Why Virgin Galactic Stock Is Still Rocketing Higher Friday

What happened

For the second day in a row, Virgin Galactic (NYSE: SPCE) stock is rocking and rolling higher.

After locking down a 13.6% gain Thursday on the back of news that it has hired a new CEO, Virgin Galactic shares are up another 9.4% as of 10:30 a.m. EDT Friday.

Cartoon shows a rocket shaped roller coaster labeled SPACE DREAM

Image source: Getty Images.

So what

There's no new news to explain the stock's rise, however. Logically, therefore, what we're seeing today is just a continuation of investors' enthusiasm over yesterday's appointment.

On Thursday, Virgin Galactic tapped former Disney exec Michael Colglazier to replace current CEO George Whitesides. The change in management will take place on Monday. Investors may be taking this as a positive development for two reasons.

On the surface, Virgin Galactic looks a bit like a low-margin airline stock (its immediate objective, after all, is to push people aboard space "planes" and fly them up, then fly them back down again). But at second glance it's potentially a higher-margin consumer goods stock. Once its spaceplanes begin flying, Virgin Galactic will be offering customers a unique entertainment experience including probably a week-long stay at its Spaceport America while they train to become astronauts, followed by the flight to space itself.

That's an entertainment business, in my view, and who better than the former head of Disneyland to run it?

Now what

At the same time, Virgin Galactic appears to be setting its sights higher than just operating a no-tracks-required rollercoaster ride to space and back.

Instead of leaving the company, you see, Whitesides will take over the role of chief space officer at Virgin. In this capacity, he will continue to develop "future business opportunities" for Virgin, "including point-to-point hypersonic travel and orbital space travel" -- part of the reason that Morgan Stanley initially recommended Virgin Galactic stock in late 2019, lighting a fuse under Virgin Galactic shares that has yet to be extinguished.

Incidentally, back then Morgan Stanley seemed to think its $22 price target on Virgin shares was a bit of a stretch. Today, those shares trade for $23 a share.

10 stocks we like better than Virgin Galactic Holdings Inc
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Virgin Galactic Holdings Inc wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of June 2, 2020


Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Virgin Galactic Holdings Inc. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.