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What happened: Virgin Galactic (SPCE) stock rose nearly 20% on Thursday ahead of SpaceX's (SPCX) expected IPO on Friday.

What's behind the move: Shares of the space travel company jumped in what appears to be a halo trade ahead of the highly anticipated SpaceX IPO, expected on Friday.

Shares of outer space-related companies also jumped, including Rocket Lab (RKLB), which was up 4%. Both Rocket Lab and Virgin Galactic are rebounding after a volatile few weeks for the sector.

Short sellers betting Virgin Galactic stock would fall were forced to cover positions in recent weeks as positive catalysts pushed shares higher, including progress toward restarting commercial flights later this year and a successful test flight. There has also been some speculation that the company’s ticker, SPCE, is similar to the one under which SpaceX shares will trade, SPCX, causing some confusion among retail investors.

The stock surged 200% between May 20 and early June. On Wednesday, it fell after the company completed a debt-for-equity swap, issuing new shares to repay debt, which diluted existing shareholders.

What else you need to know: Elon Musk-led SpaceX has put renewed focus on the space industry sector, with Friday's IPO expected to be the largest public debut.

Virgin Galactic, founded by British billionaire Sir Richard Branson, went public via a special purpose acquisition company in 2019.

The stock has gained roughly 68% year-to-date, but still trades at a fraction of its all-time closing high of $920 in 2021.

The company generates revenue by selling suborbital spaceflights, but paused operations in 2024 to focus on developing its next-generation spacecraft. Virgin Galactic is targeting a return to commercial flights in the fourth quarter of 2026.

The company has repeatedly issued new shares over the years, diluting stockholders. It also did a reverse stock split in 2024.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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