In January, it launched ten small satellites into space from its Californian base, with the next launch scheduled for the end of this month. The company received another burst of publicity this week when Boris Johnson was pictured in front of one of its LauncherOne rockets at Newquay's Spaceport ahead of the G7 Summit. Virgin Orbit is part of a fast-growing sector focused on launching satellites for commercial and government clients. He was previously a Goldman partner working with clients in the general industrials sector for a decade. To me, that just doesn't sound like a compelling "buy" thesis.The choice of NextGen is a logical one, since Mr Mattson is a director of Virgin Galactic, and is an experienced aviation industry insider, having also been a director of Delta Air Lines for nearly nine years. Unless Virgin Orbit raises prices significantly, or begins launching rockets even faster than it says it wants to, the company will no sooner go public than it will need to start thinking about issuing even more shares, and diluting all the folks who helped it to go public in the first place. This means that Virgin Orbit will probably still be losing money even two or three years from now, at the same time Virgin Orbit's cash reserves begin to run dry.įor this reason, I think that investors have to assume that the 376.5 million total diluted share count that Virgin Orbit projects for IPO Day will not be the final share count for this company. But even if costs didn't rise, $144 million in revenue wouldn't be enough to cover even the company's current rate of operating costs and expenses, which appears to be about $172 million per year. Now here's the problem: Virgin Orbit's cost of operations is likely to rise significantly with the pace of launches, because it costs money to build, fuel, and launch rockets. The problem with investing in Virgin Orbit At an estimated $12 million fee per launch, that works out to $144 million in annual revenue. If one assumes that Virgin's cash reserves can hold out through at least 2023 - well, then by that time the company should be launching 12 times per year. But total liabilities at the company are less than $75 million, and Virgin Orbit's $483 million post-IPO cash hoard should suffice to keep it afloat for a few years at least as it ramps up its launches and gains scale. Granted, any level of losses isn't ideal. On the plus side, that revenue grew almost five-fold in comparison to H1 2020, and Virgin Orbit's losses slimmed by 20%. What Virgin Orbit stock costsīut are an airplane, a not-quite-unique rocket, and a business plan "moat" reasons enough to buy Virgin Orbit stock when NextGen Acquisition II brings it public later this year? Is this stock - not to put too fine a point on it - a bargain? Let's take a look at the company's S-4 filing with the SEC to find out.Īccording to this filing, Virgin Orbit is not yet profitable, having lost about $76.9 million in the first half of 2021 on $7.2 million in revenue. Thus, it would appear the company has something of a moat around its business. It's launched two rockets already this year, has a third launch planned before the end of the year, and anticipates doubling its launch cadence in 2022, then again in 2023. Although Virgin Orbit isn't unique in this regard - Northrop Grumman uses a similar approach to launch its Pegasus rockets, and Cerberus-owned Stratolaunch is also working on air-launched rockets - Virgin Orbit does appear to now be the most active air-launch provider.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |