What happened
Shares of Virgin Galactic (SPCE -0.98%) -- the original space SPAC -- began to bounce back Thursday morning from a massive tech sell-off that trimmed away 27% of its market capitalization over the course of just one week.
As of 12:41 p.m. ET, Virgin Galactic was up 7.8%.
Image source: Virgin Galactic.
So what
What's been weighing on Virgin Galactic lately? Well, a huge price target cut Wednesday morning probably didn't help.
In a note out Wednesday, Bank of America analyst Ronald Epstein announced he was cutting his target on Virgin Galactic shares from $20 down to just $10 -- or basically, where the stock traded just prior to its 2019 announcement that it was going public via a reverse-merger with a special purpose acquisition company. As TheFly.com reported, Epstein cited "changing market dynamics" -- and rising interest rates -- for his decision to cut his outlook on space stocks generally. Epstein maintained his previous underperform rating on Virgin Galactic.
For Virgin Galactic in particular, the Bank of America analyst said he sees share dilution, expiring "lock-up" periods, and a lack of near-term catalysts as reasons for additional concern. He also pushed out his forecast for the extremely speculative prospect of Virgin Galactic launching service with a point-to-point high-speed airplane business -- from 2040 to 2043.
Now what
Sounds like bad news all around, right? Well, if it's any consolation, Virgin Galactic did at least dodge one bullet.
Late Wednesday, space watchers spotted a plume of black smoke rising over California's Mojave Air and Space Port. Speculation immediately began as to whether that might have been the result of an engine test failure aboard one of Virgin Galactic's spaceplanes -- but Virgin Galactic quickly denied responsibility.
Whatever this is at the Mojave Air and Space Port, it's not Virgin Galactic.
— Kristin Fisher (@KristinFisher) January 19, 2022
"This is not related to Virgin Galactic," a VG spokesperson just told me. https://t.co/R1tBOcrx1o
Turns out, the smoke actually came from a blown RS1 stage 2 rocket being tested by ABL Space Systems.
"This afternoon we lost Stage 2 of RS1 in a test anomaly. Everyone is safe and the team did an admirable job navigating the anomaly working to safe the test stand." @ablspacesystems https://t.co/VAXDozxvoW
— Kristin Fisher (@KristinFisher) January 19, 2022
So at least one thing went right -- or at least, didn't go wrong -- for Virgin Galactic. After the stock's long, painful slide, that simple fact seems like cause for relief.
