Virgin Galactic’s loss could rise as operating costs rise

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

Virgin Galactic’s net loss for the fourth quarter likely rose 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 the markets close on February 28.

The company’s mounting losses underscore the barriers to entry into the high-stakes space tourism industry, which to date has been dominated by three billionaire-backed companies: Richard Branson’s Virgin Galactic, Amazon founder’s Blue Origin, Jeff Bezos, and Tesla founder Elon Musk’s SpaceX. Unlike its competitors, which have separately won billions of dollars in NASA contracts, Virgin Galactic plans to earn most of its revenue from the sale of spaceflight, a market that is projected to reach about $20 billion. by 2031.

Virgin has spent almost $1.5 billion in the last five years to prepare for commercial flights. After a successful test flight that brought Branson and three Virgin employees to the edge of space in July 2021, the company began a “planned improvement program” on its flagship spacecraft, the aircraft carrier VMS Eve and the space shuttle VSS. Unity. 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 suborbital flights that were scheduled for the end of the year. The company says it is on track to start operating those flights in the second quarter of this year. SpaceX was recently valued at $137 billion during a private fundraising round.

Virgin Galactic shares have risen this year, buoyed by optimism that sent riskier stocks higher in January. Still, the stock is down nearly 43% in the past year, compared with a 19% drop for the consumer discretionary sector of the S&P 500.