What is Virgin Galactic (NYSE:SPCE) stock worth? It’s obviously an exceedingly difficult, and even impossible, question to answer.

Right now, the market as a whole says it’s worth $17 per share. But the market isn’t always right. Prices change. And the key question for any investor in any security is simple: is the security mis-priced?

To be honest (and I probably shouldn’t write this), the true answer is: who knows? SPCE stock is a play on what revenue and (hopefully) profits will be in 2030 and 2040. Its current fundamentals are of little help in trying to determine what those revenue and profits will look like.

After all, in 2019, Virgin Galactic posted an operating loss of $213.3 million. Revenue was just $3.8 million.

Obviously, that performance needs to get better at some point. And Virgin Galactic will have to raise more capital along the way, likely through sales of SPCE stock. But how much capital will it have to raise before it can fund itself? That depends on how quickly revenue arrives, and what long-term operating costs are.

We don’t know what those numbers will be. In fact, we can’t know.

There is a massive range of potential outcomes here. That’s precisely what makes SPCE stock so interesting. But it’s also what makes the stock so risky. Investors looking for a ‘fun’ stock to own should consider Virgin Galactic — but absolutely not with money they can’t afford to lose.

The Pullback

First off, it’s certainly helpful that SPCE stock has pulled back so sharply. Trading in February — when the stock briefly cleared $40, got a bit silly.

As I wrote at the time, SPCE had been the best stock of 2020 at that point and shares simply needed to pull back. They have, falling over 50%.

But just because the stock went into what looks in retrospect like a mini-bubble doesn’t mean it’s worthless. After all, Beyond Meat (NASDAQ:BYND), among many others, has seen that kind of trading. And though I’m still a BYND skeptic, that’s a real business with some level of long-term value. It’s just not worth the $200-plus some investors were paying last year (or, I believe, the $100 investors are paying now).

Again, it’s difficult to argue definitively that SPCE is undervalued at $17 or that it was overvalued at $40. But as I wrote in February, Richard Branson, the billionaire leader of the Virgin empire, was willing to give up over 40% of the company for $10 a share. Investors who are excited about investing “alongside” Branson (who isn’t involved in day-to-day operations) have to at least consider that fact in estimating valuation.

How SPCE Stock Soars

From here, the stock can rally. SPCE is the only pure play on space tourism in the market right now.

Amazon (NASDAQ:AMZN) founder Jeff Bezos has developed Blue Origin, but that’s a private company. The same is true of SpaceX, led by Tesla (NASDAQ:TSLA) chief executive officer Elon Musk. Boeing (NYSE:BA) might get in the game at some point, but it obviously has its own problems to deal with at the moment.

SPCE’s status as a pure play alone will drive some optimism. And there’s a real business here. Virgin Galactic is charging $250,000 a flight. But there are, well, millions of millionaires who will pay that sum for a once-in-a-lifetime experience. And as the company grows and improves, those costs will come down.

It’s not just a space tourism opportunity, either. There are hopes that Virgin Galactic’s research can lead to hypersonic travel in our own atmosphere.

What happens if Virgin Galactic becomes the leader in space tourism? It’s not impossible to imagine the company being worth $50 billion or $100 billion, against a current market capitalization around $3.5 billion. What about a hypersonic fleet of airplanes making cross-continental flights in an hour or two? Couldn’t SPCE eventually look something like BA stock — which not that long ago had a market capitalization over $200 billion?

To be sure, investors will see some dilution along the way as the company raises capital. But if Virgin Galactic wins big, its shareholders will as well. In a best-case scenario, the returns will be multiples of the current stock price.

How This Goes Wrong

There’s a key phrase there, however: “if Virgin Galactic wins big.” That is an enormous if.

This can go wrong in a myriad of ways. SpaceX and Blue Origin are backed by two of the few people on Earth with a higher net worth than Branson. Competition is going to be intense — and Blue Origin, in particular, will have little need to focus on profit at any point.

Again, Virgin Galactic is going to have to raise significant capital. Over the long haul, that should be doable, but stock offerings may undercut the share price from time to time.

And the business simply may not work. Demand may not be high enough. One tragic accident could put Virgin Galactic out of business (particularly if the aforementioned rivals avoid any such incidents).

Going into space is not a simple business. Indeed, billions of dollars of capital have been lost in trying to provide satellite Internet, with OneWeb the most recent company to go bankrupt. Manned spaceflight is a far tougher task.

To be clear: SPCE stock can wind up a zero. It’s not likely to happen in 2020 or 2021, but this is an exceedingly high-risk investment.

Have Fun with SPCE Stock

To be sure, investors can own a high-risk investment. But they have to do so wisely.

That means that SPCE stock can’t be owned with money an investor can’t afford to lose. That’s true of many stocks, but it’s doubly true for SPCE.

With that caveat, the stock admittedly is intriguing. There’s a huge opportunity here. Virgin Galactic has an experienced management team. SPCE will be a fascinating story to follow.

For the right investor, in the right part of the portfolio, SPCE can be a buy. Everything else is, pardon the pun, up in the air.

Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.