Please ensure Javascript is enabled for purposes of website accessibility

Why Virgin Galactic Stock Is Taking Off Today

By Rich Smith - Updated Jan 29, 2021 at 1:33PM

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

Is it the Reddit traders, or is it name confusion?

What happened

Shares of Virgin Galactic (SPCE 0.15%), which dropped 7% off a recent high yesterday, have turned things around and are rocketing once again, up 12.1% at 12:10 p.m. EST on Friday. But are Reddit traders driving the action today, or is there real news behind the rally? Maybe a bit of both.

Virgin Orbit Cosmic Girl Deploying LauncherOne.

Image source: Virgin Orbit.

So what

There does in fact appear to be a WallStreetBeats aspect to this story, inasmuch as traders following the popular Reddit page have indeed been targeting heavily shorted stocks of late, buying them in hope of squeezing the shares higher. Earlier this week, Virgin Galactic shares (of which 16.5% have been sold short) were identified as benefiting from the phenomenon. And on Twitter today, a smattering of traders are continuing to talk up the stock.

At the same time, momentum traders may be getting an assist in their efforts from some news just out from Virgin Galactic's sister company, Virgin Orbit, which completed its first successful satellite deployment from a midair rocket launch earlier this month. As reported today (also on Twitter), Virgin has signed a contract to launch a satellite for the Dutch Ministry of Defense in March.

Now what

But here's what investors need to remember: Yes, today's announcement is further evidence that Virgin Orbit is growing its business, and probably its VOX defense business in particular (VOX being the subsidiary designated for experimental military missions). But Virgin Orbit is not Virgin Galactic. These are two separate companies, albeit they share a parent company in Limited, as S&P Global Market Intelligence confirms.

And while it's also true that Virgin Orbit may be headed for an IPO, as has been rumored, and it's also likely that continued success in rocket launches would make the IPO more attractive, even such an event would benefit privately held rather than publicly traded Virgin Galactic.

The one must not be confused with the other.

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.
$6.56 (0.15%) $0.01

*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 05/24/2022.

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.