Virgin Galactic’s Loss Could Widen as Operating Costs Balloon

Virgin Galactic Holdings Inc. (SPCE), the world’s first publicly traded space tourism company, likely lost over $100 million in the fourth quarter as operating costs surged and the company geared up to begin commercial operations.

Key Takeaways

  • Analysts expect to see a year-on-year earnings decline against higher revenues.
  • Investors cheered a test flight of the VMS Eve mothership in February.
  • Virgin Galactic is nearing commercial readiness for its consumer space flights.

Virgin Galactic’s net loss for the fourth quarter likely increased 72% to $139 million, or 52 cents a share, from $81 million a year ago, according to estimates compiled by Visible Alpha. The company is expected to report $0.5 million in revenue, a 251% year-over-year increase more than offset by a 125% increase in research and development costs ($93 million). Virgin Galactic reports results after markets close Feb. 28.

The company’s widening losses underscore the barriers to entering the high-risk space tourism industry, which to date has been dominated by three billionaire-backed ventures: Richard Branson’s Virgin Galactic, Amazon founder Jeff Bezos’s Blue Origin, and Tesla founder Elon Musk’s SpaceX. Unlike its competitors, which have separately earned billions of dollars in NASA contracts, Virgin Galactic plans to derive the bulk of its income from selling space flights, a market that is projected to reach about $20 billion by 2031.

Virgin has burned through almost $1.5 billion in the last five years to prepare for commercial flights. After a successful test flight that took Branson and three Virgin employees to the edge of space in July 2021, the company began a “planned enhancement program” on its flagship spacecraft, the VMS Eve carrier and VSS Unity spaceliner. The VMS Eve returned to the skies for the first time in over a year earlier this month.

Last year the company began selling $450,000 tickets—including a $150,000 deposit—for 90-minute, sub-orbital flights that were scheduled for the end of the year. The company says it is on track to begin operating those flights in the second quarter of this year. SpaceX was recently valued at $137 billion during a round of private fundraising.

Shares of Virgin Galactic have rallied this year, buoyed by the optimism that lifted riskier equities higher in January. Still, the stock is down almost 43% in the last year, compared with a 19% decline for the S&P 500 Consumer Discretionary sector.

Source: TradingView.


Virgin Galactic Key Stats
  Estimate for Q4 2022  Q4 2021  Q4 2020
Adjusted Earnings Per Share ($) -0.52 -0.31  -0.35
Revenue ($M) 0.5 0.14 0
Research and Development Costs ($M) 93.3 41.5 41.5

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