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Why Virgin Galactic Stock Popped Today

By Rich Smith - Jan 7, 2021 at 1:56PM

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A problem has been identified, and a fix is on the way.

What happened

Three weeks ago, Virgin Galactic Holdings ( SPCE -4.71% ) encountered a bit of a hiccup in its test flight schedule when a computer aboard its VSS Unity spaceplane lost connection to its rocket engine, triggering an automatic shutdown that prevented the engine from firing and aborted the mission.

Three weeks later, Virgin Galactic has figured out what went wrong, and is working on a fix -- and Virgin Galactic stock is up 3% as of 1:30 p.m. EST because of it.

VSS Unity and VMS Eve in their hangar in New Mexico at daybreak

Image source: Virgin Galactic.

So what

Virgin Galactic updated investors and space fans on the news in a pair of tweets this morning, confirming that it has "completed the post-flight inspections and root cause analysis of what caused the onboard computer to halt ignition of the rocket motor," has defined the corrective actions needed to prevent a repeat of the glitch, and has work "already under way" to make the necessary fix.

Now what

There's no word yet on precisely how long this will take, but Virgin did promise to let investors know when it has an estimated "pre-flight timeline for the next test flight."

Long story short, the company is back on track. We may not know when the next test flight will take place, or when all scheduled test flights will be concluded, or when Virgin Galactic will (finally) be able to begin flying commercially and generating revenue so that we can affix an accurate valuation to the stock -- but at least we know that the countdown has begun.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Virgin Galactic Holdings, Inc. Stock Quote
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