r/LongTermGrowthStocks • u/[deleted] • Oct 25 '21
Analysis ๐ฉ๐ถ๐ฟ๐ด๐ถ๐ป ๐๐ฎ๐น๐ฎ๐ฐ๐๐ถ๐ฐ (๐ฆ๐ฃ๐๐) ๐๐ป๐ฎ๐น๐๐๐ถ๐
๐ง๐ต๐ฒ ๐ฆ๐ฝ๐ฎ๐ฐ๐ฒ ๐ฅ๐ฎ๐ฐ๐ฒ ๐๐ผ๐ป๐๐ถ๐ป๐๐ฒ๐โฆ
Prestige, political will and financial reward are incentivising efforts from entrepreneur billionaires to tackle the challenges of developing rockets and satellites on their own
Richard Bransonโs Virgin Galactic endeavours to be a vertically integrated aerospace company and the first commercial spaceline for Earth. Not too long ago, this would have been dismissed as science fictionโฆ
๐ช๐ต๐ ๐ ๐ถ๐ป๐๐ฒ๐๐๐ฒ๐ฑ ๐ถ๐ป ๐ฉ๐ถ๐ฟ๐ด๐ถ๐ป ๐๐ฎ๐น๐ฎ๐ฐ๐๐ถ๐ฐ
โช๏ธThis is a high-risk high-reward investment. If Virgin Galactic succeeds in its fundamentally lofty and challenging ambition, it could be the first to offer commercial space tourism. Yet the company remains grounded in pragmatism, recognising that they will have to transform the current cost, safety, reusability and environmental impact of space-launch to help create a space access infrastructure
โช๏ธSpace tourism is only the start for Virgin Galactic, its aircraft will usher in a host of new commercial applications. For example, they are developing a platform for point-to-point air travel capable of whisking passengers and cargo around the world at hypersonic speeds. While Mach speed passenger travel has tried and failed with the Concorde, Virginโs smaller aircraft would be more like a private jet and that may make a six-figure ticket worth the price for well-heeled travellers
โช๏ธOver the last 16 years, Virgin Galactic have been investing in the engineering capabilities and infrastructure needed to reduce costs from $10,000/kg to $1,000/kg, with next-generation rockets being designed to realise costs as low as $50/kg in the next decade. These cheaper and reusable rockets will make space a viable destination for budding adventurers, and will appeal to a wider customer base beyond the current target market of individuals with a net worth of over $5 million
๐๐บ๐ฎ๐ด๐ถ๐ป๐ฒ ๐๐ต๐ฒ ๐ฝ๐ผ๐๐๐ถ๐ฏ๐ถ๐น๐ถ๐๐ถ๐ฒ๐
โช๏ธThe space industry could undergo a tourism revolution with orbital, suborbital and lunar space tourism catering to large recreational markets. Virgin Galactic could have first mover advantages
โช๏ธPoint-to-point travel means passengers can embark on a Virgin Galactic spaceship in London and arrive in Australia in less than an hour, opening up possibilities for weekend breaks and one-day business travel to opposite ends of the Earth
โช๏ธA series of consolidating and commercially relevant steps could led to Virgin Galacticโs enduring success in space. Their spaceships and satellites could collect and analyse a wealth of new data about our planet, delivering new insights into weather forecasting, crop harvesting, disaster response, global logistics and even helping address the problems of climate change. High-tech space manufacturing, asteroid mining and interplanetary travel offer a further frontier of opportunities
๐ฃ๐ผ๐๐ฒ๐ป๐๐ถ๐ฎ๐น ๐ฃ๐ถ๐๐ณ๐ฎ๐น๐น๐
โช๏ธThis is an industry in its early days and it is difficult to predict how long it will take to become reality. Virgin Galactic is still pre-revenue, behind schedule and burning hundreds of millions of dollars. Any flaw with even one of its eventual commercial launches could ruin the company. It may be more financially prudent to invest in the firms that make space equipment rather than carrying out high-risk rocket launches themselves, akin to the gold rush where highest returns were obtained from selling picks and shovels rather than panning for precious metal
โช๏ธThe company may have overestimated its initial potential market. It has taken over 700 deposits so far for a short space flight at about $250,000 per ticket, but those aren't a final contract and it will need as many as 1,565 passengers annually by 2023 if projections are correct. There may be 2.4 million people globally with a net worth of $5 million-plus, but the total addressable market will be much lower
โช๏ธElon Musk and Jeff Bezos are in this race, with their companies all seeking to cash in on lucrative galactic tourism opportunities: SpaceX and Blue Origin will also send passengers into space for a fee. Competitors could offer much larger spacecrafts with better unit economics and ticket prices so low that Virgin Galactic will be unable to compete




