Richard Branson’s Virgin Galactic May Be First Profitable Space Company

Virgin Galactic intends to sell a $250,000 Earth-orbiting tourism package. And it may actually find a market.

Richard Branson
Richard Branson’s Virgin Galactic intends to sell $250,000 tourism packages to the world’s ultra-rich. ADRIAN DENNIS/AFP/GettyImages

Britain’s legendary business mogul Sir Richard Branson doesn’t need any more money. “Stuff,” the multi-billionaire wrote in his latest blog post, “really does not bring happiness.” However, that motto isn’t stopping him from pushing his space tourism company, Virgin Galactic, toward making money.

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Earlier this month, Virgin Galactic (SPCE) quietly went public on the New York Stock Exchange (NYSE) as a subsidiary under Social Capital Hedosophia Holdings, a special purpose acquisition company headed by former Facebook executive-turned-venture capitalist Chamath Palihapitiya, making it the first so-called “new space” company to go public.

SEE ALSO: Why NASA Should Stop Trying to Make Mars Happen

It was an unusual move for a company whose main product—in Virgin’s case, space travel—is still in the research and development stage because, for a capital-intensive business like space exploration, the constant pressure to deliver earnings for shareholders is the last thing most founders want.

But Branson seems confident enough to be held accountable for making Virgin Galactic a profitable business.

Unlike Elon Musk’s SpaceX and Jeff BezosBlue Origin, which aim to colonize Mars or send humans to the moon again, Branson’s space venture keeps its ambition firmly tied to Earth. For the near future, Virgin Galactic intends to sell a $250,000-per-person Earth-orbiting tourism program to the world’s ultra-rich.

As unattainable as it sounds, this luxury travel package may actually find a market, stock analysts figured. “This price is in line with what a rich person might spend for other unique travel experiences but comes with even greater bragging rights because of how few people have had the experience of orbiting the earth,” Luis Sanchez, a commentator for financial advisory site Motley Fool, wrote on Tuesday.

“There are roughly two million people in the world with a net worth greater than $10 million,” Sanchez went on to explain. “The company only needs about 1,000 people a year to buy its service to have a viable business—1,000 people is less than a 10th of 1% of the two million people who could probably afford it.”

Virgin Galactic has said it has already taken $80 million in deposits for approximately 600 reservations. These deposits represent a potential revenue of $120 million. The company plans to increase revenue by at least 2.5 times and gross earnings by 5.5 times by 2023. Based on these estimates, Virgin Galactic was valued at $1.5 billion at the time it merged with Social Capital Hedosophia Holdings.

Richard Branson’s Virgin Galactic May Be First Profitable Space Company