(Bloomberg) — A rapid rally in shares of Virgin Galactic Holdings Inc. that burned short sellers betting against the space tourism firm, came to a sudden halt on Tuesday as the shares nosedived following a recent trend among other rocket and satellite companies.
Most Read from Bloomberg
Shares of Virgin Galactic soared more than 200% since May 20 through Monday’s close, pushing short-sellers’ paper losses to $64 million for this year, according to data from S3 Partners. However, the stock sank as much as 36% on Tuesday as the breathless rally ran out of steam.
Catalysts behind the surge through June 1 included a reaffirmed fourth-quarter launch timeline and the company’s first flight test in two years. However, the stock gain was likely amplified by a short squeeze, S3 said, as those wagering against the stock were forced to buy back shares to close their positions.
“Virgin Galactic enters June with shorts getting squeezed, and the positioning explains why,” S3 Partners’ founder Bob Sloan wrote in a note to clients on Monday. “Shorts have committed more than long managers on either side of the book: $118.3 million short against $44.9 million active and $58.2 million passive long.”
In recent weeks, growing excitement around the space sector has driven investors into companies seen as beneficiaries of SpaceX’s upcoming market debut. The rally recently faced a reality check after a Blue Origin rocket exploded during a launchpad test, but until Tuesday Virgin Galactic had bucked the broader sector pullback.
“Momentum and retail flows chased the news ahead of the SpaceX IPO, and the crowded short cut both ways: a rallying-cry for retail longs and a direct accelerant as shorts bought to cover,” S3’s Sloan added. And given shorts hold a larger position than institutional active and passive longs combined, if the rally continues “that leaves shorts as a marginal buyer.”
–With assistance from Carmen Reinicke.
(Updates from the first through the third paragraphs, adds Virgin’s stock move Tuesday and updates chart.)
Most Read from Bloomberg Businessweek
©2026 Bloomberg L.P.
