Virgin Galactic Stock – Profit or Peril?
Jeff Bezos, Elon Musk, Sir Richard Branson, can you imagine being a fly on a wall at a boardroom discussion between these three titans of industry? What would you overhear as they whizzed between topics like a pinball in a pinball machine? Certainly, it would feature an animated dialogue about their shared desire to commercialize space travel.
At present, Richard Branson’s Virgin Galactic is the only one of the big three companies participating in the commercial space race to be publicly traded, and therefore available for Joe and Jane Public to purchase via their Virgin Galactic Stock (SPCE). However, just because you can buy a slice of the company doesn’t mean you’ll be able to afford a seat on the bus. According to Virgin Galactic’s corporate website (virgingalatic.com) the sticker price for this gravity defying experience is $250K, although there are no tickets for sale at the moment.
Virgin Galactic Stock performance
SPCE deputed on the New York Stock Exchange (NYSE) on October 28th, 2019, and much like the soaring and sometimes crashing history of its tech, the stock has experienced substantial volatility since then. While it’s up more than 200% for the last three-month period (as of mid-February 2020), it was trading as low as $6.90 per share on November 25th, 2019.
Why the highs and lows?
The factors underpinning the stock’s volatility range from technological setbacks to personnel additions (such as filling a newly created COO position in January 2020 with seasoned professional Enrico Palermo) to third-party institutional investment and the relative newness of the stock itself. While the company is not actively conducting space flights and collecting revenue today, it did recently sell a significant chunk of shares to Park West Asset Management, a California-based hedge fund, perhaps a sign of things to come.
The future of SPCE
Virgin Galactic and its leadership team have lofty goals philosophically, not just literally. Their published mission includes “using space for good” and “democratizing space.” Can they do it? And will they be able to turn a profit along the way? There are simply too many variables to predict. From technology refinement to regulation to good old-fashioned supply and demand, there are a number of hurdles that will have to be clarified and cleared before stakeholders can reasonably consider money poured into the stock anything more than speculative.
Why Virgin Galactic's stock is soaring
Strap in or sit out?
Should the average stock investor allocate a portion of his or her hard-earned paycheck toward SPCE? Well let’s start by assuming that the average stock investor is a different animal from the average worker. The average worker should pick a low-cost target date fund or basket of index funds, automate their investment, and forget about it. However, the average stock investor should do the homework, decide if the drama and dream of space travel is beguiling enough to win the necessary dollars, and then allocate a small portion of his or her portfolio, the amount earmarked for speculation. After that, buckle up for what could be both an exciting and bumpy ride!