Stunts are Virgin founder Sir Richard Branson’s stock in trade. Well aware that Jeff Bezos plans to fly in a Blue Origin rocket on July 20, Branson is expected to climb aboard a Virgin Galactic flight this Sunday. News that the space flight company will launch its first test mission with a full crew put a booster under the share price. Branson may be tempted to continue selling down his stake.
Virgin Galactic is shrewdly commandeering some of the attention garnered by Bezos’s flight, who stepped down as chief executive of Amazon on Monday. On every other metric, Virgin Galactic appears to be lagging behind. Its spacecraft launches from an aircraft and is expected to rise 55 miles in the air. Blue Origin’s rocket takes off from the ground and will go up about 66 miles.
Putting Branson on a flight a few days before Bezos does not mean Virgin Galactic will be first to launch commercial operations, either.
That uncertainty seems to trouble investors only periodically. In May, news that a test flight might be delayed knocked shares down a fifth. Yet when regulators cleared the company to fly passengers last month, the share price jumped by almost a third.
Both Branson and Bezos are travelling to the “edge of space”. Neither can be sure that there is a large pool of customers waiting to do the same. Virgin Galactic’s near-$11bn valuation is more connected to a low interest rate environment than the known market for space tourism.
It has a few more years to find out. In the last quarter, the New York-listed business reported $617m cash on hand. Given it burnt through $50m and is expected to combust another $60m in the second quarter it appears to have about 10 quarters of cash left. There is also about $80m from advanced ticket sales, though this is not yet counted as revenue. Branson is in the process of selling shares. But it makes sense for the group to raise capital for itself when the share price is riding high.
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