Why Boeing and Astra Space Dropped Monday, but Virgin Galactic Soared

What happened

The space travel sector has been in the news lately, and excitement continues on that front as Jeff Bezos plans to take a ride to the edge of space tomorrow on his company Blue Origin’s maiden passenger voyage. Virgin Galactic Holdings (NYSE:SPCE) led the way carrying its founder about a week ago. Its stock is one of the few in the green Monday, jumping about 8% today as of 3:10 p.m. EDT. But shares of fellow space company start-up Astra Space (NASDAQ:ASTR) were down about 5%, while the stock of Boeing (NYSE:BA) — which gets meaningful revenue from its defense, space, and security segment — continued to struggle, dropping more than 5%. 

So what

Boeing’s defense, space, and security segment represented 47% of total revenue in the first quarter of 2021. But the company’s space portion is more of a potential future growth driver than a current contributor. Boeing does have satellite, space launch system, and global positioning system business. The company calls its Starliner “a next-generation space capsule that will take people to and from low-Earth orbit.”

Boeing's Starliner space capsule on a trailer in front of Boeing space image.

Boeing’s Starliner is a next-generation space capsule that will take people to and from low-Earth orbit. Image source: Boeing.

But excitement about travel to the edge of space is being dominated right now by Virgin Galactic and tomorrow’s Blue Origin flight, which Jeff Bezos will be aboard. Elon Musk’s SpaceX has also been on investors’ radar. 

The jump in Virgin Galactic shares today may, in fact, be because of Musk. Virgin Galactic founder Sir Richard Branson said the fellow billionaire has reserved a seat on a future Virgin Galactic flight. Today’s move comes after the stock ran up ahead of the successful space travel trip that Branson was aboard, but then dropped when the company announced a common share offering to raise new capital. 

Now what

Boeing is still clearly trading on what’s affecting the company here on Earth. The 737 MAX business is finally on the upswing, but new issues with the 787 Dreamliner forced the company to revise estimated 2021 deliveries of that aircraft from its inventory to less than half of what it previously thought. And now the quickly spreading COVID-19 delta variant in conjunction with lower-than-hoped-for vaccination coverage has the economic reopening in question.

On top of those headwinds, other companies are entering the space business, potentially adding to new competition for that segment. Astra Space says it plans to start delivering customer payloads into low Earth orbit this summer. New competition in a future growth area for Boeing isn’t helping while problems with its existing aircraft business continues to add to its struggles. The stock should recover some when a return of business travel and tourism seems sustainable, but for today there’s really not much good news for Boeing.

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