Daily Stock Market Reports

Why Virgin Galactic Is Soaring Today

What happened

Virgin Galactic Holdings ( SPCE 14.00% ) is out with earnings and though very little money is coming in, the company’s financial position is on the upswing. That’s helping rocket the shares more than 10% higher on Wednesday morning.

So what

Space tourism start-up Virgin Galactic hasn’t had much to show for its efforts so far, launching founder Richard Branson into space last summer but then suffering a series of setbacks that has delayed commercial launch. The company’s fourth-quarter results were a reminder of its current position: Virgin Galactic lost $0.31 per share on revenue of just $141,000.

Richard Branson and other crew members pose in front of a Virgin Galactic spacecraft.

Image source: Virgin Galactic.

Analysts had been expecting a loss of $0.34 per share on $330,000 in revenue.

The important thing for investors isn’t the numbers, but rather the progress made getting operations up and running. And on that measure the release was great news, with CEO Michael Colglazier saying, “We remain on track and on schedule to complete our enhanced program and launch commercial service later this year.”

Virgin Galactic finished the year with $931 million in cash, up from $679 million at the end of 2020.

Now what

Even with Wednesday’s jump, Virgin Galactic shares are still off more than 80% since Branson’s historic ride. Continued caution is advised. Even if Virgin Galactic gets airborne before year-end as it hopes, there are still questions about the total size of the space tourism market and the long-term economic viability of the offering.

If it all comes together, Virgin Galactic could still end up being a big winner for investors. But given the risks and the uncertainty involved, this stock at best should remain a small part of a well-diversified portfolio. The rocket ship is heading in the right direction, but there is still a long way to go from here.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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