Virgin Galactic rocks the market

What’s happening?

The biggest newsmaker of the stock market in the past few days has been Virgin Galactic. The stock jumped by more than 20% in premarket trading on Monday. Earlier this month, it dropped more than 30% for the year.

Why is this happening?

Space tourism is an industry of the future that captures the attention of many. Yet, the recent few months have brought a lot of disappointment: Virgin Galactic initially wanted to make a test flight in December but had to delay the launch by 6 months. During this period, the future looked very uncertain. The news that Sir Richard Branson sold more than $150 million worth of the company’s stock in April didn’t help either.

Then, however, a ray of sunshine appeared. On May 22, Virgin Galactic did conduct a successful spaceflight test. It’s not hard to see why the market saw that as a major breakthrough: investors decided to jump in buying the stock at a low price.

What does it mean for traders?

The stock is currently trading around $24, while the average analysts’ forecasts are at $33. This means that Virgin Galactic may have a growth potential of more than 37%. Notice that this level represents about half of the high set in February around $60.

Of course, many things can happen in the future, and the firm has a lot to achieve. For a start, it needs to perform three more test flights before it becomes able to fly commercial customers. There’s no guarantee that no incidents happen. Next, it’s still hard to estimate how much revenue the business will bring, initial investments are certainly immense. One thing that doesn’t cause any doubts is that the stock of Virgin Galactic will offer great price swings for traders to take advantage of.

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Elizabeth Belugina

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