“Virgin Galactic Holdings Inc. unveiled its newest spacecraft, VSS Imagine, the first vehicle produced under a new assembly system that’s critical to the company’s goal of offering daily tourism flights to space,” Bloomberg writes.
Why It Matters: Richard Branson and Virgin Galactic want to make commercial space travel a common thing. The company has a target of reaching 400 flights annually from New Mexico and expanding globally.
Stock Watch: Virgin Galactic shares are up 23% in 2021 and were priced at $29.13 (as of 10:30 a.m.).
- The Imagine follows another spacecraft, the VSS Unity, which was “hit by delays in its path toward customer flights by pandemic-related setbacks and electrical problems.” Unity will test next in May after issues popped up in December and February.
- The Imagine features a “mirror-like” exterior, which provides thermal protection.
- After Branson gets a trip to space this summer, Virgin Galactic plans to start selling tickets again and slowly unwind its 600 person backlog. The company has plans for its “first formal revenue flight” with the Italian Air Force later this year.
The Next Steps: The Imagine will begin ground testing soon, with guide tests to follow this summer. The company is also working on a third vehicle, the VSS Inspire. But pandemic related delays pushed it to next year, when it will begin flight tests.
- Virgin Galactic also plans to switch its future vehicles to what’s called a Delta class design, leading to “faster assembly times and less maintenance.” The company is also exploring whether to contract parts of the assembly work for its carrier ‘motherships’ which drop the spacecraft from high altitudes.”
At $29.20, Virgin Galactic ($SPCE) is trading for a $6.5 billion valuation. This valuation is a non-meaningful number because that represents 11.0x management’s projected 2023 revenue and 23x projected EBITDA, despite the fact that no one knows what the demand is for recreational space flight for $350k to $400k per ticket.
An investment here completely relies on angel or venture capital style hopes that space tourism will be a multi-billion dollar industry and that Virgin Galactic will be a big player in the market. I don’t necessarily doubt this might happen, but I believe there are surer bets available for my money.