Go Go Galactic: Virgin Galactic launch on the New York Stock Exchange
November 20, 2019
2 min read
What's going on here?
On the 28th of October 2019, Virgin Galactic Holdings (VGH) debuted on the New York Stock Exchange (NYSE). The company, founded by Sir Richard Branson, started trading as the first space tourism business on the exchange.
What does this mean?
Through the process of listing, Virgin Galactic has opened itself up to more potential investors which will, as Branson put it, allow for “more astronauts” to enter space. Over 9 million shares were exchanged on its first day of trading, rising as high as $12.93 but closing at $10.61.
Virgin Galactic’s route to the NYSE was not that of an initial public offering (to learn more about IPOs and how they are being used by law firms, see our “LittleLaw looks at” piece on that here). Instead, the company merged with Silicon Valley based Social Capital Hedosophia (SCH) which was already listed. In what is known as a reverse merger, SCH took a 49% minority stake in the company while Virgin Galactic’s existing shareholders retained 51% of shares. In a reverse merger an active private company merges with a dormant public company.
What's the big picture effect?
Virgin Galactic’s listing means the company takes the lead in the commercial space industry by beating its competitors (Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin) to grace the stock exchange as the first floated space tourism company.
By the mid-2020s Virgin Galactic aims to fly aspiring astronauts into suborbital space for a 90-minute trip at the cost of $250,000 per customer. While Virgin Galactic is yet to turn a profit, it already has customer reservations from more than 600 people in 60 countries totalling to $80 million in deposits and $120 million of potential revenue.
On top of this, Branson has shared that more than 3,700 people “have expressed desire to buy a ticket”. This demonstrates that the dream of going into space has the potential to translate into sky-rocketing returns for investors. However, this lucrative revenue stream can only be realised once Virgin Galactic’s rocket ships make their first commercial flight.
Just as commercial air travel grew from its start as a niche market in the early 1900s, commercial space travel may have the potential to be the next mass market once costs are reduced. Swiss investment bank, UBS, has estimated the industry to grow 10% per year and be worth $3 billion by 2030. The rise of this new industry could be astronomical!
Report written by Heerim Hwang
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