Key insights
- The author highlights SPCE as a speculative trade opportunity due to its upcoming earnings, potential SpaceX IPO, and high short interest. Positive news on pre-orders or Delta ship testing could trigger a significant rally. The author notes increased interest in space stocks and suggests the market may be underestimating the potential volatility in SPCE options.
Hello Stock Enthusiasts,
I wanted to discuss what I believe is one of the most interesting trades on the stock market right now, Virgin Galactic. The stock is down 86% the last 2 years due to heavy dilution, excessive cash burn, and a 2 year launch pause to develop their Delta class ships, with the idea that hopefully this will make their business of sending rich people to the edge of space for 750k per ticket scale. Their balance sheet is ugly with 338M in cash and 324M in debt, but in early April, they announced they are planning to resume launches by Q4 2026 and have a backlog of 400M in pre-orders. This sent the stock soaring from lows of about $2.17 to highs of roughly $3.30, a roughly 50% move. Perhaps a glimmer of hope for the company, which the market is pricing like a likely bankruptcy at the current 275M market cap.
Tomorrow they report earnings and expectations for this stock continue to be low (they are estimating -0.94 EPS and virtually 0 revenue (240K). Given their track record of delays, I believe this is fair. However I believe the market is failing to see how the combination of this earnings report and a SpaceX IPO affect IV. Any positive news in pre-order numbers or delta ship testing can be a significant fundamental catalyst, and now it is mid May and the SpaceX IPO is imminently approaching. The other space stocks such as RKLB, PL, and LUNR are all up huge the last 3 months (80%+ each) and Kalshi is pricing in a 79% implied probability of a SpaceX IPO before July 1st, with the market receiving a total of 4.6M in liquidity. Additionally, July 17 call and put options imply a 42% move in SPCE in either direction. For a stock with approximately 27% of its float shorted, this feels low given the 2 months till expiry and these background catalysts.
I am curious whether this is on any of your radars, I do not see this as a value investment, but rather a speculative time bound trade. Additionally if you all are tracking any other Space stocks ahead of this IPO I would like to encourage a discussion about which ones.
Regarding this post, my position is currently 125x $5 calls expiring 7/17, about 3.5k principal, where I’m playing the IV and bullish side of the debate.