Premarket Sees Virgin Galactic Higher

admin May 11, 2023

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Sub-orbital travel company Virgin Galactic (SPCE.US) is extending gains in pre-opening market trading after telling investors that it plans to hold a test flight at the end of May to precede its first commercial mission. That one is scheduled to take place in June. Despite a larger y/y net loss in Q1 results, investors see opportunities in the planned launch of customer flights, which if they take off – will generate first revenues:

Q1 net loss was $159 million, compared to a loss of $93 million in Q1 2022.
The company had $874 million in cash and cash equivalents as of March 31

Virgin Galactic cited higher R&D spending and investments in Delta spacecraft, being built in partnership with defense giant Textron (TXT.US), as reasons for the loss. The new ships are due to launch in 2026 and generate 75% of the company’s margins.

Since the flight that took its main investor, billionaire Richard Branson, into orbit in July 2021, the company has only been ‘in space’ once (the successful VSS Unity test flight)
The company has been ‘burning through’ the cash needed to grow its business and send customers into space on a regular basis. It has sold a total of 800 tickets, for 600 of which interested parties paid between $200,000 and $250,000, with another 200 sold at $450,000 – which is also the current ticket price;
The May test flight will carry four of its employees with NASA and USAF experience and two pilots. The flight is expected to reach 50,000 feet in altitude because the U.S. considers this level the limit of space (12 miles below the so-called Karman Line);
The company’s latest financial report showed that the company’s cash is melting away. Now it is inexorably chasing time, limiting room for potential mistakes. The company needs to start generating revenue as soon as possible, it has the necessary approval from the Federal Aviation Agency, to organize commercial flights. In previous years, a period of successful flights has resulted in a rally in its share price but Virgin Galactic has repeatedly made flight schedule changes.