Daily Brief: It’ll Take More Than A Spacefaring CEO To Impress Virgin Galactic’s Investors

Daily Brief: It’ll Take More Than A Spacefaring CEO To Impress Virgin Galactic’s Investors

over 2 years ago3 mins

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Virgin Galactic completed its next major test flight over the weekend, as the space tourism company doubles down on its battle for the stratosphere.

What does this mean?

The mission was the spacecraft’s twenty-second test flight, but its first with a full crew. It also marked the first time a company founder has traveled on their own ship, with Richard Branson beating Amazon’s Jeff Bezos – who has his own midlife crisis-fueled space venture – by eight days.

Both companies are trying to build businesses catering to fatcats who’ll pay top dollar for an unforgettable view of our planet. And those fatcats seem to be here for it: more than 600 of them have paid an average of $130,000 each for the chance to fly with Virgin Galactic, while another thousand have saved their spots with a $1,000 deposit.

Flight plan

Why should I care?

For markets: Virgin Galactic flies too close to the sun.

Virgin Galactic’s shares – which doubled in the lead-up to the weekend’s test flight – were up by as much as 10% before the market opened on Monday. The company was quick to capitalize on the jump, announcing that it’d be selling $500 million worth of new shares to help fund its transition from test flights to full-blown commercial operations. But what goes up must come down, and with so many new shares on the market set to dilute the value of existing ones, investors sent its stock back down more than 10%.

Virgin stock

Zooming in: Get ready for liftoff.

Virgin Galactic said on Monday that it was planning to eventually have around 400 flights a year carrying six passengers each, which could – according to investment research firm Alliance Bernstein – end up costing between $400,000 and $500,000 a ticket. That implies up to $1.2 billion of annual sales once the firm’s operations are fully up and running, which would be – sigh – out of this world.

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British Households Are $1.3 Trillion Richer Now

Wealth image

A report out on Monday showed Brits saved an extra $1.3 trillion during the pandemic, with the haves yet again out-having the have-nots.

What does this mean?

Household wealth – calculated by subtracting a household’s debts from its assets – has jumped by around 6% in the UK since before the pandemic, with the average family now $11,000 better off. Emphasis on the average family: the richest 10% have $70,000 more in their pockets, while the poorest 30% are up just $120.

There are a couple of reasons why that gap’s so big. For one thing, the increase was mostly thanks to a rise in the prices of stocks and real estate, which are owned in more significant quantities by wealthier people. And for another, the poorest – who work more in the lockdown-battered services industry – were hit much harder by the effects of the pandemic.

Pandemic wealth boom

Why should I care?

For markets: You can’t rely on the rich.

The Bank of England is expecting these savings to drive a surge in consumer spending, with British shoppers forecast to spend around 10% of the money they’ve been holding onto. But there could be trouble ahead: if the rich are the only ones with money to burn, the country’s economic recovery might not be as strong as the central bank’s anticipating – which would fit with last week’s disappointing data.

For you personally: Buy into the new normal.

With the last of the UK’s lockdown measures being lifted, workers are finally starting to head back to London: data out on Monday showed the first uptick in the city’s real estate rental prices since the pandemic began. But you don’t need to own an office block to benefit: you could just invest in real estate investment trusts, which give you exposure to multiple properties all in one tidy package.

London rent
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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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