Space tourism company Virgin Galactic is now a listed company, thanks to a reverse merger. Richard Branson, the company's billionaire founder, was present at the New York Stock Exchange on Monday morning to celebrate the public offering, along with fireworks shows and a giant banner of his eye adorning the exterior of the building.
For the first trading day, the shares of the company – under the ticker SPCE – were emerging much of the morning. Shares opened at $ 12.34, but eventually closed at $ 11.75 – a decrease of 0.3 percent.
The question now is whether public investors put their money in a company that is aimed at sending tourists to the space, where they will experience weightlessness for a few minutes. Virgin Galactic's first vehicle is a spacecraft called VSS Unity, which transports a handful of passengers to the edge of the space and then lands on a runway. Until now, Virgin Galactic has sent VSS Unity only twice, with a total of five passengers on board. The plan is for commercial activities to start somewhere mid 2020, when Branson itself goes into space for the first time.
George Whitesides, CEO of Branson and Virgin Galactic, spoke with The edge about today's public offering and how this will help the company in the coming months.
For the sake of clarity, this interview has been slightly edited.
The edge: I would like to know what you think the first trading day is.
Richard Branson: I look at the graph while you speak and the larger arrow straight out. I think we had two really good days. So the 11 percent rises on Friday, and then 5 or 6 percent today. Anyway, looks good.
How hopeful will this offer be for you because you are still developing and trying to get those first commercial launches going mid next year?
Branson: Virgin Galactic raised half a billion dollars … We would close a deal with the Saudis we rejected a few months ago because of the Khashoggi incident. With that money in the company, it replaces Saudi money, and it will be very useful to get more people, get more space ships on the way to be developed, have a new mother ship built and finish the job.
Next year we will deploy people, including myself, into space. And as soon as we start to put people in space, we must try to speed up the process of getting as many spaceships as possible.
You have just reached a big milestone with the second spaceship [launched for the first time]. Can you explain how development goes with that?
George Whitesides: Yes, of course you know that this is a huge milestone, for every vehicle, is the day you can actually turn on the avionics, turn on the electrical, and it's all powered internally by on-board batteries. That is a big problem. We still have a good way to get on that vehicle, but you know, I think it's encouraging that it's starting to look structurally like a spaceship.
You discussed your financial details earlier and how the income is now slow, because you do not sell tickets. How crucial are those extra spacecraft and when do you expect to open tickets again and see more income coming in?
Whitesides: The extra space ships are very important for the company. We need to bring extra capacity to the market and we think we can sell those seats. We will make one vehicle – [VSS] Unity – work, and then we will introduce another one relatively quickly. And we'll just keep adding them about once a year; that is the kind of general plan.
You know, we have about 600 customers who paid, but since the flight in December, when we opened the opportunity for people to register their interest in buying, we've had more than 3,700 people making reservations. So that is enormously encouraging for us. These are people who are apparently aware of the ticket price. We are quite encouraged by where we are now.
Explain once again the plans for ticket prices. As I understand it, there will be a short price rise followed by a fall. Can you explain how that should work?
Whitesides: Yes, it is going up a bit, and to be honest, we are going to have dynamic pricing. We think we … frankly, we've probably undervalued it too much for a while. But that's okay; that is thanks to the good people who registered early. These are a kind of early adopters. We will raise the price to reflect development costs and other related costs. But over time our entire company is busy reducing costs and it is difficult to predict exactly what the time frame will be. It will be essentially market-driven, but that is the long-term goal.
What is the most important way to reduce these costs? What is needed?
Whitesides: They are a few different things. One is just a kind of normal production efficiency in space travel – both on space ships as a whole, while we build extra space ships, our unit costs will fall. And also with things based on marginal equipment such as our rocket motor cartridge – we are already integrating innovations with which we can build them cheaper, while still maintaining quality.
The company also has an interesting dynamic, namely: once you have a group of people who can control a spaceship, you don't have to add so many more people to add a second spaceship. We think in the order of maybe 10 to 15 percent. And so you can see if that is true and then add a few space ships, your labor economy per flight actually gets much better.
You have had a recent series of milestones. Today's submission takes just two weeks after the unveiling of your flight suits. What is the next step and when can we expect the next flight to space?
Whitesides: We have many more great things to come. I don't want to give away what they are, but we still have the revelation of the spaceship interior and a few other really nice things that you see coming on the road. We must complete the transition to Spaceport America before we begin the final phase of our test flight program. And then, if all goes well, we can fly that historic first flight to Richard.
Branson: And whoever comes up with me, which we will announce soon!
Can you tell how many people are coming with you?
Branson: No, I am afraid we will save it, but thanks for asking.
What was it like to see the company trading under the SPCE symbol today?
Branson: It took 15 years to get here and a huge effort from just under 1,000 engineers, and many ups and downs. It was just amazing. And we were very lucky with the SPCE symbol. I can't really say it, but it was the generosity of another exchange that gave us this. And we were extremely grateful that they let us get it. It just can't be better to have the SPCE ticker as our symbol.
You mentioned ups and downs, and it was a long way to get here. I'm curious, what should you say to anyone who might be a bit wary about investing in the first publicly traded human space company?
Branson: It seems to have been no problem. I mean, we have a huge group of institutions that have come in – some of the biggest institutional names. And the public seems to come in in fairly large numbers. It is an exciting company, but it is also a company that has all the potential to achieve fantastic returns. And we will do our best to honor all investors who have come in.