It’s always interesting to see an up and coming company that hasn’t even turned a profit yet experience massive gains in the stock market. That is exactly what has happened with Virgin Galactic (NYSE:SPCE) stock since it went public in October 2019. Helmed by eccentric billionaire Sir Richard Branson, Virgin Galactic’s mission is to take their customers on an unforgettable voyage to space.Commercial interest in companies that are related to outer space travel is rapidly increasing, as investors start to consider it a real possibility in the future. What makes Virgin Galactic so interesting is that it offers a unique business model and vision to it’s investors and customers, respectively. Let’s take an in-depth look at Virgin Galactic below and try to determine whether or not it is worth a look in your portfolio.
Virgin Galactic – Going Up?
Have you ever dreamed of going to space? Experiencing the infinite blackness of the great unknown is becoming more and more of a possibility with every passing day thanks to Virgin Galactic. It’s the only pure-play on space tourism in the stock market right now and many investors are excited about its prospects. Virgin Galactic’s mission is to develop commercial spacecraft that allow “space tourists” to experience suborbital spaceflights. This ambitious idea could only come from someone like British Entrepreneur Sir Richard Branson of Virgin Atlantic fame.
The company was founded in 2004 and has been working hard to get their spaceships ready for commercial travelers. For just $250,000 dollars, you can reserve your seat on their cutting edge spacecraft for a suborbital flight. The flight will provide customers with a multi-day experience that culminates in spaceflight which includes several minutes of weightlessness and stunning views of the Earth from space. The company’s flight service isn’t expected to start until the second part of 2020, but that hasn’t stopped investors from purchasing shares in the company. Although Virgin Galactic has yet to take a maiden voyage, it seems that there is real demand for a seat on one of their flights.
Strong Performance in the Market Since IPO
One of the interesting things to note about Virgin Galactic stock is that they have a $7-billion-dollar market capitalization without even making their first successful trip. A lot of this price increase is a result of speculation, and we will learn a lot more about the company’s fundamentals after they release their next quarterly earnings report after market hours on Tuesday, Feb 25th. Analysts are anticipating weak revenue numbers and an EPS loss, but the real numbers that most will be analyzing are their number of flight reservations and the amount of time until they launch their first flight.
Virgin Galactic stock is up roughly 250% since it’s debut in October 2019. You simply can’t help but notice the huge increase in both institutional and retail buyers since the company began trading. One of the big reasons for its intergalactic price performance is that it is essentially the only pure-play for space travel on the market. There is competition in the commercial space travel industry, but Virgin Galactic is currently the only publicly-traded company in that sector. It seems that investors are compelled by the potential of the business and the upside associated with space travel in general.
Whether or not you believe in the future of “space tourism” or if you think that we are still a long way off from sending people to space on commercial flights, the strong performance of Virgin Galactic’s stock is undeniable. The company is still in its early growth stages and will likely need to obtain additional funding to continue its expansion, but that shouldn’t be a big problem with the huge interest that the company has received in the market thus far.
Remember to look at your investments with a long-term view instead of a short term speculative perspective. Sure, there are lots of challenges that the company will need to overcome before becoming profitable, but the potential is undeniable if the commercial space travel industry ever gets off the ground. Just remember that this is still a highly speculative play and that there will be large price swings going forward as the company works towards profitability.