Can Virgin Galactic Come Back From the Dead? (Or Is This Stock Just Dead Money?)

Twenty-nine months -- 29 long months. That's how long it's been since Virgin Galactic (NYSE: SPCE), the space tourism company founded by Sir Richard Branson, last flew a spaceplane full of tourists to space and back. On June 8, 2024, Virgin retired its Unity spaceplane model... forever.

Last week, however, this space pioneer announced it's nearly ready to re-enter the space tourism business. The first of a new fleet of "Delta-class" spaceplanes is ready for assembly and testing. By Q2 2027 -- about three years after the last Unity flight -- Virgin Galactic should be ready to resume commercial operations. Three months after that, a second Delta spaceplane will join the first in operation.

Introducing Apeiron

On Wednesday, Oct. 28, Virgin further announced that it will name the first Delta-class spaceplane Apeiron, an ancient Greek word meaning "(that which is) unlimited; boundless; infinite; indefinite."

Virgin had previously announced that it's begun preparing 100 future space tourists to fly on the spaceplane. At an anticipated flight cadence of two flights per week and with room for six paying passengers aboard, Apeiron should be able to work its way through the first 100 customers in a little over eight weeks. Once the company's second Delta-class spaceplane joins it, Virgin Galactic should be able to handle that many passengers every month.

Virgin Galactic has already pre-sold about 700 seats on the spaceplanes. Counting from the date of Apeiron's first flight and assuming its sister spaceplane arrives on schedule, I estimate it might take the company about six or seven months total to work through that backlog.

New tickets selling briskly

In anticipation of these dates, Virgin has lined up 100 future space tourist "astronauts" to begin "readiness and preparation" activities for their flights. But what does this mean for the company, financially?

When Virgin Galactic first started out, it sold tickets on its spaceplane for anywhere from $200,000 to $250,000 apiece. Prices have moved higher in fits and starts, hitting $450,000 in 2021, and the first 800 tickets the company sold largely fit within this price range. This year, as Virgin begins gearing up for its return to flight, the company raised its prices again and set a new record for ticket price:

$750,000.

The good news here is that even at a price nearly four times what it initially charged, Virgin Galactic says ticket sales were "oversubscribed and booked out ahead of schedule, demonstrating strong demand." (This also implies that prices could go even higher, especially now that Blue Origin has ceased flying tourists to orbit.)

The bad news is that Virgin Galactic might need to do exactly that if it wants to turn a profit.

Virgin Galactic's space math

Consider: In its most recent earnings report, Virgin Galactic predicted that if it can get Apeiron flying by February 2027 as planned, the company will generate positive quarterly free cash flow at least once in 2027.

How will it do that?

Well, in Q3 2026, Virgin Galactic reported $50 million in negative operating cash flow, exacerbated by $41 million in capital investment (so total cash burn of $91 million). In Q4, management warns that negative free cash flow could rise as high as $100 million -- but let's assume the target here is just to offset $91 million in cash burn with revenue from space tourism flights.

Divided by $750,000 per ticket, Virgin needs to put 121 paying customers into orbit per quarter for the math to work. Divided by six passengers per flight -- about 20 flights per quarter. Divided by 13 weeks in a quarter -- about 1.5 flights per week.

If Apeiron can fly two times a week, therefore, the math might work. And if Virgin can get a second Delta-class spaceplane flying as well by Q2 2027, then four total flights per week should practically guarantee that Virgin Galactic achieves positive free cash flow.

Except for three things.

First, Virgin Galactic is $91 million FCF-negative right now with no operating costs for flying spaceplanes (because it isn't flying spaceplanes). As spaceplanes start flying, operating costs will go up, and Virgin will need to fly more often to cover them.

Second, before Virgin Galactic can begin collecting $750,000 per ticket, it must first fly all the passengers who paid $450,000, $250,000, or even just $200,000 for those tickets. It's going to take a whole lot longer to cover its costs at those ticket prices than at $750,000 per ticket.

Finally, this is space -- and space is hard. Just because Virgin Galactic says it will resume flying in Q1 2027 and have two spaceplanes operating by Q2 doesn't mean it will happen. Unless everything goes right for Virgin next year, this stock could be dead money until it does.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.