Virgin Galactic stock is soaring ahead of the SpaceX IPO: what next?

Virgin Galactic NYSE:SPCE stock price has gone parabolic this month, reaching its highest point since December last year. SPCE shares have jumped by 65% from their lowest level this year. So, will the stock continue rising as short interest jumps?

Virgin Galactic has soared ahead of the SpaceX IPO

The SPCE stock price has been in a strong bullish trend in the past few weeks, mirroring the performance of of other space companies. Indeed, companies like Rocket Lab, Intuitive Machines, and Planet Labs have all surged this year as investors wait for the upcoming SpaceX IPO.

Elon Musk’s SpaceX plans to go public in a deal valued at over $1.5 trillion. And traders on Polymarket believes that the company’s valuation will eventually jump to over $2 trillion. 

SpaceX and Virgin Galactic are not related as their business models are quite different. However, it is common for stocks in the same industry to go up when there is hype among investors. The risk, however, is that the companies will pull back after the IPO happens as investors book profits.

Virgin Galactic stock has jumped after the company increased its booking fees ahead of the spaceflight launches. The company has hinted that its first flights will start in the fourth quarter of this year.

READ MORE: Why space stocks like Planet Labs, Rocket Lab, and LUNR are surging this year

Virgin Galactic faces some major risks ahead

Still, Virgin Galactic faces some major risks ahead. The most recent results showed that it had over $251 million in cash and equivalents. It reported total operating expenses of $66 million, better than the $89 million it made in the same period last year.

These numbers mean that the company will likely continue to dilute its shareholders through its at-the-market offering. It generated about $52 million in the first quarter and has access to about $87 million in its existing program.

The company also has substantial debt load. It ended the last quarter with over $117 million in short-term debt and $202 million in long-term debt. As such, it will continue to raise capital to raise cash.

These fears explain why investors are aggressively shorting the company. It has a short interest of 23%, much higher than other companies. 

SPCE stock price technical analysis

Virgin Galactic stock chart | Source: TradingView

The daily chart shows that the Virgin Galactic stock price has surged in the past few days. This retreat happened after it formed a triple-bottom pattern at $2.3 and a neckline at $3.3, its highest point on April 8. It has now moved above the neckline. 

The stock has moved slightly below the 50% Fibonacci Retracemenr level. It has moved above the 50-day and 200-day weighted moving averages, a sign that bulls are prevailing.

Therefore, these technicals suggest that the stock has more upside ahead of the SpaceX IPO. It will then retreat before and after SpaceX IPO.