More traders than ever are betting against Virgin Galactic amid the stock's record surge (SPCE) | Markets Insider
In the last 30 days, Virgin Galactic stock shorted has increased by 3.4 million shares, a 25% jump, according to data from financial-analytics firm S3 Partners. The spike in short-selling comes amid a record run for the space tourism company — the stock has gained 223% for the year through Wednesday's close. Virgin Galactic short-sellers are down $440 million in mark-to-market losses this year, according to S3 data. Still, there's no sign that a "short squeeze" is coming, according to Ihor Dusaniwsky of S3 Partners. Watch Virgin Galactic trade live on Markets Insider. Read more on Business Insider.
There's a new popular stock to short on Wall Street, and it's out of this world. In the last 30 days, traders have shorted an additional 3.4 million Virgin Galactic shares, an increase of more than 25%, according to data from financial-analytics firm S3 Partners. It's the largest amount of shares shorted for the stock, Ihor Dusaniwsky, the managing director of predictive analytics, told Markets Insider in an email Thursday. "Short interest, much like Virgin Galactic's VSS Unity spaceship, has never seen such heights before," he said. The increase in traders betting against Sir Richard Branson's space tourism company comes amid a record rally for the stock. This year, Virgin Galactic has gained more than 223% through Wednesday's close. That means that even though traders are rushing to bet against the buzzy space company, their potential losses are growing. So far in 2020, Virgin Galactic short-sellers are down $440 million in mark-to-market losses, according to S3 data. The frenzied short-selling has also driven up the stock's borrow fee, which could put additional stress on traders banking on shares falling. Virgin Galactic's stock borrow fee is nearly 20% and continues to rise, Dusaniwsky said. Still, Virgin Galactic short-sellers haven't caved to the pressure. "Although all the signs point to a short squeeze, we do not see shorts capitulating and exiting their positions at this time," Dusaniwsky said. But that could change if the stock continues to gain attention from short-sellers. "While there is no short squeeze at the moment, there is a very good chance shorts may start covering as even higher stock borrow rates make a losing trade too painful to hold onto," Dusaniwsky said. There might be some relief on the horizon for Virgin Galactic short-sellers. After initially spiking as much as 12% in early trading Thursday, the stock fell as much as 5% after Morgan Stanley said shares are "overdue" for a correction. Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption
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Virgin Galactic has gained nearly 150% this year through Friday's close in a speedy rally that's...Virgin Galactic has gained nearly 150% this year through Friday's close in a speedy rally that's outpaced automaker Tesla's torrid 91% rise in the same timeframe. Shares of the space tourism company surged as much as 35% to a new high in early trading on Tuesday. Adam Jonas of Morgan Stanley thinks the stock price could "use a breather." While he's constructive on Virgin Galactic, "the move in the stock price of late appears to be driven by forces beyond fundamental factors," he wrote in a Tuesday note. Watch Virgin Galactic trade live on Markets Insider. Read more on Business Insider. Virgin Galactic is rocketing higher in a rapid surge that's even outpaced Tesla's record-breaking rally. So far in 2020, Virgin Galactic has gained a searing 148% through Friday's close. In the same timeframe, Tesla has gained 91% in a torrid rally that's led analysts and traders to question the stock's underlying fundamentals. The space company founded by Sir Richard Branson continued to beat the automaker's gains this week. Virgin Galactic spiked as much as 35% in early trading Tuesday to a fresh all-time high of $38.72 per share, while Tesla gained as much as 8%. Virgin Galactic's momentum is continuing from Friday when the stock closed 21% higher after the company announced that it had moved its spacecraft VSS Unity from Mojave, California, to New Mexico, where it will one day shuttle passengers to and from space. The recent rally has led at least one Wall Street analyst to question the stock's climb, saying that the share price could "use a breather." "We are constructive on the story and rate the stock overweight," Adam Jonas of Morgan Stanley wrote in a Tuesday note. "However, we must acknowledge that the move in the stock price of late appears to be driven by forces beyond fundamental factors." When Morgan Stanley first initiated coverage of Virgin Galactic in December, its $60 bull-case target represented over 700% upside, he wrote. Today, however, the shares have about 100% upside after just two months. Jonas also wrote that while Friday's move of the VSS Unity had "some important learnings," he didn't see it as one of the more ambitious tests for the company. "We believe the investment community still has much more room to better understand the potential of the emerging space economy," he wrote. In the future, Morgan Stanley thinks the company could even move beyond the $60 bull case as it "executes on key milestones and moves from proof-of-concept to industrial and commercial success." Virgin Galactic has a consensus price target of $18.50 and three "buy" ratings according to Bloomberg data. The company is due to report is fiscal fourth quarter 2019 earnings on February 25 after market close. Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption
Traders who bet against Tesla’s success could be the ones now pushing the share price higher.