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The shares of Virgin Galactic resumed its rapid ascent on Thursday. After co-founder Richard Branson launches into space, though, things may be different.
Virgin Galactic (c) Virgin Galactic (c) Virgin Galactic (c) Virgin Galactic
Virgin Galactic is a company that specializes in space travel
The stock market’s wild journey continued on Thursday. The company’s stock is rising as it prepares to send co-founder Sir Richard Branson into space this weekend. The action looks to be another example of the phrase “buy the rumor, sell the news” in the investment world. If this is the case, investors may want to consider reducing their investments before the weekend. The stock of Virgin Galactic (SPCE) increased 17.3 percent on Thursday. The
S&P 500 Index
and
The Dow Jones Industrial Average (DJIA) is a stock market index
Both are down roughly 1% compared to each other. Japan has declared a fresh Covid emergency relating to Delta variant infections, sending stocks down.
There isn’t much to blame Thursday’s advances on for Virgin Galactic. Since early May, when the business got its test flight program back on track, the stock has risen from around $15 to more than $50. The completion of test flights will lead to the launch of commercial operations.
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Test flights have recently been sufficient to move the stock. On the first trading day after the business completed a manned test flight on May 22, shares rose 28 percent. The stock of Virgin Galactic increased by further 39% on June 25 after the business gained approval from the Federal Aviation Administration to carry paying passengers. That was a more powerful reaction with a more powerful catalyst. Investors in Virgin Galactic appear to be becoming addicted to stock catalysts. And it appears that they are bidding up shares on Thursday, hoping for a repeat of the previous two quick advances. A test flight with Virgin Galactic co-founder Sir Richard Branson scheduled for July 11 will be the next catalyst for the stock. The flight was supposed to take off on July 1st. In a July 1 news release, Branson stated, “I firmly think that space belongs to all of us.” “I’m honored to be a member of a wonderful team of mission specialists that will assist validate the journey our future astronauts will take and guarantee we offer the exceptional customer experience Virgin customers expect.” When catalysts are recognized ahead of time, the difficulty for investors is that equities sell off after the event occurs. The stock of Virgin Galactic fell roughly 5% the next day after the 28 percent increase. Even so, before the FAA authorization was granted, shares climbed to almost $40. However, even after the test flight jump, shares were still trading at a discount to what Wall Street thought they were worth. The average analyst price target on May 24, the first trading day after the May 22 test flight, was around $30. That day, the stock closed at around $27. The stock finished at $52.69 on Thursday, with an average analyst price objective of $35. A post-Branson flight sell-off is more likely as a result of the divergence. Because the stock market is always looking ahead, the value of a Branson flight will be measured in shares before the flight takes place. Investors should consider this as they consider holding all of their stocks into next week. Investors have been very pleased with their Galactic investment so far. The stock is risen roughly 122 percent. Al Root can be reached at allen.root@dowjones.com./n
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