Virgin Galactic Holdings (SPCE) has been one of the most intriguing stocks of 2021. I selected the stock as my Top Pick for 2021 and the shares have risen over 50% so far this year, asserts Bryan Perry, editor of Cash Machine.
Coming into the year with huge expectations of launching commercial sub-orbital space flights, the company was beset with several technical problems that kept delaying the maiden launch.
After soaring to $62 in early February, shares of SPCE hurled lower toward 2020 lows on headlines of repeat launch delays.
Finally, on May 23, the company completed its first successful test of its manned shuttle, considered a major milestone in the sector, and the stock rocketed higher after sticking a historic landing. SPCE execs reported after the test flight they would begin testing for commercial passenger flights next year.
With the stock being one of the most heavily shorted names, the Reddit crowd took notice and rallied the Wall Street Bets trading mob to fuel its most recent rally back up to $36 from $16 in a ferocious short-squeeze where trading volume exploded.
As of June 15, it was reported that Virgin Galactic remains one of the most shorted stocks with close to 28% of the float on loan following a 117% run up.
The shorts are betting heavily that Jeff Bezos’s Blue Origin and Elon Musk’s Space X will offer much more of a true space tour experience and leave Virgin Galactic investors holding space dust.
I guess the market will never run out of traders and investors that want to play with fire and I’ve never met a professional short-seller who owns a yacht.
Virgin Galactic isn’t targeting the same market as Blue Origin and Space X. Instead they are going after the science community for microgravity experimentation, space-based research, astronaut training and some retail experiential.
Earlier this month, Virgin Galactic reported it will send a researcher on a dedicated flight to conduct experiments and test new healthcare technologies as part of a collaboration with the International Institute for Astronautical Sciences.
Once the market differentiates what Virgin Galactic’s business model is from that where a race to colonize Mars by Bezos and Musk is the primary goal, then not only will the market take the company more seriously for its merits and goals, the shorts might have to deploy a heat shield when the stock finally does come back to Earth.
