Virgin Galactic is losing space tourism first-mover advantage to Blue Origin, says UBS

Published Thu, May 6 202111:00 AM EDTUpdated Thu, May 6 20211:57 PM EDT

Michael Sheetz @in/michaeljsheetz @thesheetztweetz

Jeff Bezos' Blue Origin plans to launch the first crewed flight of its New Shepard rocket on July 20 , a step that likely removes Virgin Galactic's first-mover advantage in the space tourism marketplace, UBS said. "Blue Origin threw down the gauntlet on positioning itself to be (potentially) the first suborbital space tourism company with a paying passenger," UBS analyst Myles Walton wrote in a note to investors. Shares of Virgin Galactic fell as much as 4% in trading from its previous close of $19.94. The stock is down more than 19% so far this year, having erased early gains after more than doubling to highs above $60 a share in February. Virgin Galactic's stock losses accelerated over the past two months after delays to its test program and commercial flights , as well as share sales by chairman Chamath Palihapitiya and then founder Richard Branson. Cathie Wood's new space ETF also dumped nearly half its stake of Virgin Galactic late last month. The pair of billionaire-founded companies are competing in the suborbital sector of the space tourism market – where rides spend a few minutes floating in microgravity at the edge of space – as opposed to the orbital multi-day rides offered by SpaceX, such as its Inspiration4 private flight coming up in September . Blue Origin has yet to reveal pricing for tickets on its New Shepard rocket, but is holding a public online auction for one of the six seats on the inaugural flight. In the past Virgin Galactic sold tickets at a price between $200,000 and $250,000 each, and UBS' Walton expects "pricing on this single seat to arrive well above" that price point. "Clearly this ticket carries a 'first of a kind' premium, so the near-term risk for price destabilization seems less likely," Walton said. UBS expects, based on company guidance, that Virgin Galactic's first paying customer will be a test flight carrying members of the Italian Air Force in August. However, the company postponed the beginning of commercial flights until early 2022, due to development delays. Virgin Galactic has not flown a spaceflight in more than two years, since its most recent rocket-powered test flight in February 2019 . "With 15 successful flights of the New Shepard under its belt, Blue Origin appears ready ... providing up to a [six-month] head start on lifting paying consumers to space vs. Virgin Galactic," Walton said. Walton also highlighted some of the many requirements in the fine print of Blue Origin's auction. To fly on New Shepard, the passenger must be between 5'10" and 6'4" tall, and weigh between 110 pounds and 223 pounds. The passenger must also be able to experience gravitational loads of 3Gs during ascent and 5.5Gs during reentry. "Astronaut is required to insure themselves as the only insurance Blue Origin provides is that required by the FAA for any claims against the Astronaut by any third party," Walton noted. UBS has a neutral rating on Virgin Galactic's stock, with a price target of $40 a share, which is roughly 100% above Thursday's share price. – CNBC's Michael Bloom contributed to this report.

Jeff Bezos takes a look at the New Shepard rocket booster on the landing pad after a successful NS-15 flight and landing in April 2021.

Blue Origin

"Blue Origin threw down the gauntlet on positioning itself to be (potentially) the first suborbital space tourism company with a paying passenger," UBS analyst Myles Walton wrote in a note to investors.

Shares of Virgin Galactic fell as much as 4% in trading from its previous close of $19.94. The stock is down more than 19% so far this year, having erased early gains after more than doubling to highs above $60 a share in February.

Virgin Galactic's spacecraft Unity reaches space for the first time.

Source: Virgin Galactic