With the successful suborbital flight of Virgin Galactic’s VSS Unity on July 11, 2021, the nascent space tourism industry has officially taken off. As one of the leading companies in this field, Virgin Galactic has attracted much attention from investors around the world. This article will analyze the investment value and potential of Virgin Galactic, and provide suggestions on how to seize the opportunity of the space tourism wave. By elaborating on the company’s technology, financials, competitive landscape and future outlook, investors can gain valuable insights before deciding whether and how to invest in Virgin Galactic.
Virgin Galactic has proven its technical capabilities
On July 11, 2021, Virgin Galactic’s VSS Unity successfully conducted a suborbital flight that reached 85 km above the Earth’s surface. This milestone flight carried founder Sir Richard Branson and 5 crew members to the edge of space for the first time. It proved that Virgin Galactic has mastered the key technologies of suborbital spaceflight, including the aerial launch of SpaceShipTwo from the mothership VMS Eve, rocket-powered ascent to high altitudes, feathered reentry system, and horizontal landing back on the runway. With 18 test flights completed to date, Virgin Galactic is on track to begin commercial operations in 2022, providing an unique experience for space enthusiasts.
Huge market potential for space tourism
According to Virgin Galactic, over 600 customers from 60 countries have booked future flights, demonstrating strong interest in space travel. The company currently charges $250,000 per seat, and expects to increase the price substantially once regular operations commence. Morgan Stanley estimates that the space tourism market could reach $1.7 billion by 2030. As one of the first movers in the industry, Virgin Galactic is well-positioned to capture a significant share of this market. Its brand awareness and existing order book give it an advantage over potential competitors like Blue Origin.
Virgin Galactic is ramping up investments ahead of commercialization
Virgin Galactic invested substantially in infrastructure and workforce expansion in preparation for commercial service. It established Spaceport America in New Mexico as its commercial headquarters and operational base, and opened a Gateway to Space building to facilitate customer flights. Manufacturing facilities in Mojave, California were also scaled up. The company increased its workforce from around 200 employees in early 2019 to over 800 by mid-2021. While these investments have inflated expenses and operating losses recently, they have laid the groundwork for Virgin Galactic to tap into the multi-billion dollar space tourism opportunity.
Pay attention to potential risks
Although optimism surrounds Virgin Galactic currently, investors should still be aware of potential risks. Its technology could encounter setbacks that delay commercialization plans. Demand may fall short of projections in the early years. Government regulations for passenger spaceflight remain unclear and could constrain the business. Competition from Blue Origin, SpaceX and others may intensify down the road. While the long-term growth story appears promising, Virgin Galactic is still in the early stages as a public company, so investors should watch for bumps along the way.
Virgin Galactic offers an intriguing investment opportunity as a first mover in space tourism. Its proven technology, strong brand awareness and order book provide tailwinds for growth. But risks exist given the early stage of the industry. Investors need to assess their risk appetite before deciding whether and how to gain exposure to this futuristic business.