The central theses
- Analysts estimate earnings per share at $ -0.34 versus -0.30 for the second quarter of FY2020.
- The company is expected to post revenue for the first time since the first quarter of fiscal 2020.
- Virgin Galactic plans to launch customer flights into space in 2022.
Virgin Galactic Holdings Inc. (SPCE) attracted worldwide attention in July when its billionaire CEO Richard Branson became the first person to fly into space with a rocket he financed. The flight marks the beginning of both burgeoning space tourism and the so-called “billionaire space race,” in which Branson and Amazon.com Inc. (AMZN) Founders Jeff Bezos vie to be the first private rocket developer to reach space. Bezos flew to the edge of space a few days after Branson, but reached greater heights using a rocket developed by his company Blue Origin.
Investors will watch how this competition could have affected Virgin Galactic’s finances when the company closes on August 5th for its second fiscal year (For your information) 2021. Analysts expect mixed results. It is forecast for the company that the losses per share will increase slightly compared to the previous year (YOY) Basis. However, Virgin Galactic is also expected to post sales for the first time since the first quarter of FY2020.
Virgin Galactic’s stock has been very volatile over the past year. The company’s shares soared in early 2021 before giving up on all of those gains and falling below the broader market in the spring. After falling to a low in May, Virgin Galactic shares rallied again, peaking in late June before plummeting again. The stock is currently trading just below the overall market with a one-year total return of 26.4% versus 33.0% for the S&P 500.
Virgin Galactic win history
Virgin Galactic did not generate positive earnings per share (EPS) in every quarter since at least the first quarter of FY 2018. Losses gradually widened throughout FY 2019 and then steeply in the first quarter of FY 2020 before recovering somewhat by the end of the year. In the first quarter of FY 2021, losses increased on a sequential basis. Now analysts are forecasting that losses will also widen in the second quarter of FY 2021, albeit on an annual basis and not sequentially.
Since Virgin Galactic has not yet begun customer flights, its primary sources of income are the transportation of scientific commercial research and development payloads on its space systems and the provision of engineering services to the US government. The company expects to eventually generate most of its revenue from selling tickets for flights into space.
Virgin Galactic’s quarterly revenue was relatively low through the first quarter of FY2020. Then, beginning in the second quarter of this year, the company had no sales for four consecutive quarters. Now analysts expect Virgin Galactic to report sales again in the second quarter of FY 2021. This sales estimate is expected to correspond to the value from the second quarter of FY 2019.
For the full year FY 2021, analysts expect an annual loss per share of 1.41 US dollars, which would be the largest loss per share in at least three years. Sales are expected to increase from $ 0.2 million to $ 3.0 million.
|Virgin Galactic Key Stats|
|Estimate for Q2 FY 2021||Q2 FY 2020||Q2 FY 2019|
|Earnings per share ($)||-0.34||-0.30||-0.23|
|Revenue ($ million)||0.6||N / A||0.6|
Source: Visible alpha
With Virgin Galactic, Blue Origin, and a small number of other space companies vying for supremacy in the burgeoning space tourism industry, there may be room for optimism for investors. As of July 12, 600 people had already reserved tickets for space flights between $ 200,000 and $ 250,000 per person. Another 400 people have reportedly expressed an interest in tickets as they become available, with fares expected to rise between $ 300,000 and $ 400,000.
The high cost of space travel can make it difficult to assess the addressable market of Virgin Galactic’s space tourism arm, but a current estimate is $ 600 billion. The risks associated with space tourism can also be high. Virgin Galactic expects commercial service to begin in 2022.