Virgin Galactic Charges $900,000 Per Ticket — But Is It Enough?

Actions of Virgin Galactic (SPCE 6.75%) they have fallen about 90% in the past year, falling from a high of $65 per share to less than $7. The space stock enjoyed some growth after the company reported better-than-expected second-quarter earnings results on Aug. 7. But since then, the stock has retreated.

Why is that?

From $250,000 to infinity and beyond

It wasn’t exactly “infinity”. But the biggest surprise in Virgin Galactic’s Q2 earnings report was surely the revelation that in Q2, ticket prices for seats on its Unity spacecraft averaged $900,000.

That was a big change from when Virgin Galactic started selling tickets five years ago at prices closer to $250,000. It’s also double the $450,000 Virgin quoted just three years ago. On the other hand, it shows that Virgin Galactic is starting to price its tickets closer to the $1.25 million per seat that rival Blue Origin charges. And thanks to those higher prices, Virgin reported revenue of $4.2 million for the quarter, compared with the $3.4 million Wall Street was expecting.

Of course, Virgin Galactic still lost money for the quarter. A lot of money — $4.36 per share, which is 75% of what Virgin Galactic stock is selling for today. But again, thanks to higher ticket prices, its loss wasn’t as bad as the nearly $5 per share analysts had forecast.

Unfortunately for Virgin Galactic shareholders, that was about it for the good news.

Virgin Galactic has a rough 16 to 28 months

Analyzing the results, chief executive Michael Colglazier noted that in addition to high ticket prices, second-quarter revenue benefited from “membership fees for future astronauts.” The problem is that Virgin Galactic retired its only operational spaceplane after it made a final flight in Q2, and won’t be able to pilot any of these “future astronauts” until it builds its much-promised “Delta-class” spaceplane.

Colglazier stuck to the timeline he originally promised for Delta, saying it is “on track to enter commercial service in 2026.” However, that target is still 16 to 28 months away, and between now and then Virgin Galactic will have to try to thread the financial needle of staying solvent while burning cash with little or no revenue from spaceflight to -reimburse their expenses.

So how is it going?

Virgin Galactic’s hard math

In some ways, it’s not bad. Comparing the results of Q2 (during which Virgin launched exactly one space tourism flight) with Q1 (during which it also launched just once), it appears that Virgin Galactic managed to reduce its operating costs from 113.1 million of dollars to only 106 million dollars. Between higher revenue and lower costs, Virgin narrowed its operating loss to $101.8 million from $139.6 million a year earlier. Net loss was $93.8 million, compared to $134.4 million.

Virgin also reduced its cash burn rate by about 10%, from $126.3 million to $113.6 million.

On the other hand, between Q1 and Q2, it doubled its capex to around $34.4 million. If this trend continues — and as Virgin Galactic works to build new spacecraft, I would expect it to — it could hurt the improvements the company has made to operating cash flow.

Indeed, Virgin Galactic has warned that its cash burn in Q3 will be higher than in Q2 — at least $115 million and perhaps as much as $125 million.

The result for investors

Here’s the bottom line for investors betting that Virgin Galactic can make the math work.

Counting cash, cash equivalents, restricted cash and both short-term and long-term marketable securities, Virgin Galactic currently boasts over $820 million in reserves. Even at a burn rate of $125 million per quarter, that should be enough to keep the company solvent for another six quarters — that is, until early 2026. At that point, Virgin Galactic could begin refill. its coffers with revenue from its new Delta-class spaceplanes.

Let’s hope those Deltas don’t start flying too late in 2026. Otherwise, Virgin Galactic will have to find another way to raise the money to cross the finish line.