Virgin Galactic: Pop Goes the Stock Price

The curvature of the Earth from SpaceShipTwo. (Credit: Virgin Galactic)

All around the Wall Street
Investors rolled the big dice
Investors thought ’twas a big feat
Pop! Goes the stock price….

by Douglas Messier
Managing Editor

Earlier this week, Rich Smith over at the Motley Fool noted that Virgin Galactic’s stock had popped big time:

Volatile space stock Virgin Galactic Holdings (NYSE:SPCE) is rewarding investors once again on Wednesday, rising 8.7% through 12:15 p.m. EST on no obvious news — or at least, no obviously new news.

Smith was right. There was nothing new. But, he did note this:

Two days ago, a tweet from the space tourism pioneer emphasized to investors that its recently postponed flight-test schedule could be back on track in short order. The New Mexico health order that froze Virgin’s operations two Mondays ago was set to expire just two weeks later. That means that, technically at least, Virgin could be back in business as early as Nov. 30.

So, here are the actual tweets:

The first tweet is simply one of Virgin Galactic’s classic “in lieu of actual flights, here’s something to keep you all engaged in the meantime” publicity pieces. They’ve been doing this through 16 years of delays, the majority of which are unrelated to the current pandemic.

The second tweet is merely a statement of fact. Yes, they will resume flight prep as soon as the COVID-19 lockdown is lifted. That could be on Nov. 30. Or maybe later if health authorities extend the order.

Why either of these tweets should cause the stock to suddenly jump is surprising. But, it apparently did. Or maybe there was something else that made the stock pop that we don’t know about.

I think it probably demonstrates that the stock market is really kind of a casino. People are really betting big on Virgin Galactic being able to do all the things it’s been promising to do since 2004.

That promise is not about launching SpaceShipTwo on suborbital flights periodically with months-long gaps in between. The shortest gap between such flights was two months. The current gap is 21 months and counting.

What Virgin Galactic has been promising for 16 years is regular space tourism flights multiple times per week. The company isn’t anywhere close to that goal. They’ve still got at least three more flight tests over the coming four or five months before they can even contemplate such a flight rate.

Anyone who invests in Virgin Galactic need to be patient. Very patient. Serious revenues are many months in the future. Even then, the whole thing could pop in an instant. And not in a good way.