It certainly could be Robinhood traders, once again squeezing Virgin Galactic shorts, that's driving today's rally. With 16.5% short interest in the stock, any upward momentum in Virgin shares holds the potential to spook short-sellers out of their positions, resulting in more buying that drives the shares higher. But why might investors be buying in the first place so as to create that momentum?
Two related stories suggest themselves. First, on Monday this week, the company announced that its spaceplane test-flight program is back on track, with the next attempt at reaching space scheduled to take place as soon as Feb. 13. A second scheduled test flight could then be conducted before the month is out, setting up a situation in which Virgin Galactic founder Sir Richard Branson could take his own flight -- reassuring customers that the spaceplane is safe to fly on -- as early as March.
At the same time, on Tuesday, a company that has floated plans of launching competing space tourism flights -- SpaceX -- suffered its second catastrophic landing in a series of high-altitude, unmanned test flights.
If this is turning into a race to build a space tourism business, and if SpaceX and Virgin Galactic are the two main contenders, then any delays in SpaceX proving its new Starship spacecraft spaceworthy could translate into a presumption that Virgin Galactic will be the first company to fly tourists to space and back.
Advantage: Virgin Galactic.
But here's the thing: This is not just a race between SpaceX and Virgin Galactic. We also have Blue Origin and its New Shepard space rocket to consider. And as you may have heard, Blue Origin's founder, Jeff Bezos, just announced he's giving up the CEO's office at Amazon.com (AMZN 1.14%) -- a fact that should give him more time to focus on accelerating commercial operations at Blue Origin.
Furthermore, even before SpaceX works out all the kinks on Starship, it's already begun what appears to be a competing space tourism business utilizing Falcon 9 and Crew Dragon, announcing an "all-civilian" orbital space flight scheduled to take place in the fourth quarter of this year.
Long story short, Virgin Galactic is making progress toward commercial operations -- and that's great news. But its ultimate success still remains far from certain.