My Bullish Thesis

Prediction

I believe that this stock will be worth $1,000 per share as early as January 1, 2030. I believe this will happen because Virgin Galactic is attempting to reduce the ETA of commercial flight using rockets! Check out the plan:

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Who is Virgin Galactic (SPCE)?

Virgin Galactic is a commercial spaceflight company that is headed by CEO "Sir" Richard Branson (Yeah, he's a knight pretty cool). The company is going to take people into the upper atmosphere to no gravity/low gravity altitudes for the price of $250,000 per seat.

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White Knight Two - White Knight is the first stage of a two-stage launching system designed to launch Spaceship Two.

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Spaceship Two - It exists. The space tourism company's latest SpaceShipTwo vehicle, known as VSS Unity, has made two crewed test flights to suborbital space, first in December 2018 and then again in February 2019. The company is launching "Sir" Richard Branson into space sometime soon. Safe travels! :)

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CEO ("Sir" Richard Branson)

Richard Branson is the founder and CEO of Virgin Records; however, since its founding the Virgin brand has grown into a business empire including Virgin Atlantic Airways and Virgin Mobile. The main reason I like Richard Branson as CEO is because he has deep pockets, influence, and a lot of experience. If the company needs funding Richard Branson will be able to secure it. 

 

Market Opportunity ($800 billion)

About the Size of the Airline Industry (Maybe Larger) -I believe that this company has the potential to disrupt the airline industry. Although the global airline industry is projected to shrink to 668 billion U.S. dollars in 2020 due to the COVID-19 pandemic, the airline industry is typically a gigantic industry worth over $800 billion. The travel industry will return to normal eventually. Whether that is in 2021 or 2022 is yet to be decided.

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Business Plan/Goals

Speeding up Intercontinental Travel Using Space - Virgin Galactic is looking into speeding up intercontinental flight by launching commercial spacecraft. Currently to travel from LAX to Hong Kong by plane it takes about 17 hours. By flying at much higher altitudes (up in Earth's thermosphere, where there's little air to "boom"), and at speeds nearly twice Concorde's maximum speed, Virgin Galactic thinks that within just a decade or less it could be offering trips between Los Angeles and Hong Kong in as little as two hours (versus the 13 hours it takes to fly there today). A hypersonic flight from San Francisco to London could be completed in as little as 90 minutes.

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I believe that the wealthy will be willing to pay to travel from Los Angeles to Hong Kong in 2 hours for $200,000. Over time, as Virgin Galactic builds out its fleet the cost of high speed space travel will reduce and be available to more and more people. Eventually we will ask why would anybody fly by plane when you can fly by spaceship? (Sound familiar? It should because this is exactly what Tesla did)

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Fleet expansion - SPCE hopes to have 5 SpaceShipTwo crafts and 2 WhiteKnightTwo crafts in service by 2023.

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The Bear Thesis

Rockets go boom - One big drawback with this company is that sometimes rockets go boom! As we all know, rockets are highly complex vehicles and once or twice one has been known to explode. Virgin Galactic needs to convince the public that these rockets are going to be safe. Nonetheless there is a new space-race coming and new technological advances in travel are always welcomed. I would be happy to invest in a company that is hoping to make flight from LAX to Hong Kong faster and more enjoyable! :)

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Competition - Virgin Galactic is not the only company looking to do this. Elon Musk has said that SpaceX could go public sometime soon and that he is a big fan of retail investors. Also, Jeff Bezos' blue origin is also private held as of this moment but could choose to go public at anytime.

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Lack of Profitability - The company is still only making test-flights. They aren't profitable because they don't have a product to sell, but the tech exists and is on its way to the market soon. It is only a matter of time before the company begins making commercial flights. We will see about profitability then.

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COVID-19 - COVID-19 has really destroyed the travel industry. Luckily, this company is still in its infancy so it wasn't hit as hard because they weren't selling anything anyway. We'll have to see how hard the travel industry bounces back after COVID.