Often regarded as the final frontier, the burgeoning space economy is attracting contenders as if it’s the last ticket out of town before a blizzard hits. From business titans like Elon Musk of Tesla Inc. (NASDAQ: TSLA) fame to emerging nations seeking advanced solutions, more eyes are turning skyward for the next cycle in human evolution.
Better yet, what makes the latest surge in the space race so profoundly intriguing for forward-thinking investors is the underlying diversity. During the nascency of travel outside Earth’s atmosphere, the main competitors were the U.S. and the Soviet Union. Over the past few years, China has flexed its orbital muscles while more recently, Japan’s space agency announced plans — in conjunction with the U.S. — to develop a lunar hydrogen-fuel factory on the moon.
Of course, with big ambitions come even bigger risks. True, radical progress in smart technologies and transportation methods have put humankind closer than ever to realizing its interplanetary aspirations. At the same time, terrestrial technologies have endured myriad trials before achieving commercial viability. In space, the stakes are often much higher.
But that’s also why the upcoming initial public offering (IPO) of Virgin Orbit is so compelling. With its focus on small-satellite launching services, Orbit actively participates in the space economy but in a financially friendlier manner.
When Is the Virgin Orbit IPO Date?
Earlier this year on March 12, The Wall Street Journal reported that Virgin Orbit founder Richard Branson had “hired bankers to help it go public this year through a special-purpose acquisition company, aiming for a valuation for the satellite launching startup of up to $3 billion.” As the news agency reported, the “move represents the latest effort by Mr. Branson to take advantage of a recent boom in similar, blank-check listings.”
As you know, the famous and eccentric entrepreneur saw his space-tourism firm, Virgin Galactic (NYSE: SPCE), enter the public arena through a reverse merger with a SPAC.
Later, on Aug. 23, CNN Business reported that Virgin Orbit will merge with NextGen Acquisition II Corp. (NASDAQ: NGCA). Per the article, the parties involved expect the business combination to close by the end of December. Branson and Orbit executives will participate in an opening bell ceremony on Jan. 7 at the Nasdaq exchange, where company shares will trade under the ticker symbol VORB.
Before you consider suiting up your portfolio for a potential moonshot of an investment opportunity, you should realize that VORB stock will enter the IPO calendar during a perplexing and ambiguous juncture. As business media has been quick to point out, 2021 may go down as the year of the IPO, with new U.S.-based listings raising over $301 billion. Even more startling, the phenomenon has gone global, with international new listings raising $594 billion.
Both are record-breaking tallies, implying a continuation of momentum. After all, the appetite for IPOs has not waned but accelerated. Yet prospective investors of VORB stock must keep in mind Wall Street’s common adage: past performance is no guarantee of future results.
As well, the Federal Reserve recently indicated that it would adopt a hawkish tone beginning in 2022. And as Benzinga staff writer Wayne Duggan argued, the signaled rate hikes could come earlier than many investors think. Though multiple risks are inherent in the shifting policy, one of the biggest is that higher interest rates don’t incentivize riskier ventures such as stock trading on margin. Thus, a rotation out of risk-on assets to value plays could occur, disrupting VORB stock.
Finally on the topic of timing, multiple space-economy-related listings have launched to mixed fanfare. Following a tremendous hype train that saw Virgin Galactic shares close briefly near $60 territory, SPCE now trades hands at a few ticks over $13. Another space firm, Planet Labs (NYSE: PL), is down 42% over the trailing month despite commanding an arguably practical and relevant business.
Virgin Orbit Financial History
When CNN Business published the merger plans between Virgin Orbit and NextGen Acquisition II, it revealed that the terms of the deal at the time would value the business combination at $3.2 billion. Unfortunately, the latest data suggests otherwise.
Fresh off the printing press, SpaceNews.com revealed that Orbit “will get less than half the money it originally expected from its merger.” Although the satellite-launching specialist announced on Dec. 28 that the underlying SPAC’s shareholders approved the merger, Orbit announced that “the merger will provide just $228 million in gross proceeds, with $68 million coming from SPAC proceeds.”
Such figures pale compared to the projected raise of “$483 million for Virgin Orbit: $383 million from the proceeds of the SPAC and $100 million from a concurrent private investment in public equity (PIPE) round.”
That, according to SpaceNews.com, “suggests a high rate of redemptions, where shareholders of the SPAC exercise their right to get their money back rather than retain their shares in the merged company.” Regrettably, unusually robust redemptions have been a bane to SPAC-based IPOs. According to The New York Times, redemption rates have been around 50% this year compared to 20% last year.
Not surprisingly, anyone thinking about VORB stock should exercise extreme caution. But to be fair to the optimists, Orbit may attract some longshot orders financed through loose change extracted from between the sofa cushions.
For one thing, the space economy may eventually become the biggest total addressable market ever. According to Space Foundation, this sector commanded a valuation of $447 billion in 2020, reflecting strong international investment opportunities and commercial enterprise growth.
But the above represent early inning swings. According to Aviation Week, the “satellite — and the launch services to deliver them — are the most visible parts of a global space economy that is projected to grow from $400 billion to $1 trillion in annual revenue by 2040.” Better yet, such seemingly outlandish forecasts are credible because of the immediate practicality of small satellites.
By virtue of their relative diminutive nature, they’re much easier on the wallet. If heaven forbid something were to go wrong, the cost outlay might not be as devastating compared to larger-sized systems. As well, Orbit’s distinct in-flight launching mechanism — as opposed to vertical rocketing — is more convenient and fiscally palatable.
Finally, small satellites help immediately address terrestrial problems, such as the rollout of internet connectivity in underdeveloped regions. Ultimately, VORB stock could perform well if the underlying company meets performance milestones.
Virgin Orbit Potential
According to management’s projections, Virgin Orbit expects to draw revenue of $15 million for 2021, with most of the contributions coming from launch services. But by 2026, the company believes it can exceed the $2 billion annual sales threshold. Though the space economy has proven to be volatile, Orbit has the potential to deliver the goods, as long as the stars align.
And the alignment may not need to be perfect. From a recent report from The Guardian, nearly 3 billion people — or about 37% of the global population — have never used the internet. This circumstance speaks to gross inequities in economic and infrastructural access. Through small-satellite initiatives, however, Orbit can help address the latter, which in turn could positively impact the former.
On the not-so-pleasant side, VORB stock is risky because banking on meeting unaddressed needs may not always be profitable. More importantly, if investors don’t see value in doing good, Orbit could end up becoming an artificial meteoroid.
Finally, the space economy is turning out to be wickedly volatile, so careful due diligence is non negotiable.
How to Buy Virgin Orbit IPO (VORB) Stock
Interested investors will need to acquire VORB at the open, necessitating knowing how to buy stocks. See below for a quick recap.
Step 1: Pick a brokerage.
With the best brokers offering similar access and fee structures, take the time to find the platform that suits your needs.
Step 2: Decide how many shares you want.
Since IPOs are inherently risky, choose a balanced share count.
Step 3: Choose your order type.
Before trading, learn these market concepts.
- Bid: The buyer’s best offer for a stock.
- Ask: The seller’s lowest acceptable price.
- Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
- Limit order: Buy or sell requests at a predetermined price, limit orders provide transparency but no execution guarantees.
- Market order: Market orders guarantee fulfillment but only at the current rate.
- Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.
Step 4: Execute your trade.
Follow these steps to execute a market order:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
More Exposure in the Space Sector
If you’re looking for further exposure in the space sector, consider investing in lithium. Lithium-ion batteries are the battery of choice in space, and there are so many space travel firms at this point that you could do quite well investing in stocks like Albemarle (NYSE: ALB), Ganfeng Lithium (OTC: GNEN.F), Livent (NYSE: LTHM) and Lithium Americas (NYSE: LAC).
VORB Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.
Although VORB isn’t available for pre-IPO purchase, platforms like SoFi Invest offer early access to many eagerly anticipated IPOs.
A Shooting Star or a Black Hole?
On the surface, both the space economy and the small-satellite subsegment appear profoundly relevant for Virgin Orbit, especially in addressing terrestrial needs. However, space-related investments have been disappointing, warranting extreme caution for VORB stock. However, you can take solace in the fact that SPCE stock is available and provides you with access to the industry now, and at a value that allows for significant growth.