Virgin Galactic launches (on the New York stock exchange)
Virgin Galactic has become the first publicly traded space tourism company as Sir Richard Branson’s venture prepares to take its first paying customers beyond the confines of the planet.
Investors can buy shares under the stock market ticker symbol “SPCE” in the company, which is betting enough wealthy tourists will pay the $250,000 (£195,000) ticket price to make a return on investments in the ambitious business that have run into hundreds of millions of dollars.
Shares opened at $12.34 on the New York stock exchange, before rising as high as $12.93. The company’s market value was more than $2.4bn in early afternoon trading, with 196m shares in issue, according to a spokesman.
Virgin Galactic raised $450m through an unconventional merger with Social Capital Hedosophia, an investment vehicle run by the former Facebook employee Chamath Palihapitiya. Existing Virgin Galactic shareholders, including Branson, will own about 59% of the new company, which will be known as Virgin Galactic Holdings.
The commercial space sector has been well developed for decades, mainly for telecommunications and surveillance satellites. However, space tourism has taken much longer and has so far been driven by the personal ambitions of deep-pocketed billionaires, rather than expectations of near-term profits.
Virgin Galactic is going up against SpaceX, the rocket company founded by Elon Musk, the chief executive of the electric carmaker Tesla, and Blue Origin, the company owned by the
Amazon founder, Jeff Bezos, which aims to take people to the moon by 2024.
Virgin Galactic decided to list after trying to raise money privately, including talks with the government of Saudi Arabia, which were suspended after the state-sanctioned murder of Jamal Khashoggi, a journalist critical of the regime.
The company, which is led by the former Nasa chief of staff George
Whitesides, has been developing space vehicles in the Mojave desert in California, and has its main commercial operations in New Mexico.
Branson, whose various business interests have ranged from airlines and trains to bridal wear and cola, has repeatedly made optimistic predictions about Virgin Galactic’s schedule for taking people to space, but the company has also had several setbacks, including a crash in 2014 that killed a test pilot.
However, Virgin Galactic claims to have customer reservations from more than 600 people – reportedly including the actor Leonardo DiCaprio and the pop star Justin Bieber – representing approximately $80m in total collected deposits, and more than $120m in “potential revenue”.
In December, a test flight of its SpaceShipTwo made it to the edge of space for the first time, travelling at almost three times the speed of sound. The company expects to launch its first commercial flights in the first half of 2020.
Virgin has also gained the backing of more traditional space operators, including a $20m investment by Boeing. The manufacturer has agreed to work with Virgin Galactic on technology.
Analysts forecast the space tourism industry will grow rapidly in the coming decade. The Swiss investment bank UBS estimates the industry will be worth about $3bn by 2030, growing by more than 10% a year.
While space tourism is the aim of many billionaire-backed companies, new propulsion technology could open revenue streams less reliant on the super-wealthy, according to Jarrod Castle, a UBS analyst.
“The real opportunity if you can get it right is to do long-haul travel,” he said. “That would have a much more mass market.”
Documents filed by Virgin Galactic before its stock market debut suggest it will eventually aim to open space travel to more people, reducing costs, before trying to “disrupt long-haul travel”.