Virgin Galactic (NYSE:SPCE) stock is blasting 15% higher today after the company announced it would begin commercial spaceflight operations. Galactic 01, Virgin’s first commercial spaceflight, has a flight window planned for between June 27 and June 30. After that, Virgin’s second commercial spaceflight for private astronauts, Galactic 02, will take off in early August. Following the completion of the two flights, the company plans on initiating monthly commercial flights
“We are launching the first commercial spaceline for Earth with two dynamic products – our scientific research and private astronaut space missions,” said CEO Michael Colglazier. “The next exciting chapter for Virgin Galactic has been driven by innovation, determination and a commitment to delivering an unparalleled and truly transformative customer experience.”
High Short Interest Makes SPCE Stock a Short Squeeze Candidate
Today’s good news has many investors wondering if SPCE stock could undergo a short squeeze. Based on the most recent data, there were 55.26 million shares sold short as of May 31. That’s equivalent to a short interest as a percentage of float of 23.9%. Generally, a short interest above 10% is considered high while a short interest above 20% is considered very high.
At the same time, the cost to borrow (CTB) fee for SPCE has been on a downtrend since June 5, from 2.42% then to just 1.76% today. An average stock carries a CTB fee of between 0.3% and 3%. The CTB fee rises when short seller demand is high and falls when short seller demand is low. A high CTB fee can also influence short sellers to sell out by buying the underlying stock in an attempt to escape the high fee.
As a result, SPCE has two opposing short squeeze statistics. It is worth noting that Virgin Galactic’s short interest is accurate as of May 31. Since then, shares have risen higher by about 35%, which means that a short squeeze could have already taken place. The low and falling CTB fee supports this thesis. Still, successful flights of Galactic 01 and Galactic 02 could ultimately lead to a higher share price. On the other hand, flight failures would be catastrophic for SPCE stock.
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On the date of publication, Eddie Pan did not hold (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.
