Options Trader Takes Massive Position In Virgin Galactic Stock: Where Is It Headed?

On Aug. 12, Sir Richard Branson’s Virgin Investments dumped $300 million worth of Virgin Galactic Holdings, Inc (NYSE: SPCE) stock. The billionaire said the proceeds from the sale would go toward helping his other businesses recover from the COVID-19 pandemic.

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The day prior to Branson selling 10,416,000 shares of his space tourism company, Morgan Stanley analyst Kristine Liwag downgraded the stock from Equal-weight to Underweight and gave a $25 price target. Although Unity23 is expected to fly to space in September, Liwag noted Virgin Galactic’s fleet will then be grounded until the summer of 2022 while the company enters a heavy maintenance period.

With no flights to look forward to for an extended period of time, traders and investors may have to rely on Virgin Galactic’s quarterly earnings for excitement. After a long period of no revenue, Virgin Galactic announced it was reopening sales on Aug. 5 during its second-quarter earnings call. The company has increased its price for a single seat aboard its spacecraft from $200,000 to $450,000.

See Also: Why This Virgin Galactic Analyst Has Turned Bearish On The Stock

On Wednesday after the market closed, an institution decided to take a gamble on Virgin Galactic by executing a block trade of common shares. The trader may believe Virgin Galactic has received massive interest in ticket sales or that the stock has bottomed near the analyst’s price target and purchased $17.29 million worth of shares.

Why It’s Important: When a block trade occurs it indicates a hedge fund or institution has taken a position in common shares. A block trade always involves large sizing and is typically handled by a blockhouse privately and outside of the open market. Because block trades don’t happen on the open market the large size of the trades doesn’t create volatility in the stock being traded.

These types of purchase orders are made by institutions purchasing a large number of a security and retail investors can find watching for block trades useful because it indicates “smart money” has entered into a position.

The SPCE Block Trade: Below is a look at the most notable alert, courtesy of Benzinga Pro:

  • At 5:50 p.m., a trader executed a block trade above the ask of 684,824 Virgin Galactic shares at $25.25. The trade represented a $17.29 million bullish bet.

SPCE Price Action: Virgin Galactic was trading up 0.7% to $25.42 at time of publication.

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