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Virgin Galactic (SPCE) shares closed with a 5.30% rise on Wednesday to signal a comeback.
The shares of American spaceflight and travel company Virgin Galactic Holdings Inc (NYSE: SPCE) is on a rebound following the plunge it took after the company’s spaceflight test failed. Initially, the shares of Virgin Galactic took a plunge after the trials failed, falling as much as 20% in five days per an earlier report from Coinspeaker at the time.
What Happened to the Virgin Spaceflight Test and Investors Response
As detailed by MarketBeat, the Virgin spaceflight test was hampered as the SpaceShipTwo Unity engine “did not fully ignite as it attempted to launch over New Mexico on Saturday”, according to Chief Executive Officer (CEO) Michael Colglazier. The CEO explained further:
“The flight did not reach space as we had been planning. After being released from its mothership, the spaceship’s onboard computer that monitors the rocket motor lost connection. As designed, this triggered a fail-safe scenario that intentionally halted ignition of the rocket motor.”
Following this occurrence, Tthe CEO added that the pilot flew back to Spaceport America, the company’s base of operation.
The run-up to the test flight saw a lot of investors betting on the Virgin Galactic stocks on a bullish push in anticipation of success and the soaring of the stocks. While this did not work out as planned, Virgin Galactic had to salvage the situation with the promise to fix and improve on its failed system in a bid to retry the spaceflight test.
With the plunge in the stock took following its failure to meet investors’ expectations from the last test flight, a low of $23.78 was recorded against a high of $35.82 in 8 trading days following the test flight. The shares closed with a 5.30% rise on Wednesday to signal a comeback. But in the absence of promising news from the company, what might be driving this new surge in the shares of Virgin Galactic?
What Is Fueling SPCE Stock Growth?
New Mexico, the state of operation of the company remains one of the hard-hit states with the unrelenting spread of the COVID-19 disease. The state has enacted a red-yellow-green quarantine order in effect to limit the spread of coronavirus. The red order shows strict lockdowns and movement for non-essential workers, the yellow spells partial lockdown while green signals no strict lockdown measures.
As noted by the Motley Fool, the new rally in the stock price SPCE may be fueled by the yellow tag on the Spaceport Country earlier this week which shows the county may soon be out of lockdowns and the company’s spaceflight tests can resume unhindered, and as soon as possible.
In addition, the longer-term outlook for the company’s core service, space tourism may benefit from the company’s elastic business model. The company has received almost 600,000 orders ranging from $200,000 to $250,000 from elite citizens anticipating to travel to space with the company as soon as it is set to resume its commercial operations. These bookings were made years ago before the company began this test flight and as a result, this current failed test flight may not influence bookings of which the company has about 400,000 more orders in the pipeline according to MarketBeat.