Virgin Galactic Stock Jumps Again, Bucking Skeptics
Virgin Galactic Stock Jumps Again, Bucking Skeptics
(Bloomberg) -- Virgin Galactic Holdings Inc. climbed as much as 8.2% to a record high, bucking calls from Morgan Stanley analyst Adam Jonas, who said the stock is overdue for a “modest correction.”
Jonas, who called for a breather in Virgin Galactic’s rally just two days ago, expects the stock surge will prompt questions on the company’s earnings call next week on whether it will raise capital.
Even though the company has the necessary liquidity to meet the needs of launching its commercial service, investors may encourage management to pad its pockets given “unpredictable market conditions and the wide range of commercial applications inherent in Phase 3 (hypersonic P2P),” Jonas wrote in a note Thursday.
“Enthusiasm around the emerging space economy has triggered a pace of volume and volatility around SPCE that has taken the MS [Morgan Stanley] Space Team by surprise,” he said.
The stock now fully reflects a “highly successful space tourism business at scale, a moderately successful space tourism business with early credit for the hypersonic opportunity, or a combination of both,” yet Jonas is unable to pinpoint any big thesis change, nor has there been any acceleration to the events since his December initiation.
Virgin Galactic is among a group of stocks that have rallied amid outsized options trading this week, spurred on by retail investors talking up their positions on message boards like r/wallstreetbets on Reddit. Total options volume in Virgin Galactic Wednesday was more than 4 times its 20-day average, Plug Power Inc.’s was more than 10 times its average, and Fuel Cell Energy Inc.’s reached 3 times its average.
Plug Power trading was mixed on Thursday, while Fuel Cell fell as much 9.7%, paring the 34% gain over the previous two sessions. Virgin Galactic and Plug Power were also up about 30% this week through Wednesday.
Jonas rates Virgin Galactic shares overweight, with a price target of $22 per share.
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