Virgin Galactic (SPCE) shares were taking a beating in Monday’s session after the company announced plans to sell $500 million’s worth of stock to raise capital. However, that will probably matter little to founder Richard Branson.
The day before, strapped to his seat on the VSS Unity, the billionaire, along with 3 Virgin Galactic employees and 2 pilots, traveled into space for the first time. Possibly the only one watching gritting his teeth was fellow billionaire Jeff Bezos, who will have to console himself with coming second when he heads as a tourist into space on the Blue Origin owned New Shepard on July 20.
During the flight, the VSS Unity managed a top speed exceeding Mach 3 and reached an apogee of 53.5 miles (or 86 kilometers), some way above an altitude of 50 miles (or 80 km) which NASA and the US Space Force define as the edge of space, although Canaccord’s Ken Herbert thinks someone might want to have a word about that.
“While Blue Origin is likely to nitpick the apogee of Branson’s flight (above the US-defined space border) in contrast with the internationally recognized Karman Line (100 km) in the coming days,” said the 5-star analyst, “We view Branson’s achievement as a massive marketing coup for Virgin Galactic that will be impossible for the public to ignore.”
Upon landing, Branson seemed to ignore a prior promise for a big announcement, as the post-flight glitzy press conference lacked any news about reopening ticket sales.
Nevertheless, Herbert thinks there are several upcoming catalysts for what Branson has called “THE spaceline for Earth.” These include: “A.) The upcoming Italian Air Force flight; B.) The completion of VSS Unity and VMS Eve maintenance work in Q4/21; and C.) a future announcement regarding revised ticket prices above the previous $250k level.”
It is the reopening of ticket sales to “prospective ‘future astronauts,’” which Herbert thinks will provide an indication whether there is a real thirst for the service beyond the backlog of 600+ participants waiting to board a spaceflight.
“If demand remains high even at a likely higher revised ticket quote (e.g., $500k),” the analyst opined, “This will be a very positive indicator for Virgin’s business model.”
Branson once again demonstrated his marketing nous and showman skills, but the challenge now, says Herbert, is for the company to “maintain the momentum and establish a flight plan in 2022 that can demonstrate a repeatable and increasing commercial launch cadence.”
All in all, Herbert sticks to a Buy rating for SPCE stock, although his $35 price target is 17% below the current share price. It will be interesting to see whether the analyst downgrade his rating or upgrade the price target over the coming months. (To watch Herbert’s track record, click here)
Overall, the analyst consensus rating here is a Moderate Buy. This is based on 4 Buys, 6 Holds, and 1 Sell. (See SPCE stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
