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Virgin Galactic, a company aimed at potential space tourists, is going public soon.
It's exciting news when an innovative company announces an initial public offering. But whether you should buy Virgin Galactic stock is another discussion entirely.
With a valuation over $1.5 billion, it's almost certain to be one of the hottest IPOs of 2019. After all, Richard Branson, the founder of Virgin America and Virgin Atlantic, is involved. This time, instead of airplanes, his company is offering rockets and space capsules.
But should you invest in Virgin Galactic stock?
Here's everything you need to know to make the call…
Whether or Not to Buy Virgin Galactic Stock
Virgin Galactic's parent company is Virgin America Inc. The latter made $56.2 million in net income last year on $1.1 billion in revenue.
Clearly Branson knows how to make money.
But Virgin Galactic hasn't matched its parent yet, though it may not be far off. Revenue for 2023 is forecast at $600 million. The company has already had 600 customers knocking on its door, and they've shelled out more than $80 million for just 10 minutes of space travel.
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That leads us to the ultimate force behind the stock. It's not the fact of an IPO but the market for space and space tourism. When 2030 rolls around, the space economy is projected to stand at $800 billion, according to The Wall Street Journal. In the same year, space tourism by itself will be worth a whopping $3 billion.
That's just part of the story. Virgin Galactic is poised to provide technology that will help it dominate the market for space.
The company has already created unconventional systems to launch spacecraft and even inexpensive rockets.
No date on the calendar has been set for the Virgin Galactic IPO, but Branson said it will happen this year. In other words, Virgin Galactic will be the world's first space tourism outfit to be traded publicly.
But it won't be the last one. Both Elon Musk's SpaceX and Jeff Bezos' Blue Origin are gearing up for space tourism as well.
Being first in the IPO market means that Virgin Galactic will reap a first-mover advantage in the IPO market for space, but the competition will be fierce.