Today, public market investors will have their first opportunity to buy shares in a space tourism company when Sir Richard Branson’s Virgin Galactic starts trading on the New York Stock Exchange.
The company’s shares will begin operating in the stock markets after raising $800 million in an agreement with Social Capital Hedosophia Holdings, a special purpose ( cash shell ) company that started Chamath Palihapitiya, a former Facebook executive.
The pact, which gives the company a business value of 1.5 billion dollars, allows Virgin Galactic to raise capital while avoiding the traditional process of an IPO. Virgin Galactic’s debut in public markets marks a key moment in Sir Richard’s bet that rich people will pay many dollars for recreational space flights, an area that attracted his billionaire colleagues Jeff Bezos and Elon Musk.
The company managed to attract 600 customers who already promised to pay up to 250 thousand dollars to travel to space, among them are Justin Bieber and Leonardo DiCaprio. Virgin Galactic has not yet launched a commercial flight for paying customers.
The firm projects that it will lose money on $31 million in revenue next year, but will achieve positive profits in 2021, under the assumption that the launch of 115 flights will generate revenue of $ 210 million. Although publicly traded companies such as Boeing and Lockheed Martin are involved in spaceflight, Virgin Galactic will be the first to focus specifically on space tourism.
The IPO occurs during a turbulent period for high profile companies entering public markets. Uber’s shares have already fallen almost 30 percent since its IPO in May, while the actions of rival Lyft have lost almost 40 percent of their value since their debut in March.
“These are difficult times in the IPO market,” said Matt Kennedy, senior strategist for initial public offering at Renaissance Capital. “If investors don’t make money in the IPO market, that makes everyone more cautious.
Cindy Stroman is one of our senior news editors. Cindy graduated from Columbia in 2002 with a degree in Business Management. She likes social media trends, being semi-healthy, and walking her dog. When she isn’t writing, Cindy loves to travel. Cindy’s last trip was a castle tour of England.