The Merger of Richard Branson’s Virgin Galactic and venture capitalist Chamath Palihapitiya Social Capital Hedosophia Holdings, a special purchase acquisition company will trade on the New York Stock Exchange under the ticker symbol “SPCE.”
By James DiGeorgia,
On Monday, Virgin Galactic (SPCE) valued at $1.5 billion launches a new era in commercial space companies regardless of whether or not space tourism is a sustainable market.
NASA astronaut Leroy Chiao like many involved in man reaching towards the heavens’ is describing SPCE by saying, “This is an exciting opportunity.” The former astronaut, however, is smart enough also to say… “I think the jury is out, but it will be exciting to follow,”
Virgin Galactic claims it already has customer reservations from over 600 people in 60 countries to soar into orbit as a paying tourist. SPCE earlier this month also announced an investment of $20 million from aircraft giant Boeing (BA) and, along with Under Amour (UAA), unveiled breathtaking and yet sleek next-generation spacesuits to be worn by Galactic passengers during flights.
Scott Parazynski, the author of The Sky Below and also former NASA space pioneer, sees long term potential for the commercial space industry…
“I see ourselves in the barnstorming era of commercial human space travel, and I hold out hope that what's happening in suborbital and low earth orbit space will eventually lead to point-to-point global travel and even touristic space station and lunar outpost flights in the future,”
A good many multi-billionaires agree, and as a result, the number of companies like Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin is investing tens of billions of dollars to build the infrastructure and equipment.
Regardless of the excitement or better because of it, we at WallStreetRebel.com are compelled to warn those looking to jump on Virgin Galactic’s (SPCE) IPO, especially if it spikes to a ridiculous valuation on the excitement.
We could see SPCE jump to $3, $5 even $10 billion valuations very quickly on space enthusiasm and the promise of trillions of dollars in upside potential even though space travel may not be a realistic aspiration for everyday citizens — a flight on Virgin Galactic certainly won’t be cheap. A 90-minute journey is estimated cost is a whopping $250,000. That’s the estimate now, but it’s not a guarantee. The trip could easily cost $2.5 million by the first launch, according to many observers.
Even former Astronaut Parazynski sees the danger of economics involved saying …
“I'm bullish on commercial human spaceflight as a whole, and it's incredibly exciting that several contenders are about to start launching their first paying customers. What's yet to be seen is if there's a sustainable market at a price point where sufficient customers will pay.”
Consider the fact that a trip with NASA via a Russian rocket to the International Space Station as a “private astronaut” currently costs a staggering $52 million per person. Parazynski warns...
“I fear that [Virgin’s] addressable market is rather small, and the ability to drop that price point significantly is going to be extremely challenging,”
Leroy Chiao Leroy Chiao cautions that if the price of the adventure into space for tourists becomes too expensive, a company like SPCE could find a limited audience that could make a company like SPCE survival limited.
The danger will be enormous for the initial passengers and crew. The technology needed to make these SPCE adventures routine like quantum computers is still several years from becoming a reality. One major accident could become a death blow to SPCE.
WallStreetRebel.com cautions investors: While we could see frenetic upward trading that pushes SPCE shares well above the $1.5 billion estimated valuation, the company could see its share price double, triple or quadruple in price, it could also like Beyond Meat (BYND-Nasdaq) and collapse in value as cost, competition, and market size starts to overtake the enthusiasm.