So, Virgin Galactic Holdings Inc. (SPCE) shares are having a moment Tuesday morning. They're up sharply, which is the kind of thing that happens when a company reports quarterly results that... well, let's just say the market finds something to like.
Here's the deal: after Monday's close, the space tourism company reported a fourth-quarter loss of 98 cents per share. That's not a profit, obviously—it's a loss. But on Wall Street, it's all about expectations, and analysts were expecting a loss of $1.05 per share. So, losing less money than you thought you would? That's a win. Revenue, however, came in at $312,000, which missed the target of $495,000. It's a bit of a mixed bag, but the market is choosing to focus on the earnings beat.
The Spaceship Update
The more exciting news, perhaps, is about the hardware. CEO Michael Colglazier said the first new SpaceShip is nearly complete, with ground testing scheduled to start in April. That's tangible progress for a company whose entire business model is, literally, up in the air. They've also started selling what they call "limited Spaceflight Expeditions" for $750,000 a pop. Colglazier added, "We continue to strategically manage our capital to support our planned ramp in cash flow." In other words: we're spending money to (hopefully) make money later.
The Short Interest Angle
Now, here's a fun wrinkle. Short interest in Virgin Galactic recently increased from 15.40 million to 16.94 million shares. That means 23.19% of the company's available shares are being bet against. When a heavily shorted stock gets some good news—or even not-terrible news—it can trigger a short squeeze, where short sellers rush to buy shares to cover their positions, pushing the price up even more. It would take them about 10.54 days to cover all those short bets, according to data. So, part of today's surge might just be a mechanical reaction in the market.
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