If billionaire egos get bent because someone beat them to the punch, Elon Musk’s and Jeff Bezos’ must be a little twisted Tuesday morning. Why? Because Richard Branson’s Virgin Galactic is preparing to become the world’s first public space tourism company.
The British billionaire is merging his company with Social Capital Hedosophia (NYSE: IPOA), a special purpose acquisition company, or SPAC for short, formed in 2017 by merging Chamath Palihapitiya’s Social Capital with venture capital firm Hedosophia. Apropos, while not giving away too much, Palihapitiya told CNBC this morning that the new public company will have a 4-letter ticker that has something to do with space.
Social Capital is investing $800 million in Virgin Galactic and will own 49% of the new company, which will have an enterprise value of $1.5 billion.
The combined company intends to be public by the end of 2019. Palihapitiya, who has committed to invest another $100 million at completion of the transaction, will be chairman of the combined company.
Branson founded Virgin Galactic in 2004 and finds himself in a race to space with Blue Origin, a space company of Amazon (NASDAQ: AMZN) founder Bezos and SpaceX, a venture of outspoken Tesla (NASDAQ: TSLA) founder Musk. Virgin Galactic has raked in more than $1 billion in investment since inception.
Virgin Galactic trumpets several firsts in the race, including building the first vehicle for commercial service to put humans into space and completing two crewed spaceflights on its VSS Unity, one in December and the other in February. The vehicles are more akin to planes than rockets in appearance to deliver“a safe and familiar flying experience for customers to go into space and become officially designated astronauts.”
Considering only about 560 people in history have been to space, Branson isn’t having any trouble finding people eager to reach the final frontier. In fact, his company is already on track to more than double that total by itself, having collected deposits from more than 600 people in 60 countries for future space flights that has pulled in about $80 million and represents $120 million in potential revenue for Virgin Galactic.
Speaking of cash flow, Branson expects the company to be profitable within two years of being public.
Initially, the space journeys are going to be expensive (apparently around $200,000 each based upon the deposits and potential revenue figures provided), but Branson expects costs to come down as they build up their fleet of spacecrafts.