Sub-orbital travel company Virgin Galactic (SPCE.US) is set to begin commercial services later this month, after 19 years in business - a series of ups and downs. At the opening its stock was gaining 40%, but is now 'only' 16%. The first flight of 'Galactic 01' is scheduled to take place with the Italian Air Force - between June 27 and 30. After that, the first fully commercial flight will take place in early August - with subsequent flights taking place monthly. The company has all the relevant FAA approvals;
- Virgin Galactic reported successful routine maintenance and inspections of its main VMS Eve and VSS Unity aircraft. The company has about 800 applicants lined up to take advantage of its offer but can reopen enrollment at any time. Customers will pay from $200/250,000 (first 600 customers),to $450,000 for the last 200;
- Assuming 6 passengers ($1.2 million in revenue per flight), a rate of 1 flight per month is still a drop in the ocean if we consider the scale of Virgin Galactic's cash usage ($139 million in cash, as of Q1 2023). Counting very optimistically, the company would now have to send about 40 flights a month to avoid a quarterly loss. However, there is a chance that some of the R&D expenses will drop once commercial services are deployed and the company will try harder to save cash;
- The company is keen to start commercial flights and take passengers on board as soon as possible because its cash burn has increased rapidly recently. This, in an extreme scenario, could result in a scenario of seeking an external capital injection (the company generates virtually no profits). Without actual services, the company could have quite a problem finding an investor and could go bankrupt similar to sister company Virgin Orbit;
If truly commercial services are rolled out this summer, the company is likely to have considerably less trouble finding capital.This in this case could equate to its long-term survival and, in the long term, achieving profitability when it is able to make services available with a larger fleet and on a larger scale - the stock market realizes, however, that this is years away.
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Virgin Galactic (SPCE.US) shares, H4 interval. The SMA200 and SMA100 averages have formed a 'golden cross' potentially confirming a trend reversal, but the dynamic pressure for profit-taking may indicate that the market will not react to the company's flight with similar euphoria to the 2020-2021 period. Source: xStation5
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