News that exchange-traded fund (ETF) mega-manager Ark Invest plans to add a Space Exploration ETF has shares of Virgin Galactic (NYSE:SPCE) fired up on Thursday morning.
Remember the old-school TV commercials that said, “When E.F. Hutton talks, people listen”? Well, that’s how it is with Ark CEO Catherine Wood. She rocked the gene-editing space last month with her bet on CRISPR Therapeutics (NASDAQ:CRSP). Her firm’s Wednesday securities filing that it will launch under the ARKX ETF ticker has people listening.
While there are no specifics in the filing on which stocks will be included among the fund’s constituents, SPCE stock is up double-digits in pre-market trading this morning, as are shares of Maxar Technologies (NYSE:MAXR), which is working with NASA on the new lunar Gateway spacecraft.
SPCE Stock in ETF Sweet Spot
The Space Exploration ETF will focus on companies that are “leading, enabling, or benefitting from technologically enabled products and/or services that occur beyond the surface of the Earth,” the SEC filing said.
Virgin Galactic fits nicely into those characteristics, with its space tourism business model.
InvestorPlace analyst Luke Lango has called SPCE stock a “long-term winner” with a long-term model that assumes 12 operational space ships by 2030, flying five flights per months, with six passengers on each flight, at an average ticket price of $300,000. Under those assumptions, Lango says Virgin Galactic’s space tourism business could power roughly $1.3 billion in revenues. With this in mind, he predicts earnings per share will rise toward $2.50 by 2030.
To be sure, Virgin Galactic investors had some concerns last month when a botched test flight sank the shares. But SPCE stock bounced back last week after the company said its technicians had completed the post-flight inspections and identified what caused the onboard computer to halt ignition of the rocket motor. “Corrective actions have been defined and work is already underway.”
Countdown to Blast Off
While we wait to see when Ark’s new Space Exploration ETF will start trading, SPCE stock remains 40% below its 52-week high of $42.49. However, based on his calculations, Lango has a 2021 price target topping $30 a share.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.