Virgin Galactic’s Upcoming Test Could Boost Their Value for Investors

By Thomas Price Monday, October 19, 2020

The tourism industry as a whole has seen some incredible losses over the course of 2020. With the ongoing COVID-19 pandemic closing borders and millions of Americans filing for unemployment, the idea of any kind of vacation feels like a far off idea. The idea of space tourism feels even more like a fantasy than simply visiting a national park or leaving the country. However, the British spaceflight company Virgin Galactic is about to reach a major milestone that could put commercial space travel one step closer to viability. With both the scientific community as well as many investors watching closely, what exactly does Virgin Galactic have planned, and how will their stock react to this?

Virgin Galactic’s Major Mission

A few weeks ago, Virgin Galactic made a major announcement regarding their space flight plans. The company has officially scheduled the first of two different crewed test flights for their SpaceShipTwo craft to take place on October 22. This marks the beginning of the final round of testing for their much-touted spaceship, which has been through two different suborbital flights in the past. In 2019, Virgin Galactic’s chief astronaut instructor became the company’s first test passenger after accompanying two crew members on one of their suborbital flights. These flights will eventually be offered to space tourists if everything continues to go to plan. This upcoming test marks the first that will be conducted from their new headquarters, Spaceport America, which the company moved to last year. While this test and the one to follow are major news in it of itself, another major point for this will be one of the passengers on board.

Accompanying the crew members this time around will be the leader of the New Horizons mission to Pluto, Dr. Alan Stern. He will be conducting a NASA-funded science experiment while onboard the SpaceShipTwo. The specific research he will be conducting will be pertaining to the NASA F-18 low light level camera, which will help determine if quality information and astronomical observations can be taken from one of these trips. Dr. Stern’s vital signs will also be monitored in order to gain information for a biomedical experiment. This marks the first-ever selection of a private-sector researching flying with NASA funding on a commercial vehicle. The trip will be a 2.5-hour flight with a carrier plane taking the SpaceShipTwo up to an altitude of 50,000 feet, where it will then be dropped and rocket-propelled into suborbital space. Passengers will then be able to see the curvature of Earth, experience minutes of weightlessness, and contrast the planet with the backdrop of space

What This Mission Means for Investors

The very odd thing about Virgin Galactic is that there will be no real revenue to look at, at least for a while. The value of the company, and therefore the value of the stock, is based at this point solely on the potential interest and revenue of commercial space travel in the future. That being said, after a successful flight test in February of 2019, over 600 spaceflight tickets were reserved, equalling about $80 million being placed as deposits. With consumers willing to pay upwards of $250,000 to experience one of these trips, the demand is clearly there if the company is ever able to translate these tests into fully operational flights.

Over the past month, Virgin Galactic’s stock has risen by around 22.52% in anticipation for the tests to take place. While all of this growth is built on hypothetical travel in the future, it does not appear to be on completely shaky ground. In 2017, the United States Chamber of Commerce estimated that commercial space travel was worth around $385 billion. Considering that Virgin Galactic has already sunk over $500 million into this endeavor, that is not very reassuring. However, the Chamber of Commerce also stated that by 2040, the commercial space travel industry could be worth upward of $1.4 trillion. With Virgin Galactic being the first to put their foot in the door of an over trillion-dollar industry could be extraordinarily lucrative in the long run.

Final Conclusions

Virgin Galactic is still at least a few years off from creating a fleet of commercial spaceships that can carry dozens of tourists off into space, but this next test is one colossal step closer to that dream. The idea of passing this milestone and moving forward towards being at the forefront of potentially trillions of dollars in revenue has led to cautious optimism from investors looking toward the future instead of another likely year of losses from the ambitious company.

About the Author

Headshot of Thomas Price

Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

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