Please ensure Javascript is enabled for purposes of website accessibility

Why Virgin Galactic Stock Popped Again on Thursday

By Rich Smith - Jun 3, 2021 at 11:53AM

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

"Ambassador for spaceflight" Kellie Gerardi is taking a short trip to space.

What happened

Shares of Virgin Galactic Holdings (SPCE -4.82%) continued to cruise higher Thursday morning after bouncing off of Tuesday's sell-off. Investors are responding positively to the company's announcement this morning that it has contracted to fly Kellie Gerardi, a researcher at the International Institute for Astronautical Sciences, on an upcoming research flight. 

As of 11 a.m. EDT today, Virgin Galactic stock was up 7.5% on the news.

Simple green arrow going up

Image source: Getty Images.

So what

Gerardi will perform research into new healthcare technologies in a weightless environment, building on past research. She'll have to work fast, though, to make the most of what will be only several minutes of weightlessness. 

Now what

In addition to no date being set for Gerardi's flight, no price was stated for the contract. As such, it's hard to conclude that this single press release justifies the approximately $500 million increase in Virgin Galactic's market capitalization that has resulted from it.

Ultimately, the economics of Virgin Galactic's fleet of spaceplanes are most likely to resemble the economics of any airline fleet. That is to say, the company needs mass volumes of repeat business from a large number of customers flying to space -- not just occasional one-off customers, for example, rushing to perform research that's better suited to the continuous weightless environment on the International Space Station.

Today's announcement is doubtlessly good public relations for the stock. But what Virgin Galactic really needs is to wrap up its flight testing and finally get its commercial tourism business off the ground.

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.

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.
SPCE
$6.32 (-4.82%) $0.32

*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 analyst team.

Stock Advisor Returns
397%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

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.