Virgin Galactic (SPCE) is an aerospace company within the Virgin Group, which was founded in 2004 year by eccentric multimillionaire Richard Branson.
Together with the controlled organization The Spaceship Company Virgin Galactic is working on the creation of spacecraft, assign?? for launching personal travelers into a suborbital place and launching satellites into orbit. Virgin Galactic has been working on the implementation of its own "space Odyssey" for seventeen years and is currently at the final stage of the commercialization of human spaceflight.
Trends and Forecasts, market size and main players
At this point, space tourism is limited to a few orbital flights., which were performed by American Space Adventures. Over the past two decades, the company has transported only 7 travelers.
Space tourism is now a completely free niche. Bank of America expects annual revenue growth for the entire space industry by 230%: with 424 billion in 2019 year before 1,4 trillion dollars to 2030 year. The space tourism industry is still in its infancy, but it may become mainstream as technology advances, increasing security and lowering prices. Among others, space tourism will become the starting point for the development of high-speed travel around the Earth.
Since space flight is an industry with the highest barrier to entry, there are only a few commercial companies now, who are working on the creation of suborbital space vehicles. More significant achievements were made by Virgin Galactic and Jeff Bezos' space company Blue Origin, scheduling?? conduct the first commercial flights in the near future.
Elon Musk's SpaceX has made significant progress in orbital spaceflight and is now working on a large Starship rocket with a capacity of 100 passengers. Starship was created for suborbital flights and will allow you to fly from New York to Shanghai in 39 minutes - instead of the usual 15 hours on the plane.
According to UBS calculations, on routes with a duration of more than 10 more hours fly once a year 150 million passengers. If you imagine, that in the future, twenty percent of these shipments will be made by space transport at a cost 2500 $ per trip, then we see the emerging transport and space industry with annual revenues of 75 billion dollars. In the long term, long-haul flights on aircraft with a duration of more than 10 hours will be completely replaced by flights on suborbital spacecraft.
Since of the 3 main players - Virgin Galactic, Blue Origin and SpaceX - only Virgin Galactic shares are available for purchase on the exchange, Let's take a closer look at it in our review..
Virgin Galactic and suborbital spaceflight
Virgin Galactic has developed a reusable space system called SpaceShipTwo, which is designed both to send travelers into space, and for hypersonic point-to-point travel. The space system consists of 3 main components: jet carrier WhiteKnightTwo, SpaceShipTwo spacecraft of the same name and RocketMotorTwo hybrid rocket motor.
The carrier aircraft is designed to lift the SpaceShipTwo spacecraft to a height 15 km. This doctrine is perfectly suitable for small space launches in terms of price.. After climbing, SpaceShipTwo disconnects from the carrier aircraft and, using a hybrid rocket engine, makes an exit to space at a speed of, three and a half times the speed of sound.
SpaceShipTwo is a reusable winged ship, which is capable of delivering to a suborbital space place and returning to planet Earth six travelers at a time or commercial cargo. Virgin Galactic passengers won't circle the Earth, as astronauts aboard the International Space Station. However, they will be able to experience a couple of minutes of weightlessness and see the landscapes of the Earth in the blackness of space.. After gravity pulls the spacecraft back to the upper atmosphere, the descent to planet Earth will begin, which will be no different from landing on an ordinary plane.
Virgin Galactic develops LauncherOne orbital launch vehicle to launch satellites into orbit, capable of delivering small satellites weighing up to 227 kg into Earth orbit at historically low prices. The company uses the purpose-built Spaceport America in New Mexico as a launch pad..
Current state of the project
In order to send the first clients into space, Virgin Galactic has two successful test flights remaining. However, there were difficulties with this. In December 2020 year 2nd test flight was cut off after, how the ship's onboard computer lost contact with the rocket engine and ended its ignition.
To eliminate the emerging electromechanical interference, the company postponed the next test flight to May 2021 of the year. If the flight goes well, 1-th commercial flights can be expected at the end 2021 - early 2022 of the year.
30 March Virgin Galactic introduced its 2nd manned spacecraft - SpaceShip III. Refreshed spacecraft designed in a modular way, what will allow you to do more 400 suborbital flights per year. 1-The first test of the new ship - a drop in the air from the carrier aircraft and return to the ground - is scheduled for the summer. The company does not stop there and is already working on the assembly of the third ship.
Development strategy
5 november 2020 of the year, Virgin Galactic CEO Michael Colglaser laid out long-term goals at a meeting with reporters, according to which the company plans to generate up to billions of revenue per year from each used spaceport. To do this, the company plans to produce 400 flights per year at each spaceport.
Based on the declared ability of SpaceShip III to do more 400 suborbital flights per year, we can come to the conclusion, that in the first couple of years there will be one spaceship per spaceport. In the future, the company plans to have three motherships for each spaceport..
A clear number of spaceports, which the company plans to use, management has not yet named. but, based on media reports that Virgin Galactic has signed agreements to lease airport areas for spaceports with the UAE, Italy, England, Australia, Sweden and other states, it can be concluded that Virgin Galactic wants to make a network of spaceports around the world.
This will allow the company to produce not only tourist flights into space, but also enter the vast aviation market and do commercial supersonic passenger transportation between the continents.
Financial condition
Since Virgin Galactic has no revenue, it is unrealistic to estimate based on the beliefs of fundamental study. To allocate funds to its own work, the company occasionally issues and sells new shares, thus eroding the fraction of existing shareholders.
According to reporting for 2020 year, direct loss of steel 273 million dollars in relation to the net loss in 210,9 million dollars in 2019 year. The main cost items are research and development in the amount of 158,8 million dollars, as well as administrative expenses in the amount 116,6 million dollars.
On the balance sheet of the company are 665,9 million dollars of cash and cash equivalents, which is enough to allocate financial resources for the company's costs for the next 1.5–2 years. Total debt insignificant — total 27,5 million dollars.
Revenue forecast
Virgin Galactic's reporting indicates, what a couple of years ago more 600 people booked a tourist flight at a cost of 200 to 250 thousand dollars per seat. After that, the company closed the reservation and wants to resume ticket sales only after the successful completion of test flights.. Based on the company's objectives to generate billions per year when performing 400 departures for 2400 passengers, we can come to the conclusion, that the ticket price will be approximately 417 one thousand dollars. Eventually, available capacities, which were represented by 2 spaceships, will allow Virgin Galactic to increase its revenue to 2 billion dollars a year.
Based on an analysis of the company's existing armor, management predicts, that its motivated audience in the field of space tourism is represented by people with a general condition above 10 million dollars. According to the Credit Suisse Research Institute Global Wealth Report for 2019 year, there are about 2 million adults in the world, suitable for the designated aspect. You can wait, that the existing order book and the highest demand for space flights will provide Virgin Galactic with low launch costs and the highest gross margin.
Company valuation
At this moment, the capitalization of the company is only 5,46 billion dollars and clearly reflects the lack of confidence of financiers in the future of the company. Maybe, the prerequisite was the delay of the test flight and the facts of the sale of shares by the founder Richard Branson.
However, the delays in the test flight are due to the need for an additional option for the ship's systems.. Based on the technical difficulty of the project, delays and postponements are common practice. Elon Musk's company SpaceX took eighteen years, before it completed the 1st manned launch of the Crew Dragon into space.
On the sale of shares by an insider, then around this topic a huge number of copies have already been broken and confirmed more than once, that the fact of implementation does not mean absolutely nothing. Mark Zuckerberg, Jeff Bezos, Bill Gates and Steve Jobs since going public on Facebook, Amazon, Microsoft and Apple often sold their stakes. However, this did not prevent these companies from succeeding., grow in capitalization and become the face of America.
Among others, Richard Branson sold about ten percent of his shares and, according to Bloomberg, currently owns twenty-four percent of Virgin Galactic.
If we take the company's revenue growth to 2 billion dollars over the next 3 years, then Virgin Galactic is trading at a forward 3-year P / S 3,15. Given the lack of comparable public rivals, you can draw an analogy with the pioneer in the field of electric cars - Tesla.
If financiers likewise value Virgin Galactic - P / S 20, then the capitalization of the company can grow to 40 billion dollars, which implies growth potential in 630% on the horizon of 3 years.
Output
Virgin Galactic is at the forefront of new industry, which will open space for the masses and forever change the world. Buying shares in Virgin Galactic now gives financiers the opportunity to enter the company at the very beginning of its growth story. Powerful management team, led by chief space chief George Whitesides, who has previously worked 20 years at NASA, inspires confidence.
However, be aware of the risks, such as fatal accidents. This may lower the credibility of the company., lead to significant compensation payments and bankruptcy of the company.
