Although I haven’t been an ardent supporter of Virgin Galactic (NYSE:SPCE), I can appreciate the appeal of the underlying space tourism industry. There’s the romance of the ultimate frontier, and more importantly, industry projections are quite intriguing if you believe in the viability of SPCE stock.
According to IBISWorld, commercialized space travel “is likely to become a significant part” of the global tourism industry, which is valued at $1.5 trillion. Further, information from the Space Foundation reveals that in 2019, revenue from the global space economy amounted to just under $424 billion. At the top of the list was the commercial space products and services category, ringing up nearly $218 billion in revenue.
True, the sticker shock of getting a seat in Virgin Galactic’s rocket ride — a cool quarter-of-a-million dollars — has been a sticking point for those on the fence about SPCE stock. To be fair, though, Virgin isn’t exactly targeting a consumer base that would blink at the price, let alone gasp.
Plus, aside from China, the U.S. has the most billionaires in the world at 626. $250,000 is a drop in the bucket for these folks. Then you factor in that Virgin Galactic appeals to the other nations’ billionaires, along with well-known athletes — think superstars like Lionel Messi — and celebrities and you can appreciate why some investors are enthusiastic about SPCE stock.
Oh yeah, and there’s this little thing called Reddit.
Of course, it’s the story that nobody can stop talking about. Seemingly out of nowhere, shares of GameStop (NYSE:GME) skyrocketed to unbelievable heights as retail investors eagerly bought in to extract a short squeeze.
SPCE stock isn’t quite like GME. However, with the short percentage of float at slightly over 56%, bears seemed confident in their negative trade. Alas, the retail guys had a little something to say about that.
If You Buy SPCE Stock, Look Out for Number One
I believe that what the Reddit bulls did to GME and SPCE is brilliant and gutsy. They truly had to have faith in each other to pull this off — it’s not enough merely to identify a massive short position. As a retail investor, your best (and only) hope against gargantuan hedge funds is to harness the power of the crowd.
So when I look at social media posts about SPCE stock, I can appreciate why they have a tinge of practically-religious conviction.
But that conviction makes me concerned. If you’re gambling on SPCE, make sure to look out for your money. None of these Reddit bulls gives a rat’s behind about you, despite what they say about holding to infinity. You should get out when you want to (and you should at some point).
Don’t Believe The Hype
Money changes people.
Therefore, if you’re gambling on SPCE stock or GME (guilty as charged), or really any other Reddit play, please look out for yourself. Ignore what the others are saying on social media about waging a war against the shorts.
The truth is plain and simple: people are in this to make money. And if someone thinks they can profit by leaving you holding the bag, well, that’s just how the market goes. I wouldn’t trust these anonymous keyboard warriors any further than I could throw them.
On the date of publication, Josh Enomoto held a long position in GME and silver bullion.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.