Virgin Galactic Holdings (NYSE: SPCE) has extended its winning streak to seven sessions, pushing shares to their highest level since late June. The stock reached $3.30 on Tuesday, roughly 40% above its 2024 low, as investors rotated back into space-related equities. However, the upcoming earnings report, scheduled for August 12 after the market close, arrives with a significant overhang: short interest has climbed to nearly 30% of the float.
Heavy short interest reflects persistent bearishness
According to Seeking Alpha data, Virgin Galactic ranks among the most heavily shorted stocks on Wall Street. With roughly a third of its shares sold short, bearish sentiment remains deeply entrenched. These short sellers have been rewarded, as the stock still trades about 63% below its yearly high. That peak came after a sharp squeeze in June, when shares jumped from $2.13 in April to $8.90 on June 1, fueled by optimism ahead of the SpaceX IPO.
The bearish thesis centers on Virgin Galactic's cash burn and its lack of commercial revenue. The company has yet to begin regular spaceflight operations, and its cash position has been supported by at-the-market (ATM) equity offerings. In April, it raised approximately $52 million through such a program, leaving about $84 million available. This has led to significant dilution for existing shareholders, and there is a real possibility of further capital raises in the coming quarters. Even once commercial flights begin, profitability is likely years away.
Additionally, the industry itself remains unproven. While Virgin Galactic has accumulated a substantial backlog of reservations, the sustainability of long-term demand for suborbital space tourism is still uncertain.
Earnings preview: modest revenue, focus on cash and timeline
The upcoming earnings release is unlikely to show meaningful revenue. Analysts expect second-quarter revenue of just $128,000, with full-year 2024 revenue projected at $12.72 million, rising to $297 million in 2025. In the first quarter, the company reported cash of $251 million, operating expenses of $66 million (down from $89 million a year earlier), and a net loss of $65 million, an improvement from the $84 million loss in the prior-year period.
Investors will look for updates on the company's testing schedule and any changes to its cash runway. In its last report, management reiterated plans to continue SpaceShip testing ahead of commercial flights targeted for the fourth quarter of 2025.
Technical setup: triple bottom and momentum signals
From a technical perspective, the daily chart shows a triple-bottom pattern, with the stock finding support at $2.42 in June, July, and August. This formation is often viewed as a bullish reversal signal. The price has now climbed above the 50-day exponential moving average (EMA), and the Relative Strength Index (RSI) has risen to 62, indicating growing upward momentum. The ADX indicator has also moved to 25, suggesting that buyers are currently in control.
If the earnings report does not disappoint, the stock could extend its rally toward the psychological $5 level. However, given the high short interest, any negative surprise could trigger a sharp sell-off. The market's reaction will likely hinge on management's commentary regarding cash burn, flight testing progress, and the timeline to commercial operations.
For context, other space-related names have also seen volatility. SpaceX's recent rebound highlights the sector's sensitivity to sentiment. Meanwhile, broader market moves, such as the S&P 500's response to CPI data, can influence risk appetite for speculative stocks like SPCE.
Investors will be watching closely to see whether the rally can withstand the earnings test, especially with such a large short position poised to react.
This article is for informational purposes only and does not constitute financial advice.
