Virgin Galactic shares rocket past Tesla
'A prime example of a short squeeze candidate'
Sir Richard Branson's Virgin Galactic is one of the hottest stocks in the market this year, along with Elon Musk's Tesla.
Shares of the Las Cruces, New Mexico-based space-tourism venture have surged over 80 percent during their eight-day winning streak and are up over 162 percent this year, outpacing even Tesla's 105 percent gain.
Branson, via Vieco USA, is the largest shareholder in the space company, as Musk is for the electric vehicle company. Musk also oversees SpaceX, while Amazon CEO Jeff Bezos has Blue Origin, both space companies are privately held.
MUSK, BEZOS, BRANSON BILLIONAIRES IN SPACE RACE
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SPCE | VIRGIN GALACTIC HOLDINGS INC. | 7.03 | +0.01 | +0.21% |
| TSLA | TESLA INC. | 332.89 | -5.34 | -1.58% |
“Virgin Galactic is a prime example of a short squeeze candidate,” wrote Ihor Duswaniwsky, managing director predictive analytics at the financial-analytics firm S3 Partners, in a note published Tuesday.
Sir Richard Branson helps show off Virgin Galactic's new Under Armour spacewear. (Credit: Virgin Galactic)
Short-sellers, or traders betting Virgin Galactic's stock would fall, had endured nearly $257 million of mark-to-market losses year-to-date through Tuesday, S3 data showed.
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But as shares have rallied over the past week, short bets have increased. At Tuesday’s close, short interest was $473.3 million, or 31 percent of shares available for trading, meaning short-sellers were inflicted with sizeable losses as shares rallied Wednesday.
“Shorts may have a strong conviction in this name, but if losses continue to accumulate we can have a significant short squeeze in this stock,” Duswaniwsky wrote. “Once we see shorts covering there may be a race for the exits as the buys-to-cover become a second stage to SPCE’s rally.”
The first publicly-traded space tourism company, Virgin Galactic has invested more than $1 billion in the fledgling business over 16 years, completing two manned test flights in late 2018 and early 2019, Chief Operating Officer Enrico Palermo said at a UBS conference on Jan. 31. The company's December flight was the first into space from U.S. soil since NASA retired the space shuttle.
“We really proved from end to end that we had a product, a concept that could enable many tens of thousands of people to realize their ambitions of flying into space,” Palermo said.
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Virgin Galactic reported a net loss of $51.5 million in the third quarter on revenue of $832,000. The company is scheduled to report its fourth-quarter results on Feb. 25.