Virgin Galactic 01 Launch Fuels Commercial Stock Growth

Virgin Galactic Holdings, Inc., one of the pioneering companies in the commercial spaceflight industry, recently announced the launch dates for its inaugural spaceflight, “Galactic 01”. The much-anticipated event is slated to take place between June 27 and June 30, 2023, marking a pivotal chapter in Virgin Galactic’s trajectory stock growth and shifting its gears from years of rigorous aircraft development and testing to a revenue-generating business. The bold move has led to a substantial rally in Virgin Galactic shares, with the company securing its spot among the top trending stocks on Reddit's r/wallstreetbets.

The impending launch of “Galactic 01” is a scientific research mission, aiming to transport three crew members who are set to conduct microgravity research in space. The crew members hail from esteemed institutions - the Italian Air Force and the National Research Council of Italy, further validating the mission's scientific importance.

Subsequent to this mission, Virgin Galactic is set to launch its second commercial spaceflight in early August, with plans to steadily increase the frequency to monthly spaceflights, promising a regular stream of revenue. This cadence of spaceflights is significant for the company, especially considering that each flight of its Delta Class spacecraft is projected to generate over $2.7 million in revenue given full capacity, which caters to six passengers per flight.

This monumental shift from testing to commercial operations is pivotal, not just for Virgin Galactic, but also for the space tourism industry as a whole. Industry data from Statista suggests that space tourism is on the brink of a significant growth spurt in the next decade. This surge in interest is fueled by pioneering companies such as Virgin Galactic and Jeff Bezos' Blue Origin, who are progressively investing in the development of sub-orbital flight fleets. These efforts could potentially lead to an 8X increase in the market size for sub-orbital flights between FY 2021 and FY 2031.

From a financial perspective, Virgin Galactic is at a defining juncture. While the company reported a net loss of $159M in Q1’23, and has yet to achieve profitability since its IPO in 2019, the onset of commercial operations could help ameliorate these losses. Virgin Galactic expects to lose between $130-140M in free cash flow in Q2'23, tapering to $120-130M in both Q3'23 and Q4'23. But with revenue-generating activities now commencing, there is a clear path to progressively diminishing these losses.

Pricing at $450,000 per passenger ticket, Virgin Galactic reported 600 reservations last year, amassing a total of $102.1M in customer deposits by the end of Q1'23.Virgin Galactic Stock projected to go up and to ramp up revenues from a modest few million in FY 2023 ($9.2M as per consensus) to approximately half a billion by FY 2027. This represents a spectacular annual average top line growth rate of 172%.

While the commercial spaceflight industry is fraught with uncertainties, and significant risks still persist, this venture appears to be a commercially promising proposition. Virgin Galactic's current valuation sits at 47.2X FY 2024 revenues, which, considering the infancy of their commercial operations and the rapid revenue growth anticipated, may be a justifiable investment. Virgin Galactic’s share price also experienced a significant 27.1% surge in the last trading session to close at $6.01, hinting at the market’s positive response to these developments.

Virgin Galactic Holding ,  Stock Symbol Price Chart >>

Acknowledging the successful completion of its spaceflight, ‘The Unity 25’ mission, in May 2023, and with the announcement of upcoming commercial spaceline operations, Virgin Galactic is demonstrating that it's transitioning from a purely research and development-focused firm to a revenue-generating entity. Given this trajectory, Virgin Galactic’s upcoming quarterly report, expected to post a loss of $0.51 per share, and revenues estimated at $1.26 million - an upswing of 249.7% from the year-ago quarter, carries significant weight.

Virgin Galactic's stride into commercial operations coupled with its immense revenue potential has led to a revision of its consensus EPS estimate for the quarter, raising it by 2.9% over the last 30 days. This upward trajectory in earnings estimate revision typically signals price appreciation, indicating a potential boost for Virgin Galactic's stock price in the near future.

With the commencement of commercial spaceflights and the anticipation of its significant revenue potential, Virgin Galactic's progress in 2023 will undoubtedly be closely watched by industry experts, investors, and space enthusiasts alike. The spaceflight company's transformative journey, from building an ambitious vision to actualizing it, serves as a testament to the immense potential that commercial spaceflights hold for the future.