Virgin Galactic shares fall after it posts further losses

Virgin Galactic, the ambitious space tourism startup founded by British entrepreneur Richard Branson, posted a net loss of $73 million for the fourth quarter.

For the year, the US-based company reported a loss of $211 million on revenue of just $3.8 million.

It was widely expected that the company would still be burning through cash as it works to clear its suborbital space plane with regulators so it can send its first paying customers aloft. Galactic executives said Tuesday that the company has cleared 20 of the 29 testing milestones that are required before it can receive approval from the Federal Aviation Administration to begin commercial flights

Following its earnings report, Virgin Galactic shares fell more than 5% during after hours trading.

The company officially began trading on the New York Stock Exchange in October. Investors have sent the stock on a meteoric, albeit volatile, climb in recent weeks even though there have been no significant updates from the company.

Its shares are up nearly 200% so far in 2020 and analysts say that may be because investors are excited about the broader space industry. Virgin Galactic is the only company among a crop of so-called “new space” ventures, which includes SpaceX and Blue Origin, that’s publicly traded.

Even analysts who are optimistic about Virgin Galactic’s future say investors may be getting ahead of themselves.

Morgan Stanley analyst Adam Jonas wrote in a note to investors last week that the sudden, dramatic spike in Virgin Galactic’s value took analysts “by surprise” and said a “modest correction is overdue and, frankly, healthy.”

Morgan Stanley’s current price target for Virgin Galactic is $22 per share, but the stock price has spiked to about $40 several times in recent weeks. The bank’s analyst say they are bullish on the company overall.

Virgin Galactic also announced that it will once again start selling tickets for rides on its SpaceShipTwo, potentially adding a new source of revenue as the company finishes testing. Customers will be able to put down a $1,000 deposit starting Wednesday.

It’s not clear what the full-price of those tickets will be.

Since its founding in 2004, more than 600 people have reserved flights with Virgin Galactic at prices ranging from $200,000 to $250,000 per seat. Customers only pay the full ticket price once they are ready to board, but those reservations represent up to $120 million in potential revenue, the company says. Galactic stopped taking orders after it saw a huge spike in interest following its first successful test flight in December 2018. The company has executed one other test flight since then.

CEO George Whitesides said Tuesday that Galactic has received nearly 8,000 inquiries about tickets over the past 14 months, indicating a significant number of high-net-worth individuals who are eager to sign up.

Beth Moses, the company’s head of training, previously told CNN Business that Virgin Galactic will want to conduct tests with as many as four passengers on board before the spacecraft will be deemed ready for commercial operations.

Moses is so far the only person to have ridden as a passenger aboard SpaceShipTwo. Branson also plans to ride aboard the plane during test flights. The company’s executives did not give a specific date for when they expect their next test flight to take place or their first commercial mission.

ARK Invest analyst Sam Korus said that, like others in his field, he believes Galactic will have a bright outlook if the company can evolve beyond delivering suborbital tourism flights for the ultra-wealthy.

Galactic has long said it could parlay the technology it developed for space tourism flights into delivering supersonic travel between cities. That business plan likely would not take shape anytime soon, Korus added.