Virgin Galactic (Nasdaq: SPCE) hired a new CEO, Michael Colglazier, who was previously the president of Disney Parks (NYSE: DIS). Virgin Galactic's stock was marginally higher on the news. Colglazier replaces former CEO, George Whitesides, who led the company for the last decade. Whitesides will be elevated to chief space officer. The company is gearing up for its first commercial space launch later this year.
It's in the final test stages at its launch facility in New Mexico. It's already successfully launched unpowered vehicles and its suborbital spaceplane. The next step is to test powered flight vehicles before moving onto flights for its ticket-holders.
Colgalzier's elevation is a sign that the company is going to shift from its focus on the technical aspect of safely launching humans into space to also creating a premium, travel experience for its customers. This includes accommodations, training, and ground activities. In contrast, previous CEO Whitesides was at NASA before helming Virgin Galactic.
When Branson debuted the concept of space tourism, there was a lot of skepticism of it being a viable business especially in terms of demand and safety concerns. However, there are enough rich people who want to go to space as bookings for the first flight with a cost between $200,000 to $250,000 have quickly filled up.
Currently, Virgin Galactic has $100 million in deposits which represent over $200 million in revenue once flights begin. The company has said that ticket prices will be lower during its pre-flight space but will cost over $1 million once actual flight begins.
SPCE Stock
Virgin Galactic was originally started by Richard Branson a decade ago with the idea for space tourism. Later, it was brought to public markets by Branson and Chamath Palihapitiya through a Special Purpose Acquisition Corporation (SPAC). A SPAC is a way to go public with less cost by acquiring a public company with no operations.
Palihapitiya has come to prominence in recent years, as he was an early investor in Facebook (Nasdaq: FB) and through several successful VC and public market investments. If Virgin Galactic is successful in creating a space tourism business, then this may prove to be his biggest win.
Virgin Galactic's stock became a momentum darling between November 2019 and February 2020, when it climbed from $7 to over $40. Since then, the stock gave up some gains but mainly traded sideways between $15 and $20, although it briefly dipped to $10 during the crash in March. In recent days, the stock has been moving higher.
Given that so Virgin Galactic already has a valuation of over $5 billion despite the company still working on its product. It's a good measure for the market's risk appetites. So far, it's lost money every quarter, and there's little visibility in terms of its costs in running a space tourism business. There's also a question of how much demand there will be once the initial burst of rich people excited about going to space is exhausted.