Shares of Virgin Galactic Holdings surged approximately 18% to $3.25 in Friday afternoon trading, driven by renewed investor interest in space-related equities following reports of a potential initial public offering (IPO) by SpaceX. Trading volume was nearly triple the average, indicating strong participation from short-term traders.
The rally extended Thursday's 11% gain, which had snapped a four-day losing streak. The broader market saw modest gains, with the Nasdaq Composite rising 0.09% and the Dow up 0.55% on Thursday.
The catalyst for the sector-wide move was not a company-specific announcement but rather speculation surrounding SpaceX's IPO plans. According to Reuters, SpaceX is considering a staggered system for early share resales after its IPO, rather than a standard six-month lock-up period. The company is reportedly targeting a valuation of $1.75 trillion. Mayer Brown attorney Ali Perry noted that such a structure could avoid a "big lock-up cliff" but would not eliminate volatility.
Other space stocks also benefited, with AST SpaceMobile and Virgin Galactic each rising over 9%, while Rocket Lab and Firefly Aerospace posted gains as well.
For Virgin Galactic, the market is looking past near-term revenue challenges and focusing on upcoming spacecraft milestones. The company announced on May 14 that its first new SpaceShip had advanced through ground testing, with flight testing targeted for the third quarter and the first spaceflight expected in the fourth quarter. CEO Michael Colglazier stated that the company had "delivered the first of our new SpaceShips" to its test-and-launch hangar and remained "on track" for the schedule, adding that they are working through the "final quarters of our pre-revenue phase."
Despite the positive sentiment, Virgin Galactic's financial picture remains precarious. The company reported first-quarter revenue of just $0.2 million, a net loss of $65 million, and negative free cash flow of $93 million. In a May 18 filing, Virgin Galactic redeemed $10 million of its 9.80% first-lien notes by issuing 3.77 million shares, leaving approximately $202.5 million of those notes outstanding. The filing described this as part of a broader capital-management and cash-preservation strategy.
However, the company's quarterly filing warned that it remains in the pre-commercial service phase, has no spaceflight revenue, expects significant expenses for next-generation spaceships, and faces conditions that raise substantial doubt about its ability to continue as a going concern. This accounting warning highlights the risk that a sector rally alone may not fix the balance sheet.
The stock's trajectory is now tied to two key timelines: the SpaceX IPO cycle and Virgin Galactic's own test-flight schedule. Any delays in testing, a shift in risk appetite, or further equity issuance could quickly alter the trade. U.S. markets were open Friday, but the New York Stock Exchange is closed Monday, May 25, for Memorial Day. Trading resumes Tuesday with Virgin Galactic carrying heightened attention as a high-beta space bet.
