, including point-to-point hypersonic travel and orbital space travel." In this single line, Virgin Galactic confirmed its investors' fondest hopes: that the company won't stop developing its business with the idea of providing one-shot rides to space and back, but will also continue to develop plans for providing point-to-point, super fast commercial air travel, and then move on to developing new spaceships capable of reaching Earth orbit and carrying passengers on longer, and more lucrative, excursions than the company's SpaceShipTwo spaceplanes can currently manage.

In short, even before it's made its first commercial flight, Virgin Galactic is promising even bigger things to come -- and investors like hearing that, a lot.

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

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