VSS Unity’s 7th Glide Flight in Mojave, CA on Jan. 11, 2018.
Courtesy Virgin Galactic
Space tourism pioneer Virgin Galactic reported a larger-than-expected second quarter loss Thursday evening. But earnings don’t matter for the pre-sales start-up. Investors are focused on other things—new flight pricing being chief among them. Shares are rising in Friday premarket trading.
Virgin Galactic (ticker: SPCE) stock is up 3.5% in premarket trading. S&P 500 and Dow Jones Industrial Average futures are both up about 0.1%.
Galactic lost 39 cents a share from an insignificant level of sales. Wall Street was looking for a 33-cent loss. But earnings don’t matter at this stage of the company’s existence and a lot happened during the second quarter. The company finished a key test flight, received its commercial license from the FAA and took Sir Richard Branson to space in the company’s first crewed flight.
Third-quarter activity is going to be significant too. “Leveraging the surge in consumer interest following the Unity 22 flight, we are excited to announce the reopening of sales effective today, beginning with our Spacefarer community,” said CEO Michael Colglazier in the company’s news release. “We are delighted to open the door to an entirely new industry and consumer experience.”
It’s going to be even more expensive to fly though. The new pricing point for a seat on a flight to space will be $450,000. It’s a huge number for ordinary people, but good for the stock if Galactic can fill its spacecraft.
Cowen analyst Oliver Chen wrote Thursday that the higher prices speak to the strength of the company’s brand. He rates shares Buy and has a $51 price target for the stock.
Canaccord analyst Austin Moeller also rates shares Buy. His price target is $48. Moeller pointed out in his report that the company is transitioning to its new Delta-class ships and is also offering new sales options such as the ability to charter an entire flight.
Investors want to see forward progress with new companies, and that’s what they got with Galactic’s second-quarter report.
Investors have been on a wild ride with the stock recently. Virgin Galactic stock is down almost 50% from its February 52-week high and up more than 120% from its May 52-week low. Year-to-date, the stock is up about 33% coming into Friday trading.
Write to Al Root at [email protected]
