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Virgin Galactic Holdings Inc. stock jumped more than 7% on Friday as Wall Street looked past a wider-than-expected quarterly loss for the space-tourism company to focus on the news it is selling seats on its space-tourism flights thanks to a “surge in consumer interest.”
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stock was on track for its best close in three weeks, and its largest one-day percentage increase in nearly a month. The shares are down about 42% from their record closing high of $59.41 on Feb. 11.
The reopening of space-tourism ticket sales is “a significant positive milestone for the company,” which had been expected to resume sales immediately after the July flight that carried Virgin’s founder Richard Branson and five crewmates to suborbital space, said Austin Moeller, an analyst at Canaccord Genuity.
Virgin said late Thursday it will offer single seats, a multi-seat package for couples, friends, or families, and a full-flight buyout, with prices starting at $450,000 a seat, up from a previous $250,000.
But that is down from estimates ranging from $500,000 to $600,000 a seat, Moeller said.
Virgin also surprised analysts by saying it will transition to a new spacecraft family “much faster than anticipated,” he said.
Virgin would be able to launch its Delta class spacecraft at a rate of one a week, whereas the VSS Unity class currently averages a turnaround time of between seven to eight weeks “at best.”
“Virgin Galactic’s engineers are on track to complete their designs for the Delta-class spaceship later this month, which will likely be followed by a reveal sometime later in 2021,” Moeller said.
See also: SpaceX wins NASA contract to be part of Jupiter’s moon program
On the flip side, Virgin extended its maintenance and upgrade phase, which means that September 2021 for the Italian Air Force is likely to be the company’s last mission until at least the first half of 2022.
“While the push to the right of additional customer spaceflights is somewhat disappointing, we view the company’s new focus on improving the efficiency of the
existing spaceships and scaling up the Delta-class fleet as a prudent strategic decision,” the Canaccord Genuity analyst said.
The ticket price increase from $250,000 “highlights the power of the Virgin Galactic brand and the rise of experiential luxury among high-net-worth individuals,” said Cowen analyst Oliver Chen.
The lengthier maintenance period postpones revenue generation, but the enhancements will help the supply side of the equation, with the Eve mothership no longer “a major constraint,” Chen said.
He tweaked his expectations for a first commercial test flight to the third quarter of 2022 from the beginning of the year.
Risk factors for Virgin Galactic include any technical mishaps causing delays to the first commercial space flight, technical issues emerging out of the payload flights, and fewer-than-expected flights between maintenance for the mothership Eve even after the company’s modification and enhancement period, he said.
Virgin late Thursday reported a loss of 39 cents a share on sales of $571,000, compared with expectations of a loss of 33 cents a share.
The company reported revenue of $571,000, mostly from a paid flight for NASA in May carrying experiments. The revenue was above expectations of $300,000 and compared with no revenue in the second quarter of 2020.
The stock is 40% higher this year, which compares with gains of around 17% for the S&P 500 index.
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