In just a little under one week, Virgin Galactic(NYSE: SPCE) will launch a spaceplane carrying two crew and four paying customers to the edge of space. This "Galactic 07" flight, which is scheduled to take off as early as June 8, will mark the company's 12th trip to space, and its seventh revenue-generating flight since Virgin Galactic first began running commercial flights.
It might also be Virgin Galactic's last commercial spaceflight... ever.
Good news and bad news...
Galactic 07 will likely generate above-average revenue for Virgin Galactic. That's the good news.
Ordinarily, you'd expect a flight carrying four passengers paying $250,000 a ticket to only generate $1 million for Virgin Galactic. Despite this being the company's only flight to take place in second-quarter 2024, however, analysts polled by S&P Global Market Intelligence forecast that the company will rake in $3.3 million in revenue this quarter.
That's an aggressive target, but Virgin Galactic might still hit it. In addition to three "private astronauts" paying the usual ticket price, the company noted that Galactic 07 will also carry a "researcher astronaut" from Axiom Space, who will presumably be paying an above-market rate. The spaceplane will also host multiple science experiments from NASA, another service that generates revenue for the company.
But here's the bad news: Even $3.3 million won't come close to covering Virgin Galactic's $110 million-plus per quarter in operating and other costs. As a result, analysts expect Virgin Galactic to lose roughly $100 million this quarter -- and burn more than $120 million in cash.
...and worse news for Virgin Galactic
And here's even worse news for Virgin Galactic investors: Virgin Galactic has confirmed that Galactic 07 will be its "Unity" spaceplane's final spaceflight. After Galactic 07, the company is suspending all commercial flight operations until it has built, tested, and certified a new generation of spaceplanes -- the Delta class -- to replace Unity sometime in 2026.
Thus, Virgin Galactic investors can look forward to owning a stock generating essentially zero revenue for the next 18 to 30 months -- and that's if everything goes as planned, and the Delta program doesn't get delayed.
Virgin Galactic's worst news of all
But even there, the bad news isn't over. While Virgin Galactic was the first space tourism company to fly humans to space, it's not the only space company doing that.
Just 200 miles southeast of Virgin Galactic's New Mexico "Spaceport America," another space company has set up what it calls "Launch Site One." Deep in the heart of Texas, Virgin rival Blue Origin resumed launching its own space tourism flights last month, after taking a 20-month hiatus to investigate the cause of an anomaly with one of its uncrewed rockets.
Blue Origin's seventh crewed spaceflight didn't go off without a hitch. One of the landing capsule's three parachutes didn't fully inflate on descent. But despite this caveat, Blue Origin is leading Virgin Galactic in a number of respects.
First, every time Virgin launches a spaceplane, it can carry only four tourists to space, and sell four space tickets. Virgin's Delta-class spaceplanes aim to grow passenger capacity to six. But Blue Origin's New Shepard can already carry six tourists at a time, and thus already generates at least 50% more ticket revenue per flight.
Second, Virgin Galactic has flown to space 11 times so far, but Blue Origin's May launch marked its 23rd successful spaceflight, and its seventh mission carrying passengers. In both respects, Blue Origin is leading its rival.
Now, at the very moment Blue Origin has resumed flying tourists to space again, Virgin Galactic is about to stop, and take at least a year-and-a-half break? And expect the space tourism market to sit still and wait for it to redesign and build new spaceplanes to compete with Blue Origin?
I hardly think that's likely.
The next couple of years are going to be pretty rough for Virgin Galactic investors, as Blue Origin flies more and more missions, and as (I suspect) more and more Virgin Galactic customers will trade in their tickets to fly with Blue Origin instead. Blue Origin will gain experience, collect revenue, and -- importantly -- be able to spend that revenue on research and development to upgrade its space rockets even more.
Meanwhile, all Virgin Galactic can do is lose money, burn cash, and hope there's still a space tourism market to return to, when it resumes flying again itself. I personally think that's a slim hope, and I wouldn't invest in Virgin Galactic stock today.
Should you invest $1,000 in Virgin Galactic right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
