Virgin Galactic Holdings Inc. reported its second-quarter results late Tuesday, with the private spaceflight company setting its sights firmly on regular missions and its new Delta spacecraft.
The company, which is targeting Aug. 10 for the launch of its second commercial spaceflight, Galactic 02, says monthly missions will follow.
“We are building consumer interest and confidence by operating our commercial spaceline safely and consistently on a planned monthly cadence,” said Virgin Galactic CEO Michael Colglazier during a conference call to discuss the results. “We are executing on that objective.”
In June, Virgin Galactic made its first commercial flight when the Galactic 01 mission transported three crew members from the Italian air force and the National Research Council of Italy into space to conduct research on microgravity.
Related: Virgin Galactic stock falls on second-quarter revenue miss
But analysts say that Virgin Galactic may need additional capital raises as it ramps up its regular spaceflights.
“Customer feedback from the company’s recent Galactic 01 research-oriented flight was positive and the company appears positioned to begin generating revenue with several civilian flights planned through year-end,” Truist analyst Michael Ciarmoli wrote in a note Wednesday. “We do expect revenue to remain modest and cash burn at elevated levels through at least 2025 until the Delta-class vehicles near commercial readiness, and in the interim expect the company to continue to raise capital through dilutive equity offerings.”
Truist Securities maintained its sell rating and $3 price target for Virgin Galactic.
Shares of Virgin Galactic fell 3.7% Wednesday after the company’s second-quarter revenue miss.
Related: These are the passengers for Virgin Galactic’s first private spaceflight
The new Delta-class spaceships will enter commercial service in 2026, according to Virgin Galactic. On the conference call, Colglazier said the company is focused on completing its Delta designs in 2023. Testing is expected to take place in 2025, with the ships entering commercial service the following year.
KeyBanc Capital Markets also highlighted the Delta spaceships and capital raises in a note released Tuesday. “Our long-term view remains intact as we believe [Virgin Galactic] is positioning itself well to be a leader in space tourism once operations are scaled, though this is capital intensive and likely several years away,” KeyBanc analyst Michael Leshock wrote in the note. “We believe an additional capital raise is likely before Delta begins service in 2026, though in the near term it has ample cash to support its operations.”
KeyBanc Capital Markets maintained its sector-weight rating for Virgin Galactic.
Justus Parmar, CEO of Fortuna Investments, a venture-capital and advisory company currently focused on space investments, says the second quarter was not as successful as Virgin Galactic painted it to be. “Its growth to $2 million in revenue was simply not impressive relative to expectations,” he wrote. “Virgin Galactic’s two successful commercial flights don’t offset its continued burning of cash on [research and development], and its revenue profile remains bleak,” Parmar added.
Related: Virgin Galactic’s stock jumps as company sets date for second commercial flight
Revenue for each of the third and fourth quarters is expected to be approximately $1 million, according to Virgin Galactic.
Parmar acknowledges that company founder Richard Branson has built a strong Virgin Galactic brand, but warns that earnings reinforce the need for revenue. “He needs to focus on speeding up revenue and nailing down the technology if he wants to turn the situation around,” Parmar wrote.
Read the full article here
