Hey this is tom, and you know i don't know a lot of people who are in their 70s, who would be willing to go into space like richard branson just did yesterday. The only other person i can think of is my grandpa and he's already asking me for a ticket. Obviously i can't afford the fee 250 000 a pop, but richard if you're watching this - and you want to take my grandpa into space. I'd be down he'd, be down.

Give me a call now on this serious note, we have to talk about what happened with virgin galactic. This is a huge story, a lot of hype, a lot of euphoria rightfully. So it's a huge event, but the real question for me here is: is this company for real? Is it or legit and in this video i'll give you the actual analysis of that beyond the high beyond the noise, whether this company at this price is a good enough investment for me now, stick around with me and i'll. Tell you my opinion.

Okay. So here's a little background. Just a month ago, the faa actually gave its approval for the first time for virgin galactic to take human beings into space. Now not a month goes by and richard branson, with his 70 year old ass is going up into space successfully, and we all watched it yesterday as the vss unity went into sub-orbital space 50 miles above sea level.

The stock price is going crazy about seven percent up in pre-market 153. Just this year. The stock is ballistic, but also a lot of short interest. So we actually have to take a look at the company, the business model and i'll give you my opinion.

So here's the story, so i think the virgin galactic story is very interesting and i think yesterday's flight is a pivotal event, because it divides the first 17 years from the next 10, 15 years or whatever. I think this was the end of the rd process and the beginning of the business process. Can these guys make this into a viable, sustainable business? That's the real question and in this video i'll show you why they may why they may not. What are the risks? What are the upsides and i'll give you enough tools to decide for yourself, because, like everything i say in my videos, this is just my opinion, which might be inaccurate might be wrong, might be completely the ramblings of a madman.

You have to do your own research and this video will give you good tools to get started and, as you know in my videos, i always give you the bottom line first and in this video i'll do the same thing for you and, as always, don't click. Nothing don't smash, nothing don't buy. Nothing! Don't subscribe to. Nothing.

Just give me your attention and before we go through the analysis, i always will give you the bottom line. First, that's what i do in every one of my videos, so the success of virgin galactic is dependent on one factor. Only one can this company create an affordable, safe, sustainable business, around space tourism, or rather sub-orbital space tourism, and the question is not so simple because it's not really affordable right now at 250 000 per traveler. However, that's not really out of the ordinary, because in flight commercial flight wasn't for the common man when it just started out.

This was for millionaires. This was pleasure. This wasn't about being operational. Going to business meetings.

I mean people used to fly and spend a lot of money, get caviar and champagne. Nowadays, it's kind of funny to think about it as you're sitting crammed in your seat, and you hear people vomiting in the toilet, crying babies by the way, the guy who vomiting in my toilet is probably my grandpa, but i mean that's a whole different story. Why talk about it right now? Let's move on the whole idea of this that the prices of these tickets have to come down if they cannot. It's gon na be a big issue for this business because the 250 000, the pop, is going to be very tough to maintain.

But again this is just the beginning. The commercial flies are only scheduled to start next year, so they have a lot of time to ramp this up and actually get going now. I am concerned that this thing is becoming about ego rather than business. Jeff bezos is going up next week.

Richard branson just went up yesterday i mean, is this a coincidence, or is this a competition who has the bigger spaceship? I mean i don't know, and the real question here is not about who goes first, it's about. Can you guys make it into a sustainable business? So the real question you should be asking yourself, as a shareholder in this company or as a potential shareholder. Is this an ego competition, or is this an actual business idea that can work? Let me show you both arguments from both sides. So, first of all, how does this thing work from a layman non-engineer perspective reporting for duty, so you have a plane that takes the spaceship that docks into it 45 000 feet in the air.

Then it disengages it has its own rocket. That takes it vertically into sub-orbital space. It spins there about 10 minutes. Then it glides back to earth and basically lands like a regular plane.

That's the best explanation i can give you with my non-engineer brain sounds simple. I don't think so. Just ask richard: branson 2014 was a really tough year for him, where he had a massive crash that put everything on ice for seven years. So that's not really a simple execution, but it works yesterday.

We saw it work, so there shouldn't be any issues, especially with the faa being behind it right now. First of all, the good news there's definitely demand for this thing. Virgin galactic have already collected 600 pre-orders paid pre-orders they're, actually sitting on 83 million dollars of prepaid pre-orders for flight, so the demand is there. The supply isn't amazing, it's basically them and jeff.

Bezos company does not a lot of supply and there's plenty of 10 million net worth people that are interested in this, especially with the pace of ramp up, which is going to be quite slow. Now the company expects to get to about 300 350 flights per year, but this thing is gon na take five six seven years to get to that point. So the supply is definitely not amazing for the next five years. They have plenty of butts to put in these seats at 250.

000. A pop, that's a good supply and a good demand, and another positive thing is that they definitely clear the regulatory issues the faa gave them approval. They actually went into sub-operative space. They came back.

Everything works like a charm, all gucci, so it actually is possible. It's doable and they did it. That's a massive hurdle that has been cleared, and now it completely also changed. The narrative nobody's talking about the 2014 accident anymore, everybody's talking about what happened yesterday and that's good for the company for the pr for the business for the marketing.

It has actual monetary value. Now. The bad news is that this business is going to be very complicated. Very expensive to run not to mention the extremely high operational cost, massive capital expenditures, insurance costs up the wazoo.

Can you find anybody to insure this thing, not sure? But even if you are it's going to be insane, the policies are going to be so expensive. Oh, my god, not to mention regulator, risk not to mention actual operational risks. Just ask branson. We just spoke about it.

The 2014 accident almost killed this program entirely one accident and this company is done. It's a massive risk now. The other kind of concerning thing here is that the company is pre-revenue, it's not generating any revenue, it's sitting on about 600 million in cash, which is the burn rate for about a year for this company. So in a year it's gon na run out of cash, and it's gon na need more either from the shareholders or from branson.

Now branson is definitely good for it. We all know it, so i don't expect any liquidity issues, but the company is definitely pre-revenue and you're investing in an early stage company, even though they've been added for 17 years. That's just a thing you need to understand, however, they do plan to launch commercial flights as of 2022, which means more shekels will come in into the cash register generating actual cash flow, which is good. Also, the demand is there and you know the prices can actually go up, because we just saw jeff bezos auction of a seat for 28 million dollars for his spaceship, which is way more than the 250.

A pop richard branson is currently selling, so there is potential there for sure. The question is: do i want to invest in a business that generates zero revenue and is valued at 12 billion dollars with a 22 short interest, and that answer depends on one question: can space tourism evolve into an actual legitimate business? We know that the demand is currently there. We have 600 pre-orders for this company. We have one guy paying 28 million just to go out with jeff bezos.

We know the demand is there, but how much of it is novelty and how much of it is sustainable? Over course of a decade, i'm not sure now, according to northern sky research, this is a 500 million dollar market by 2023 and 3 billion by 2030. So essentially, it seems like there's plenty of money in this game when you have only two companies battling for these clients. The question is: how operationally viable is this business? Can they actually execute 350 flights per year, which is the destination that branson has set out? I'm not sure it's a very complicated business to run if they can get it they're. Looking about 800 to 1 billion of revenues per year, which is plenty to justify the current valuation, the question then becomes operational.

Can they do it? And if yes, when can they do it 350 flights? It means a daily flight, it's very complicated. Now the other thing can they actually build long distance travel out of this, because it's much faster to go through suborbital space if they can another massive business, but nobody knows exactly when and that's the biggest problem. You have a lot of risk here, because you have a lot of unknowns and at 12 billion dollars with zero revenue, it's a little bit problematic. So here's my two cents, i think - with no revenue right now and for the next year to two years, with a lot of regulator, risk operational risk, capex, expenditures, insurance expenditures.

This company is facing a lot of challenges. It needs to get everything right in order to actually generate enough profits to justify the 12 billion valuation it's currently carrying at this price. I think for me there are better alternatives, but again, i'm not always right and i've been wrong plenty. So maybe that's one of those cases don't do anything because of me go and do the research for yourself decide for yourself and let's see what happens as always a huge shout out to the channel members and the patrons you guys are amazing.

Thank you. So much we'll see you guys in the next video.