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Virgin Galactic is making bold moves in the space flight industry and could be a formidable player in the future, however, with the recent run-up of SPCE stock, one might consider waiting for better entry levels ahead.
American spaceflight company Virgin Galactic Holdings Inc (NYSE: SPCE) has been in the news recently with SPCE stock performing pretty well. Although volatile in nature, SPCE stock has nearly doubled since November 2020. Though the stock price corrected 7.76% during the last trading session on Friday, January 15, today in the pre-market it is up 8.18%.
The buzz around Virgin Galactic stock is mainly because the ARK Investment Management filed a Space Exploration ETF with the US Securities and Exchange Commission (SEC). Investors are rejoicing with the view that the entry of big players means that there’s potential growth for the sector in the future. Besides, it will also help to bring the SPCE stock within the index.
Virgin Galactic is not a new company and has 15+ years of existence in the space market. sir Richard Branson co-founded the company in 2004 with the vision that space can be the next frontier for tourism. Over the last several years, the company has raised enough capital to build its infrastructure. Besides, it has also worked on different safety systems and innovations taking place in the sector.
For e.g. Virgin Galactic developed its own sophisticated propulsion technology. Furthermore, it also developed a vertically integrated platform allowing improved quality control. Virgin Galactic is planning to bring space flights to tourism. However, the ticket-size for such flights could be anywhere between $200,000 to $250,000.
However, analysts believe that many people have the appetite to pay for it. Credit Suisse said that nearly 2 million people worldwide are worth more than $10 million. Also, wealth management giant UBS thinks that space tourism will be a $38-billion market by 2030.
Apart from space tourism, Virgin Galactic can also offer services for NASA. Besides, the company can also earn licensing revenues from its proprietary jet propulsion systems.
Who Should Invest in SPCE Stock?
While SPCE stock has gained massive grounds, it has also remained largely volatile over the past few months. Also, the developments are still in the early-stage and Virgin Galactic can face multiple hurdles over a period of time.
Thus, investors with high-risk appetite and patience to wait for many years must consider this stock. On one end, the market potential is enormous, however, there are significant risks as well. This is just how the space flight industry operates despite several technological developments.
Moreover after the steep rally recently, one might look at better entry positions and allow the stock to cool down a bit.