What’s Pushing SPCE Stock Higher In Recent Weeks?
Virgin Galactic Holdings (NYSE: SPCE), a vertically integrated aerospace and space travel company has been on a consistent uptrend since October 2020. Its goal is to be able to provide suborbital space flights for space tourism. SPCE has been one of the most trending growth stories on Wall Street this past year. Despite having received a downgrade from Morgan Stanley, with a potential 35% downside on Monday, shares of SPCE stock continued to move to the upside. The investment bank said there isn’t any specific news to justify its recent run-up in stock prices. But shortly after that, the company announced the date of its new flight window for a rocket-powered test flight of its SpaceShip Two Unity.
The company says the flight window for VSS Unity will open on Feb 13. What’s more, Virgin believes it may have “opportunities to fly throughout the month, pending weather conditions and technical readiness“. Recall that in December last year, Virgin Galactic had to abort a test flight. Due to an onboard computer issue, the ignition of the rocket motor was halted.
“The team has since conducted the root cause analysis, completed the corrective work required, and carried out extensive ground testing. The next stage will be to assess and verify this work during a rocket-powered flight,” Virgin Galactic said in a press release.
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Could SPCE Stock Be Next On The List Of Short Squeezes?
Since its public debut, Virgin Galactic has typically traded between $15 and $25 a share. With nearly 20% of its 210 million share float sold short, SPCE stock soared to a new high of $59.43 on January 27 before retreating. In the stock market today, SPCE stock is one of the most shorted space stock. And that’s probably because investors doubt the company’s ability to actually launch commercial space flight operations anytime soon. And because of that, it shouldn’t come as a surprise that SPCE stock has been mentioned among of WallStreetBets (WSB) traders.
WSB investors typically target shorted stocks with positive news. That said, with the company’s recent update, there’s a chance that SPCE stock is likely to gain more interest from retail investors. With more shares traded hands than its average trading volume of about 18 million shares, is SPCE stock poised for a rally this week? Typically, if you see a stock that’s appreciating on high volume, it could project a sustainable increase in stock price. After surging to a high of $59.43, the stock has remained steady above $40. Certainly, some of that trading may be a result of the rush to buy stocks that are heavily shorted.
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Space Tourism To Be The Catalyst For SPCE Stock
If you have been following the company’s progress, you would have known it had performed multiple successful test flights in 2020. From there, Virgin Galactic is on track to build out a robust commercial space flight business. It is looking at potentially big demand and huge margins.
“Today, we have shown that Virgin Galactic really can open space to change the world for good,” Branson said following a test flight in December. “We will now push on with the remaining portion of our flight test program, which will see the rocket motor burn for longer and VSS Unity fly still faster and higher towards giving thousands of private astronauts an experience which provides a new, planetary perspective to our relationship with the Earth and the cosmos.“
Now, Virgin Galactic is slated to launch its spaceship sometime after February 13 pending good weather conditions and technical readiness. Should all these factors be in favor of the launch and assuming successful completion of the test flights. Richard Branson will board the third test flight in space. And that could happen sometime in the first half of 2021 if everything goes smoothly as planned.
“We are pleased to be able to get back to the skies and continue our flight test program,” said CEO Michael Colglazier in a release. “I would like to thank our team for their continued hard work and diligence in working towards this important milestone for Virgin Galactic.“
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Flying Customers To The Space For Holiday No Longer A Dream For Virgin Galactic
Right, I get it that space tourism is exciting. But for those who had no clue what’s happening, you might be wondering how the company got here. The company started gaining momentum last year when SpaceX successfully launched astronauts into space. And it is from there SPCE stock believes it can leverage its space-tourism program into a $15 billion a year high-speed travel business.
The company is steadily moving closer to flying customers to the edge of space. Once the company passes its upcoming test flights, it will gather enough Federal Aviation Administration (FAA) milestones needed for final regulatory approval to conduct regular spaceflights. After that, commercial flights on SpaceShipTwo can begin. Besides the customer cabin, upgraded horizontal stabilizers and flight controls will be part of what the flight will be testing.
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Bottom Line
Virgin Galactic appears to be saying that it is possible to complete its final two VSS Unity flights over the next four weeks. Does that mean that the company has fixed the issues that came about back in December? Well, we will have to find out in a few weeks’ time.
Certainly, there might be many skeptics when it comes to space tourism. But investors have to note that the business here with Virgin is real. Like it or not, Virgin Galactic is going to charge a hefty amount to fly people to space. Maybe you and I can’t afford it. But there are, well, enough millionaires out there who will likely be willing to pay that sum for a once-in-a-lifetime experience. The company only needs 400 passengers to make $100 million of revenue. This, of course, depends on the company’s ability to ensure that it stays well-funded. Also, the upcoming flight tests need to be successful. If Virgin Galactic meets those milestones, we could easily be looking at a multi-billion dollar opportunity. With that in mind, could SPCE stock be the best way to bet on the future of space travel?
