Shares of space tourism pioneer Virgin Galactic (NYSE: SPCE) gained 2.5% through 11 a.m. ET on Monday. The company’s new and improved share price appears to be benefiting from bad news for another space company entirely, however: SpaceX.
On Saturday morning, SpaceX conducted its second-ever attempt to launch a fully stacked Starship test vehicle atop a Super Heavy booster, aiming to circle the globe and crash the former into the Pacific Ocean, and pseudo-land the latter in the Gulf of Mexico. Instead, both vehicles exploded in flight.
Virgin Galactic is currently the only space tourism company carrying paying passengers on regular flights to the edge of space. Jeff Bezos’s Blue Origin company has a similar vehicle capable of making the flights, but its rocket, the New Shepard, has been grounded since an unmanned version blew up midair in September 2022.
New Shepard is expected to return to flight later this year. SpaceX, however, is arguably a greater threat to Virgin Galactic than is Blue Origin — at least in the field of space tourism. Once it has been proven safe to fly, the SpaceX Starship could potentially carry as many as 100 tourists to space, per flight — versus somewhere between three and six passengers per flight for both Virgin Galactic and Blue Origin.
What’s more, unit economics suggest that a SpaceX Starship designed to carry tourists might be able to charge far less per ticket than either Virgin Galactic or Blue Origin could — as little as anywhere from $10,000 to $100,000 per ticket — and conduct longer and more interesting flights to boot.
Saturday’s aborted Starship test flight doesn’t remove this threat from Virgin Galactic entirely, but it does delay it — pushing it out farther into the future. SpaceX will have to conduct more test flights before its spaceship can be considered safe for human spaceflight.
How long this will take is anyone’s guess, but given that seven months elapsed between SpaceX’s first full-stack Starship test flight and its second, and that several more test flights are likely, my guess would be that Virgin Galactic has at least a couple of years before it needs to worry about Starship honing in on its space tourism business.
Therefore, Virgin Galactic now has some breathing room. Investors should hope it uses this time wisely.
10 stocks we like better than Virgin Galactic
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and Virgin Galactic wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
*Stock Advisor returns as of November 20, 2023
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.
—
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact [email protected]
