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Virgin Galactic Execs Talk Long-Term Outlook After IPO Debut

Virgin Galactic Execs Talk Long-Term Outlook After IPO Debut

Richard Branson's space tourism company Virgin Galactic Holdings, Inc. (NYSE: SPCE) will boast gross margins that look "as good as one of the best" software companies, investor Chamath Palihapitiya told CNBC.

What Happened

Speaking next to Branson after Virgin Galactic's stock debut, Palihapitiya said the company stands out against recent IPOs as it will operate with a 70% operating margin rate. The company's business model is now not only "de-risked," but ready to monetize.

As a public company, investors should focus on two specific catalysts, Palihapitiya said.

  1. Demand for space travel stands at 600 customers who represent $120 million in future business. Beyond the initial 600 customers there will be "many more thousands" who "want to give us money."
  2. Virgin Galactic CEO George Whitesides has the ability to bring the company's rockets to space on a more frequent basis.

See Also: Musk Vs. Bezos Vs. Branson: Who's Winning The Space Tourism Race?

Millions Of Potential Customers

Ultimately, there will be 2 million people around the world who would be willing to experience space travel at the current price point of $250,000, Whitesides added to the conversation. Taking a longer-term approach, the company will be able to reduce its price point at which point the market expands as much as 40 million.

Where Boeing Fits In

Virgin Galactic is testing its own planes that can travel point-to-point at "tremendous speed," Branson said. Aircraft maker Boeing Co (NYSE: BA) invested $20 million in Branson's company, likely due to its 15 years experience to date.

A hyper-sonic plane that Virgin Galactic hopes to eventually operate can reduce a traditional 10-hour flight to just 90 minutes, Palihapitiya said. At that point the company will be able to "directly disrupt a $300 billion-plus revenue business" for traditional airlines.

Virgin Galactic's stock traded around $12.20 per share at time of publication.

Virgin Galactic visits the New York Stock Exchange to celebrate its listing. Richard Branson rings The First Trade Bell. Photo courtesy of Courtney Crow.


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