Science fiction has always intrigued me, and space tourism is one thing that is catching the attention of everyone. With the advances in technology, space tourism looks more like a reality than fiction and we are almost there. Virgin Galactic (NYSE:SPCE) is a space travel company that is planning to take you to space once its commercial operations begin. Until then, you can enjoy a ride by investing in SPCE stock.
The stock has seen a few highs and lows but that is common with the stock market. However, SPCE stock has been soaring lately. After the successful test flight last month, SPCE stock went from $17 to $37 in a month.
It has already generated profits for the investors who were patiently waiting for the test flight to take off. If you have missed the opportunity, now is the time to book the stock. SPCE has the potential to go higher as it nears commercial operations.
With that in mind, let’s take a look at the investment case for SPCE stock.
The Future Is High-Speed Travel
Several companies are investing in space tourism and they will take travel to another level. Virgin Galactic is developing a Mach 3 aircraft which will reduce the flight time from Los Angeles to Tokyo from 12 hours to four hours. It has a capacity ranging between nine to 19 seats and will work as a flight on a private jet. It is working with Rolls Royce on a new design for Mach 3.
Currently, Virgin Galactic is offering to take you into space for $250,000 but it is working on reducing the costs to make space tourism possible for those who are willing to explore space.
If the company offers a ticket for $100,000, there will be many willing to explore the space and it can change the way we view science fiction. SPCE stock will drive massive gains for investors once commercial flights begin.
There is growing competition in the industry and Amazon’s (NASDAQ:AMZN) founder, Jeff Bezos is flying to space on July 20. Branson is not the one to be left behind. He is planning a second rocket-powered test flight for July 4 and recently got approval from the Federal Aviation Administration.
Virgin Galactic expects to complete the remaining test flights by early fall or late summer. They aim to fly researchers and tourists into space from 2022. Currently, it looks like the company has everything going as per plan.
The company took the first flight in SpaceShipTwo on May 22 with two pilots. The successful flight pushed SPCE stock higher.
The competition is rising but Virgin Galactic has the first-mover advantage and it already has 600 reservations for their commercial flights, which are yet to take off. This shows that the company has an edge in the industry.
The Bottom Line on SPCE Stock
All in all, SPCE stock is a buy, but you must keep the risks in mind. The company has the potential to disrupt space tourism and with each successful flight, it will only be getting closer to embarking on commercial operations.
The company plans to complete 400 flights in a year and if this happens, it will generate massive revenue. However, even a minor technical failure in the operations could have an impact on SPCE stock. But at this stage, it looks unlikely.
It will be interesting to see whether Virgin Galactic takes the second flight on July 4, before Bezos.
Investing in SPCE stock has more rewards than risks and in a few years from now, it could be one of the top space tourism companies.
This potential makes SPCE stock a buy.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
