Small caps last week: Victoria's Secret rally, Virgin Galactic selloff, GoPro warning

Victoria’s Secret shares soared after the lingerie retailer reported stronger-than-expected earnings and raised its full-year outlook, adding to signs that CEO Hillary Super’s turnaround plan is gaining momentum. Meanwhile, shares of Richard Branson’s Virgin Galactic suffered their worst day on record after the company announced plans to issue new stock to repay debt. Elsewhere, biotech conference season is in full swing, and Freedom On Air founder Igor Klushnev has highlighted three biotech stocks with different risk-reward profiles. These are the top small-cap stories from June 1-5 in our weekly recap.

Revenue at lingerie maker Victoria’s Secret increased 15% year over year to $1.56 billion in the first quarter of its fiscal 2026. Comparable sales rose 13%. Both figures exceeded Wall Street expectations. On the back of the strong results, the management raised its full-year revenue forecast to $7.03-7.13 billion from its previous guidance of $6.85-6.95 billion. Victoria’s Secret shares surged 47.4% in trading on Tuesday following the earnings release.

The key to the company’s success is its bet on returning to the brand’s roots – sexiness. “There was ‘very consistent, double-digit [sales] increases across Victoria’s Secret, Pink, beauty channels, digital, stores and international, all very positive,’” said CEO Hillary Super, who took over in 2024 and has led the company’s transformation.

As part of the “new era of sexy” championed by Super, the company has revived the Victoria’s Secret Fashion Show. In addition, Victoria’s Secret changed its stock ticker symbol to VSXY in late May.

Virgin Galactic, the space-tourism company founded by billionaire Richard Branson, announced plans to issue new common shares to redeem up to $30.5 million of its outstanding notes.

The company is taking advantage of a roughly threefold increase in its share price over the span of a week, reported MarketWatch. The stock rallied from May 20 through June 1 alongside the broader space sector amid excitement surrounding SpaceX’s planned IPO and Virgin Galactic’s resumption of flight testing.

However, after announcing the offer, Virgin Galactic shares plunged around 39% in trading on Tuesday on dilution worries. According to MarketWatch data, it was the biggest one-day decline in the company’s history as a public company.

Action-camera maker GoPro warned that a sharp increase in memory prices driven by the AI boom has put its ability to meet its debt obligations at risk. The company’s shares plunged 12% in trading on Monday.

GoPro was forced to refile its annual report after receiving notice from suppliers, following the original filing, that memory prices would rise 80-115%. In April, suppliers also informed the company of planned reductions in production of the memory used in its cameras.

As a result, GoPro lowered its sales forecast, expects continued losses, and is exploring strategic alternatives, including a potential sale or merger.

Motley Fool contributor Jennifer Saibil recommends cosmetics company e.l.f. Beauty as having an attractive entry point. The stock has fallen around a third year to date but has yet to recover, despite what Saibil described as a “fantastic” latest quarterly report.

Freedom Broker issued a short-term trade idea on drone and counter-drone systems maker AIRO Group as a speculative “buy.” According to the analysts, the stock could gain around 50% over two months as AIRO seeks to gain U.S. government contracts and stands to benefit from restrictions on federal purchases from certain foreign suppliers.

Biotech conference season is in full swing. For biotech companies, this is a period filled with important catalysts, with clinical-trial results capable of doubling a company’s market value or sending its shares plunging.

Freedom Holding cofounder and Freedom On Air founder Igor Klushnev assessed risks across different stages of drug development and selected stocks with upside catalysts over the coming weeks and months.

For Definium, everything depends on clinical data; Viridian has completed clinical trials and is awaiting an FDA decision; and the therapy of Kura has already been approved and launched commercially, with execution and adoption the key upcoming question for investors.