Amid another rough year, shares of space tourism pioneer Virgin Galactic (NYSE:SPCE) popped higher on Tuesday. In recent sessions, SPCE stock has been on the move thanks to a pair of encouraging news. At the top of the list is that the company recently added a board member with significant investment and capital markets experience. Nevertheless, the underlying industry imposed significant difficulties, presenting a tricky narrative.
Yesterday afternoon, Virgin Galactic announced the appointment of Luigi Brambilla to the firm’s board of directors. Brambilla is an experienced corporate executive with an 18-year track record across the travel and leisure, wellness, entertainment and financial sectors. This includes 10 years at the Virgin Group.
Fundamentally, the fresh appointment should benefit the expansionary ambitions of the space economy specialist. Virgin Galactic CEO Michael Colglazier provided the following vote of confidence:
“We are very pleased to announce Luigi as the newest member of our Board. His long history with Virgin Group, along with his extensive investment and capital markets expertise, make him an ideal fit for the role as we continue to build our Delta Class fleet and ready the business for profitable growth.”
Per the press release, Brambilla’s appointment fills the seat previously held by Evan Lovell, who served on the board until his passing in June of this year.
SPCE Stock Rises on Q3 Earnings, Possible Short Squeeze
Another factor continuing to bolster SPCE stock centers on the underlying company’s third-quarter earnings report. According to Barron’s, Virgin Galactic posted a per-share loss of 28 cents on sales of $1.7 million. In contrast, Wall Street anticipated a 42-cent loss from sales of only $1.1 million.
Specifically, the CEO pointed to the firm’s six spaceflights successfully completed in under six months. Demonstrating the repeatability of its core operations, the news emphasized the popularity of space tourism. Even better, management forecasts that the company will generate $3 billion in sales in Q4, up from analysts’ estimate of $2.1 million.
Given the better-than-expected print, investors appear willing to give SPCE stock another chance. Subsequently, this sentiment pivot presents a possible short-squeeze opportunity. Per Fintel, SPCE’s short interest stands at 20.19% of its float. Generally speaking, anything above 20% is considered extremely high.
At the same time, the short interest ratio of 4.63 days to cover isn’t that remarkable as far as prior short squeezes are concerned. Also, the same can be said about the latest short borrow fee rate of 1%.
Also, even with the recent impressive performance — SPCE stock gained almost 23% in the trailing five sessions — traders aren’t moved. Specifically, Fintel’s options flow screener — which exclusively tracks big block transactions likely made by institutions — shows a significant volume of bought long-expiry puts.
Why It Matters
Despite evidence of forward progress, analysts remain bearish on SPCE stock.
Per TipRanks, the consensus view sits at moderate sell. This assessment breaks down as one buy, two holds and three sells. Overall, the average price target only lands at $2.15, implying a mere 3% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
