The world’s first publicly traded space tourism company has grown three-fold in value in the past two months. We investigate if Virgin Galactic is a buy right now
Is Virgin Galactic (NYSE: SPCE) a good investment? The stock is soaring at the minute and hype abounds around Richard Branson’s space start-up. It is one of the stocks we get asked about the most here at MyWallSt, and for good reason. If you invested in Virgin at the start of December, you’d be sitting on a three-bagger already. But is this all hype, or can Virgin Galactic deliver long-term results for investors?
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A Virgin investment isn’t just about space…
The real value behind Richard Branson’s ‘space-tourism’ venture lies in the potential of Virgin Galactic to disrupt the muti-trillion dollar airline industry by offering ultra-fast flights around the world.
Despite officially being a space tourism company — its first commercial flights are scheduled for next year — Virgin is at its core, a travel business. With this in mind, the ambitious company could build itself a moat of being the only travel company that offers hypersonic point-to-point air travel (with a few trips to space thrown in for good measure).
At a time when the duopoly of Boeing (NYSE: BA) and Airbus (EPA: AIR) finds itself in turmoil over grounded planes and corruption cases respectively, the thought of a disruptor in the aviation industry has investors intrigued. Even if Boeing holds a small stake in Virgin, the potential in the space remains vast.
With more than 600 people already signed up to fly to space at $250,000 per head, one must wonder how much wider the audience would be for supersonic travel across the globe at a fraction of the cost?
Because of this potential, Morgan Stanley (NYSE: MS) has come out and said interest in the stock is rivaled only by Tesla (NASDAQ: TSLA).
We Musk talk about Virgin’s competition…
Of course, Virgin Galactic is not the only horse in this race. Elon Musk’s SpaceX, who recently announced plans to spin out its space-internet business Starlink and pursue an IPO, has made giant leaps (for mankind, ba dum tss) in space exploration already.
SpaceX’s main goal is to create an affordable market for space transportation that will eventually allow the colonization of other planets through a series of space vehicles, including the Falcon launch vehicles and Dragon spacecraft family.
Slightly different to Virgin, but with similar potential. Musk’s space ambitions are a bit behind Branson’s on the tourism front, and there’s no denying that he must be truly sickened to have missed out on getting that awesome ‘SPCE’ ticker.
Not only that, but Tesla doesn’t even have sponsored space suits yet like Virgin, who had a range of special blue jumpsuits manufactured by sportswear manufacturer Under Armour (NYSE: UAA).
So, is Virgin Galactic a buy?
By all traditional metrics, Virgin Galactic is a ludicrously over-priced and over-hyped stock. Investors pour in while it proceeds to make no money whatsoever. Yet, should a company that calls itself “the world’s first commercial space line and vertically integrated aerospace company” be judged by traditional metrics?
I’ve used the word potential in this article 5 times, and while that may sound like I’ve left my thesaurus at home, it’s to reiterate what an investment in Virgin means. An investment in Virgin Galactic is an investment in potential, pure and simple. Are you paying over the odds at the minute? Probably, but with a company like this, the sky is no longer the limit.
The company is losing money, however, it aims to be profitable by 2021, based on completing 115 flights that generate $210m in revenue.
It will last 90 minutes, giving passengers the opportunity to see the earth from space and experience weightlessness.
The flight will cost $250,000.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Under Armour, Tesla, and Virgin Galactic. Read our full disclosure policy here.