Space tourism company Virgin Galactic Holdings (NYSE: SPCE) it went public in 2019, but has barely generated revenue since then, and any paid space flights with customers are still a long way off. Here Amadan Beò video clip, recorded March 15th, Fool.com partners Matt Frankel, CFP, Dan Caplinger, and Brian Withers will discuss Virgin Galactic and whether it is worth looking for advanced investors.
Matt Frankel: Virgin Galactic was a Chamath [Palihapitiya]the first SPAC investment. It is often credited for initiating the SPAC movement in the first place in 2019. This is the pioneer of space tourism. Its aim is to make space tourism accessible to all. That is not going to happen yet. The first flight, I think it sold for $ 250,000 a ticket. The long-term plan is for 400 planes a day to fly, or from there, and to generate billions and billions of dollars in revenue. I look at this as a company that could be a big investment when my kids are 60. What is your own opinion of Virgin Galactic and what do I miss about the short-term investment issue?
Dan Caplinger: I don’t think they really are, I mean, from a short-term business perspective, we’re basically at a development stage. To me, it looks a lot like the binary option you get with clinical level biotechnology type investments, where you are at the test flight stage, if we have a successful test run in the end, taking people into orbit, then this thing is going to do very well. If there are problems, inevitable problems with the technology, that could be catastrophic. So you definitely have this binary situation. The only thing I can say though is that there is some choice in terms of, even though the space flight material doesn’t work, they are also working on things that could make supersonic flights, such as cross-border flights across oceans. much shorter flight times on long haul routes and that can be helpful going forward.
Brian Withers: I’m just going to submit. I don’t know about the short term opportunities for this stock. Annual revenue fell 94% year over year. They had no income in Q4. Their revenue was actually around taking government payloads into space. Interestingly enough, the three launches, 600 of them have signed up and $ 80 million of investments for people who want to go into space. They had to cut it off.
This article represents the opinion of the writer, who may not agree with the “official” recommendation position of the Motley Fool chief consulting service. We are motley! Questioning an investment dissertation – even one of our own – helps us to think critically about investing and make decisions that will help us become softer, happier and richer.