The idea of billionaires trying to send us into space sounds like the plot of a Dr. Who or Black Mirror episode. But it’s the reality of the 2020s and one that’s more than 20 years in the making.
Jeff Bezos and Richard Branson each believe they can take investors and customers to the moon. But which is better between SpaceX vs Virgin Galactic stock?
These pet projects from eccentric billionaires aren’t as spacey as they seem on the surface. Most early space exploration was largely done by governments, although the National Aeronautics and Space Administration (NASA) is now a civilian space program.
Pre-sales of tickets to go into space showed interest in the project. A lot of prominent celebrities are among the first lining up to leave Earth’s atmosphere. Space tourism is about to take off, and investors are betting it’s a profitable venture.
How To Buy SpaceX Stock
SpaceX (short for Space Exploration Technologies) is probably the most popular space exploration company this side of NASA. In 2018, the company’s website was among the most popular privately owned corporate websites on the internet.
The company developed a reusable rocket and launch system that significantly reduces the cost of space flight. It launched the first manned commercial space when its Crew Dragon spaceship launched from Kennedy Space Center in the Demo-2 launch.
It signed a contract with Axiom Space to sell tickets on its planned 2021 trip to the International Space Station for a 10-day stay that costs $55 million.
Meanwhile, Space Adventures partnered with it for a cheaper flight that would exit the atmosphere for a five-day trip without docking. That trip is expected to cost up to $20 million less.
Musk said in 2016 he prefers to avoid taking the company public, so it’s focused on profits instead of going to Mars. The company only has accredited institutional investors. However, it’s not all bad news – the company has a big-name investor you can buy.
Alphabet Inc (NASDAQ:GOOG) owns a 7.5 percent stake in SpaceX. The company spent $900 million to buy it in 2015 and it doesn’t appear to have sold its stake. This means you can invest in the future of space exploration through the search giant.
Of course, if you want more direct ownership, Virgin Galactic has you covered.
Is Virgin Galactic Stock A Buy?
Virgin Galactic Holdings Inc (NYSE:SPCE) is Branson’s answer to SpaceX and was founded in 2004 with a similar promise of commercial space flight. Unlike SpaceX, it’s a publicly traded company you can directly invest in.
But that’s a bit misleading too, as the company relies on partnerships with sister companies Virgin Atlantic and Virgin Orbit. The company launched several test flights for both payload and consumer uses, although the cargo division was spun off into its own company.
It gained early buzz by selling tickets to celebrities like Leonardo DiCaprio and Justin Bieber. The company presold consumer tickets first, but it’s unlikely to carry them into orbit before SpaceX.
Virgin Orbit and its LauncherOne delivery system reached orbit in January 2021, not far behind SpaceX’s successful test flight. It took off from Spaceport America outside Truth or Consequences, New Mexico.
Of course, Virgin Orbit isn’t the same company as Virgin Galactic, so the news does little to boost investor confidence. In fact, it was investment firm Ark creating a Space Exploration ETF that really skyrocketed the company’s stock prices.
By Q1 2021, the company had reached toward a $9 billion market valuation. Still, one of the company’s biggest investors pulled out, leaving some wondering about the financial risks of space exploration.
Virgin Galactic Has Headwinds To Overcome
The biggest risk to investing in Virgin Galactic is that it hasn’t yet proved the safety and success of its launches. In fact, the company had several launch disasters over the past 20 years, including the 2014 VSS Enterprise crash.
It also aborted a December 12, 2020 test flight due to a communications issue that caused a rocket to not fire. These types of issues could spell disaster for a passenger flight, especially if those passengers include big-name celebrities like DiCaprio and Bieber.
And the company is entirely focused on commercial space flight – if cargo ends up being the only profitable side of the business, it will lose out to its own sister company, much less rivals.
Until it starts taking people on real flights and proves the concept is a profitable business, Virgin Galactic could be stuck on the launchpad for some time.
Virgin Galactic Stock Vs SpaceX
SpaceX flights cost more than Virgin Galactic’s so far. In fact, it’s about 200x more expensive for a much longer flight. The company’s joint mission with NASA in 2020 made it the first privately owned company to do so.
The design is said to be a smoother ride than previous NASA rockets, and these rockets are likely to be the first to carry civilians into space.
Of course, the price tag means it will be unreachable for all but the wealthiest of people and corporations. The average person is unlikely to ever reach Mars in our generation.
Which Space Stock Is Best?
SpaceX and Virgin Galactic are locked in the modern space race. Instead of governmental superpowers, it’s commercial companies trying to get people on the moon, Mars, and beyond. Of course, it’s an expensive endeavor that could blow up in investors’ faces.
And there are new competitors on the horizon. Jeff Bezos and his Blue Origin company are launching rockets, and Boeing’s Starliner could one day bring people to the ISS in space.
If you’re looking to invest in space exploration, look beyond Ark’s fund into which companies are involved. You may find a company you like with space exposure you didn’t realize.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.