The commercialization of space has captured the imagination of many, including those with a lot of cash to burn; since 2000, Goldman Sachs estimates that $13.3 billion has been invested in space startups, observes international investing expert Carl Delfeld, editor of Cabot Global Stocks Explorer.
Elon Musk spent $100 million in 2006 to launch Space X. Jeff Bezos is reportedly injecting $1 billion a year into Blue Origin.
Blue Origin hopes to go the moon for passenger trips by 2024 while Musk has Mars in his sights, with SpaceX planning its first cargo mission to the red planet in 2022. A crewed mission is to follow a couple of years later.
One of the most intriguing segments of the space economy is space tourism. Sir Richard Branson' Virgin Galactic Holdings (SPCE) began trading on the NYSE on October 28 at $11.75.
Prepaid tickets for 90-minute suborbital flights in 2020 with Virgin Galactic went for a cool $250,000.
More than 600 people from 60 countries have secured a spot on one of Branson’s first space flights by making a deposit representing half the total fare price. Virgin has an additional 2,500 people on the waiting list.
This 90-minute flight will escape the Earth’s atmosphere allowing passengers to experience weightlessness and see the planet’s rim from space.
Virgin Galactic operates the reusable SpaceShipTwo spaceflight system. This consists of WhiteKnightTwo, a custom-built, carrier aircraft, and SpaceShipTwo, the world’s first passenger carrying spaceship to be built by a private company and operated in commercial service.
Virgin Galactic was founded and won the X Prize for its SpaceShip One in 2004. The company has been at the forefront of commercial space activity and produced the first private space vehicle to put humans into space.
In 2010, George Whiteside joined the team from NASA and he is currently CEO. In 2016, the company was awarded a commercial operator license by the FAA.
Credit Suisse recently concluded that that Virgin would have a “near-term monopoly” on the space tourism market once Spaceship Two begins operations in 2020.
The company’s third quarter earnings results, released November 12, revealed a net loss of nearly $51 million for the quarter and a loss of $138 million for the year to date.
The chief risk is of course the possibility of a failed or unsuccessful flight, which would, without question, hit the stock hard. For this reason I see Virgin as an aggressive idea and recommend a 20% trailing stop loss.
