Virgin on the ridiculous: If you’re buying Virgin Galactic (SPCE.Z), Houston… you have a problem

Let me be clear on three things right out of the gate.

1. There’s no money to be made in space until we start ripping asteroids apart
2. Every space stock is already stupidly overvalued
3. Of all the stupidly overvalued space stocks, Virgin Galactic  (SPCE.Z) is the last to the table, and looking for the smallest piece of the pie

It’s okay to be excited when we throw a piece of metal into the atmosphere and it makes a pretty glow out the back end, just the same as it was exciting when we walked on the moon and when weed was legalized and when every second broker announced they were curing Covid-19 with their mining shell companies.

But being excited and going bonkers by burning your money in a shiny aluminum tube are two very different things.

Richard Branson is going into space? Great. Maybe he’ll malfunction on reentry, drop in on the sub-Sahara, and have to associate with real people for a week while we look for his crash zone. Maybe it’ll change his outlook on how to spend money being around people whose entire lives would change if someone gave them $50, and realizing he could literally move a nation from developing to developed without feeling the hit financially.

Probably not though. In reality, Branson didn’t even get into space. More space adjacent. Space-ish. Diet Space.

Leading up to the Branson launch, stockbrokers, who understand the markets seemingly less than meme investors, claimed this would be a PR coup that would put SPCE in the lead among all space companies on the market. At least, that’s what Canaccord was spinning over the weekend.

People who have spent more than 18 seconds looking at space companies knew better. Virgin’s business model is bunk, their tech is blah, and they’ve been beaten to the punch by everyone else.

Branson went up with an $11 billion market cap, and came down with a $9 billion market cap, once we saw how the entire thing was all a bit of rich wanker tourism.

The SPCE business plan is to sell a trip in a plane (not a space ship) that will feature a 4-minute weightlessness episode, to people who are absurdly wealthy and likely to drop $30 million getting kinda near to low orbit. I figure there are three guys who would pay that, and they all already have their own space companies so the market is going to be small. Certainly too small to recoup a $9 billion market cap.

The others toying with space, who will also be on their own rich wanker journeys soon, are Elon Musk (SpaceX), whose business model is to actually fulfill contracts flying in and out of orbit, maybe to Mars, and can land his ship on a fricking barge in the Atlantic (admittedly, cool), and Jeff Bezos (Blue Origin), whose business model is to have Lex Luthor look up to him, and go a few miles higher than Branson did, hoping mega-wealthy folks people will pay more money to get an extra 4 minutes of weightlessness than Branson is offering.

It’s like these nimrods have never been to a Six Flags. $25 in tokens and a 45 minute line-up will get you the same experience.

Here’s what Luthor is selling for $28 million.

If you pull in tight, Bezos is selling you a spot on an actual rocket. Why? So, when you land it in the Texas desert next to your car, your family will jump about with their arms raised.

I mean, really. Look at your excited family, who definitely love you for reasons not associated with the billions of dollars you have amassed.

They’re thrilled in their Ford F-150, I tell ya!

Here’s what Branson has to say about his airplane thrill ride.

“We are at the vanguard of a new industry determined to pioneer twenty-first century spacecraft, which will open space to everybody — and change the world for good.”

Good news, everybody! I know you’re struggling to find work and eat, but you can buy your way to space now!  Amazing!

Not quite sure what you’ll do there, but hey, little girl, don’t you let anyone tell you that you can’t go into space if you want to – and if you have a spare $30 million.

The bad news for Branson and Lex Luthor is this trip already exists. For $6k you can get in a Boeing plane and be flown high enough and at enough of an arc that you go weightless for 30 seconds through Space Adventures.. and they’ll let you do that fifteen times in one trip.

Look, there’s surely money to be made fulfilling government and corporate contracts getting things into space, and SpaceX already has that racket nailed down. In 2018, SpaceX made $2 billion. By 2025, it’s expected the global market for what they do will be $5 billion, which is a bit of a ceiling.

Added to which: What SpaceX can charge per launch is dropping.

The company will need to do more business going forward to hit the current revenue levels, with competition looming.

So here we are, with one company dominating, and they’re already facing a commoditized market.

Why would you buy any space company right now?

Well, clearly you wouldn’t. Let’s maybe stick to salvaging earth rather than paying for billionaires to go on holiday. At least until someone comes up with a real go at space mining… when that comes, I’m all in.

— Chris Parry