Virgin Galactic Holdings (SPCE 4.93%) provided an update late Wednesday, and this time it did not include another delay. Shares of the space tourism company jumped more than 10% at the open on Thursday on investor relief that Virgin Galactic is still on track to launch commercial service early next year.
Virgin Galactic has flown through a lot of turbulence in the last year. The company's shares are down more than 80% since July 2021 due to a series of setbacks that have delayed regularly scheduled service. While Virgin Galactic has been in a holding pattern, rivals including Jeff Bezos' Blue Origin have launched successful flights, raising questions about how much demand will be left assuming it does get airborne.
On Wednesday after markets closed, Virgin Galactic announced a deal with Boeing (BA 0.97%) subsidiary Aurora Flight Sciences to build two new mother ships. These massive planes get the spacecraft off the ground before it separates and rockets into the upper atmosphere.
The mother ships, the first of which is expected to enter service in 2025, are designed to fly up to 200 launches per year.
The mother ship order is a big deal, but investors are also likely responding to a line near the end of the press release stating that Virgin Galactic expects to begin commercial service in the first quarter of 2023. That timeline is not new, but given it was just a few months ago that Virgin Galactic was pushing back its schedule due to supply chain and manufacturing delays, it at least implies that things have not gotten worse since.
Space stocks by their nature are speculative and risky, and Virgin Galactic still has a lot to prove. Launching people into space is hard, and launching them on a regular schedule is even harder. Doing so profitably could still prove to be impossible.
If Virgin Galactic can get the stars to align, there is still hope this onetime highflier can be a success. The company appears to be moving in the right direction, and investors are bidding the stock higher as a result.