Virgin Galactic (NYSE:SPCE) promised to take people into space when no one else could. SPCE stock was the vehicle that would make space tourism a reality.
But as space becomes a realistic destination in 2021, SPCE stock is collapsing. In March, Chamath Palihapitiya, who took Virgin Galactic public through his Social Capital Hedosophia I SPAC, sold his personal stock.
Then on April 15, Sir Richard Branson, who had put the company together, sold most of his stock. Finally, Cathie Wood’s ARK Space Exploration & Innovation (NYSEARCA:ARKX) fund sold most of its stake.
Just as the company seems ready to deliver its product, its biggest investors are bailing out.
I’m not surprised.
The Shell Story
In my office, I have a copy of Microsoft (NASDAQ:MSFT) Windows 1.0, hand-signed by Bill Gates at a press conference announcing the software’s delivery.
When I got home from that press conference, I ran to my IBM PC and tried to run it. I couldn’t. I needed a faster chip, more memory. Eventually, I spent a decade chasing Windows’ upgrades, because each new version of the software needed more powerful hardware. The hardware was cheap, and the software seemed “open” to low-cost applications. It just didn’t work.
Users sought to “solve” this problem in various ways. The easiest way was to buy an Apple (NASDAQ:AAPL) Macintosh, a closed, proprietary system that actually functioned. But if you didn’t have thousands of dollars, you could get a program like GeoWorks. GeoWorks gave you something that looked like Windows and felt like Windows. But it wasn’t Windows. It didn’t run Windows applications. It was a shell around other software.
In retrospect, I find no fault with Microsoft for any of this. Graphical User Interfaces (GUIs) that could run complex software were hard to create. The company had to sell the sizzle to stay in business. When the problem was finally solved, it was worth it.
The Space Story
The Virgin Galactic space planes are a lot like GeoWorks.
For years, we’ve been teased with the idea of space. The Virgin Galactic planes, based on the SpaceShipOne design of Bert Rutan, promise to briefly take tourists into space, then bring them safely back down.
After years of trial and error, it’s close to working. Virgin’s SpaceShipTwo has been to the edge of space, with trained pilots. It could take tourists up in 2022. Meanwhile, the company has unveiled SpaceShipThree, which is sleeker, lighter, roomier, and could take six passengers. The company has even hired Joe Rohde, who formerly ran Imagineering for Walt Disney (NYSE:DIS), as “experience architect,” to turn this ride into something rich people might buy.
Meanwhile, Space has become real. SpaceX is taking up to 60 satellites at a time into low Earth orbit and putting the rocket back on its pad. It has taken astronauts to the International Space Station. It has a contract to take people to the Moon.
Science fiction writer Allen Steele is turning out to be right. Space is starting to be explored, not by governments, but by entrepreneurs.
The Bottom Line on SPCE Stock
Branson’s sale shows that he now understands that Virgin Galactic is GeoWorks all over again.
He’s launched Virgin Orbit to take satellites into space. He is talking up a new space airline that could take people halfway around the world in 90 minutes. Musk talks of using space to go from London to New York in a half hour.
But none of this is Virgin Galactic. SpaceShipTwo is a Ferris Wheel. It gives you a taste for space where people are hungry for the full experience. The ticker symbol, SPCE, isn’t pronounced space, but spice. It’s a taste and not the meal.
At the time of publication, Dana Blankenhorn directly owned shares in AAPL and MSFT.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack https://danafblankenhorn.substack.com/.