VG Acquisition (NASDAQ:VGAC), a blank-check company from Sir Richard Branson, is once again in the spotlight. But without any real news, what is moving VGAC stock? And what else do investors need to know now?
Importantly, VGAC stock started generated a huge buzz last week thanks to Ark Invest and its executive, Cathie Wood. Wood shared that her firm was rolling out a Space Exploration ETF that will trade as ARKX. As investors scrambled to guess the constituents, VGAC started to raise eyebrows. But what about the special purpose acquisition company stands out?
Well to start, it is under the leadership of business icon Branson. Investors may be familiar with his Virgin Group family, and his publicly traded Virgin Galactic (NYSE:SPCE). That company came public through a SPAC in 2019, and focuses on commercial space tourism. SPCE stock itself makes sense as an ARKX holding, leading to a rally last week. However, VGAC stock also captured attention.
That is because many investors are hopeful Branson will use VGAC to bring one of his other space-related businesses like Virgin Orbit public. Not only would this provide more direct access to a hot trend, but it would give VGAC a clearer spot in ARKX.
But with nothing out-of-this-galaxy speculation driving earlier moves in VGAC stock, what has the SPAC gaining further ground today?
It looks like there are two big reasons for the move…
Why VGAC Stock Is on the Move Today
For those unfamiliar, Virgin Orbit is part of the larger Virgin Group family of companies. It has been around since 2017, and plans to provide launch services for small satellites. Over the weekend, it made a big move in the right direction to fulfill those plans. Eight months after a botched test flight, Virgin Orbit successfully launched 10 tiny satellites into orbit. The company used a unique model — firing a rocket from a converted jumbo jet — to achieve that feat.
Essentially, recent years have seen huge interest in these small satellites. More companies than ever are making them, and they want accessible and relatively low-cost ways to get them into space. Virgin Orbit thinks it can dominate in this arena. As Andy Pasztor wrote for the Wall Street Journal, Virgin Orbit already stands out from its competitors. That is because it has successfully launched these tiny satellites out of the atmosphere. The company is now ramping up to launch its commercial operations.
This exciting news makes Virgin Orbit SPAC merger rumors even more exciting, as the company now stands out as a successful potential target. However, there is also one more reason for the move in VGAC stock…
Earlier this morning, Branson told hosts on CNBC that he was considering taking Virgin Orbit public through a SPAC. He did not identify VGAC as the specific vehicle, leaving that open for speculation. However, even this mention of a potential Virgin Orbit SPAC merger has investors excited.
So what should you do here? Many, like InvestorPlace analyst Luke Lango, agree that space is the next frontier for red-hot stocks. However, it would be wise to wait for more confirmation of the Virgin Orit SPAC merger. If Branson chooses a different blank-check company for Virgin Orbit, or abandons those plans, VGAC stock could suffer. If it all works out, VGAC stock looks like a star pick.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.
