Space tourism company Virgin Galactic (NYSE:SPCE) is one of the few high profile innovators to top Tesla‘s (NASDAQ:TSLA) half-year rally, with its stock rocketing 310% in the last three months.
Continuing the comparison, Virgin Galactic has been dubbed ‘the Tesla of space travel’, though SpaceX may have something to say about that. Richard Branson’s long-awaited commercial space venture has proved a treat with wide-eyed investors, who tipped it over the $40 mark for the first time on Thursday.
The similarities between VG and Elon Musk’s company shouldn’t just end there though, I think. A prudent investor should take a similar approach to Virgin Galactic, to the one many have advised we take to Tesla.
Its growth potential is entirely subject to its innovative success, which is difficult to predict at the best of times, and even more difficult when we begin factoring in the commercial viability of new innovations. The best we can suggest is that an individual decides what their objectives are before investing. If you’re happy in the knowledge that you’re contributing to something potentially significant to society, with a chance of extreme success or complete failure, then fill your boots!
Should we expect complete doom or just a little gloom for Virgin Galactic?
On Thursday, Business Insider cited data from S3 Partners, which stated that the volume of VG stock shorted in the last 30 days had risen by 3.4 million, representing a 25% increase.
Speaking on the increase in short positions, S3’s managing director of predictive analysis, Ihor Dusaniwsky, told BI:
“Short interest, much like Virgin Galactic’s VSS Unity spaceship, has never seen such heights before,”
Have Morgan Stanley sounded the death knell for VG’s rally?
“The stock is trading 70% above our $22 price target with around 60% upside to our $60 bull case,”
Looking ahead, Morgan Stanley think VG has attained a fortuitous position, and that the time is right for the company to launch a capital raising campaign.
“Why not raise capital now?”
“While the company has sufficient levels of liquidity to meet the needs of launching its commercial service, investors may nonetheless ask, or even encourage, management to consider adding to the coffers, given unpredictable market conditions,” Jonas said.
Now, Virgin Galactic has 82.48 million shares in issues, its market cap stands at $5.93 billion. After a dip during the session, VG shares recovered and rallied by 2.12%, but then dropped for a second time. They’re now down by 0.59%, to $37.11 per share.