A Cowen survey found that more than a third of high net worth individuals would be interested in paying for a Virgin Galactic flight, giving a sense of the demand for the company's space tourism service once it begins flying customers next year.
"Cowen's proprietary survey highlights a high level of interest among high-net-worth individuals to fly to space at a ticket price of $250k or above," analyst Oliver Chen said in a note to investors on Monday.
The firm estimated that Virgin Galactic's suborbital flights have a total addressable market of about 2.4 million people, among individuals with a net worth of more than $5 million. Of those individuals, Cowen's survey found that about 39% are interested in paying at least $250,000 for a ticket.
Cowen noted that "Virgin Galactic will face supply constraints to serve all interested individuals, given the limited capacity to fly passengers." The company currently has one spacecraft flying and has announced plans to build as many as five more in the coming years, with two currently under construction. Each spacecraft can carry up to six passengers on a flight to the edge of space, in addition to the two pilots that fly it. Cowen estimated that, if Virgin Galactic builds 11 spacecraft by 2030, the company could "potentially fly ~3,400 passengers per year," with flights nearly every day.
"[Virgin Galactic] is uniquely positioned to benefit from the growing consumer interest toward luxury experiences, especially among high-net-worth individuals. We believe a substantial growth opportunity lies ahead with the commercial spaceflight business, which already has ~600 reservations," Chen said.
Shares of Virgin Galactic rose about 3% in trading from its previous close of $17.46.
Cowen began research coverage of Virgin Galactic on Monday, giving the stock an "outperform" rating and a $22 price target – meaning the firm expects shares will rise 26% in the coming year. Virgin Galactic has two more test spaceflights it plans to conduct before flying founder Sir Richard Branson in the first quarter of 2021, which will market the opening of the company's commercial service.