Virgin Galactic’s Biggest Competitor Just Made An Expensive Mistake

For private companies such as Virgin Galactic and its rivals, space can be a very expensive endeavor, which makes losing rocket parts hurt all the more

Feb. 18, 2020

Whereas we once glued ourselves to radios and televisions worldwide to witness historical space launches and moon landings, we are now resolved to Twitter (NYSE:TWTR) updates and tabloid articles to get this kind of news.

This is because the new space race is taking place in company boardrooms, not in the Kremlin or the Pentagon. Now, Tesla (NASDAQ: TSLA) CEO Elon Musk runs his own space venture, SpaceX, while Amazon (NASDAQ: AMZN) CEO Jeff Bezos has Blue Origin and Sir Richard Branson is bringing tourism to the stars with Virgin Galactic (NYSE: SPCE). 

Even Apple (NASDAQ: AAPL) is rumored to have a secret satellite project underway. 

This is an expensive business though, and on Monday, SpaceX lost a lot of money.

What happened to SpaceX’s launch?

SpaceX announced on Monday that it had successfully launched 60 of its Starlink satellites into orbit. The purpose of Starlink is to surround the Earth with high-speed, low-latency and affordable internet access through Musk’s own fleet of satellites. 

This latest Falcon 9 launch brings SpaceX’s deployment total to 300 satellites — roughly 14% of the total number currently orbiting the planet. On paper, the launch was a complete success, except for one problem:

One of SpaceX’s famous reusable rocket boosters missed its landing spot and is now lost. 

It’s the first time that the company has lost a booster since June 2016. 

SpaceX doesn’t need to worry

The lure of SpaceX to government space contracts has been its quick turnaround, reliable infrastructure, and cheaper launch costs — largely in part to its reusable rocket boosters. SpaceX flew 15 times in 2019 without substantial issues, including a successful mission to the International Space Station in December, so one blip will not panic its engineers just yet. 

What about the competition?

The incident is no cause for celebration though, especially when looking at the recent stock performance of the world’s first publicly-traded space tourism company and SpaceX’s greatest rival: Virgin Galactic. Richard Branson’s venture is up more than 40% in the past month as its 2020 rally continues, including a 21% jump last Friday.

If you are thinking of adding them to your portfolio, you should read the following article: 

The company announced just last week that it had moved its flagship tourist spaceship, the SpaceShipTwo from Mojave, California, to its commercial headquarters at the Spaceport America’s Gateway to Space building in New Mexico. The move brings the company one step closer to its first commercial launch, with the company reporting more than 600 passengers signed up already. Each ticket costs about $250,000, adding up to $80 million in collected deposits and $120 million in potential revenue, Virgin Galactic confirmed in its third-quarter earnings report. 

How will space travel turn a profit?

While Richard Branson has stated his intention to fly commercially to space for his 70th birthday this year, and Elon Musk has claimed that he hopes to die on Mars, they will not be making much near-term profit in getting to space. This money lies slightly closer to earth. 

SpaceX’s Starlink program — which SpaceX recently suggested could spin-off with its own IPO — is looking to take over the internet sector. By connecting the entire planet on a single network, Elon Musk could gain control of the potentially $2.1 trillion U.S. internet industry. 

Virgin, on the other hand, will be looking to take advantage of the aerospace duopoly that is Boeing (NYSE: BA) and Airbus (EPA: AIR). The two titans have been struggling as of late with product faults and bribery charges, respectively. Virgin can step in to build itself a moat of being the only travel company that offers hypersonic point-to-point air travel (with a few trips to space thrown in for good measure). 
We have still yet to see Virgin go to space, and we await Starlink’s eventual going online, but it is very possible that the 2020s could be the decade where space travel finally takes off.

MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.