Virgin Galactic (SPCE) said Monday its next test flight is under review after previously saying tests were due this month, adding new doubts to when commercial service can begin. SPCE stock fell.
Virgin Galactic Test Flights
Virgin Galactic said the timing of the next flight test is currently being evaluated. But it added that work to correct electromagnetic interference (EMI) on the VSS Unity is complete, and the spaceplane is ready to start pre-flight procedures. Fixes include adding components to suppress any EMI from the flight control computer and any EMI from the ship’s wiring.
But on a conference call later, management said there is a potential wear-and-tear issue with the Eve mothership that carries the spaceplane to high altitude. The company will report back next week with an update on the schedule implications.
Previously, Virgin Galactic has said SpaceShipTwo flight tests were scheduled this month after an earlier test was aborted due to modifications that unintentionally created EMI.
Late Monday, management said after the completion of the next test flight, a second test flight will include two pilots with a full cabin of internal spaceflight participants. A third flight will include founder Richard Branson, with sales of private astronauts reopening around the same time. And a fourth flight, the last of the test flight program, will be with the Italian Air Force to demonstrate Virgin Galactic’s capabilities for microgravity research and professional astronaut training.
The company hasn’t updated pricing for private astronauts but said its research flight with the Italian Air Force will generate $2 million in revenue or the equivalent of $500,000 per seat.
Virgin Galactic has said earlier it sees the first commercial flight in early 2022, about a year later than what it previously planned.
Virgin Galactic Vs. Blue Origin
Shares lost 10% late after closing down 8.5% at 17.95 on the stock market today. SPCE stock is currently below its key 50-day and 200-day lines, according to MarketSmith chart analysis. Boeing (BA), whose venture capital arm HorizonX has a $20 million minority stake in Virgin Galactic, dropped 1.1%.
The company lost 55 cents a share, missing views for a loss of 31 cents a share and widening from 30 cents a year ago, on no revenue. Available cash slipped to $617 million from $666 million in Q4. The company expects free cash outflow to worsen to $60 million in Q2 from $50 million in Q1.
Any new delays would put Virgin further behind a top rival in the race to begin service. Blue Origin, Jeff Bezos’ space company, announced it was auctioning off seats on the first crewed flight of its New Shepard rocket in July.
Andrew Chanin, co-founder and CEO of ProcureAM, said ahead of the Q1 report that cash burn will be a key metric investors will be looking at, adding that shareholders may be concerned about a secondary offering to raise more cash.
“So now it’s not just a race against their own cash position, but we’re starting to see a much more formalized race between Virgin Galactic and Blue Origin,” he told IBD.
“So, although Blue Origin isn’t publicly traded and is going to be very difficult for most investors to get exposure to, it is something that I think everyone in the space tourism industry is now looking at.”
Late Monday, Virgin Galactic said it’s “really important” that Blue Origin be successful because it will “normalize the idea of human spaceflight to the market.” Management added that it doesn’t matter to its business if Blue Origin launches a crewed flight in July.
SPCE Stock Sales
Virgin Galactic’s earnings come as key investors sell their stake in the commercial space company.
Cathie Wood’s ARK Investment Management exchange traded funds sold 590,000 shares in Virgin Galactic in late April, just three weeks after launching her new space ETF.
Meanwhile, Virgin Galactic founder Richard Branson sold about $150 million worth of SPCE stock, about 2.5% of the space tourism company, in mid-April, according to a recent regulatory filing.
And in early March, Chamath Palihapitiya, the chairman of Virgin Galactic, tweeted that he sold his 6.2 million-share personal stake. But he still owns 15.8 million shares via his special purpose acquisition company, Social Capital Hedosophia Holdings, which took SPCE stock public.
Investors will soon have more space stocks to choose from. Astra Space is going public via Holicity (HOL), Momentus is going public via Stable Road Capital (SRAC) and Vector Acquisition (VACQ) will take Rocket Lab public in a deal that values the space company at $4.1 billion. Redwire Space is merging with Genesis Park (GNPK) to go public. And sister company Virgin Orbit is considering a public stock listing via a blank-check merger.
Follow Gillian Rich on Twitter @IBD_GRich for space news and more.
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