Virgin Galactic Holdings, on July 11, intends to launch its founder, Richard Branson, into space through a test flight of the VSS Unity. If this succeeds, Branson would be the first billionaire to travel into space — just days before Amazon’s Jeff Bezos is planned to do the same through his company Blue Origin.
Shares of Virgin Galactic went higher by 20% in trading after the news of Branson’s planned trip, with the stock up around 166% over this past year.
What’s so special about Virgin Galactic?
Unlike official government agencies like NASA, Virgin Galactic makes its components themselves through its sub-company, The Spaceship Company, and lowers the markups that companies pay when using third-party supply chains.
Since its creation, Virgin Galactic has spent around $900 million creating its launch system, which includes three vessels, SpaceShipTwo, VSS Unity, and VMS Eve, and increasing its fleet. Although not completely comparable, it costs NASA up to $11 billion to create a spacecraft from scratch, with the orbiter (the part that takes the crew to space and back) alone having a price tag of $6 billion.
The Federal Aviation Admin. has certified the company’s launch system as ready for space, allowing it to bring its clients into space. Virgin Galactic executives anticipate the company will be set to start next year. Michael Colglazier, the firm’s CEO, expects the program to earn $1 billion per year. That explains why Virgin Galactic has a $10 billion value even though it has no revenue and a cash burn rate of over $120 million per quarter.
So far, the company has sold 600 tickets and brought in over $80 million from deposits. Each ticket costs around $225,000. Around 1,000 customers are on the waitlist for the next set of tickets.
Should you invest in it?
The current heightened value of Virgin Galactic’s stock means it has already taken in some of the hype, but there is still more room for it to go higher. With new tech advancements, space tourism can become more affordable to more people over the next ten years — creating even higher demand. So consider this stock a very long-term buy that can pay off very well by the mid-2030s.
Author: Blake Ambrose