I wanted just to touch a little on this price rise if I may, those who have read about will know I’m no fan of SPCE. So while I shouldn’t spend my time breaking down meme stocks for made up internet points from strangers, I cannot sit by and without someone putting information into a the hands of potential investors / bag holders.
TLDR - The model is broken and they will never make money.
If you read their SPAC merger documents there are a few things that stand out in light of this new ticket price.
VG state that ‘research’ shows that people will spend 1%-1.5% on a single discretionary purchase, leaving the quality of such research aside, this means they’re new target customer must a net worth of $45m. Over 70% of their current reservations have come from people with a net worth of less than $20m. With the new ticket price they’ve shrunk their TAM (total addressable market) a metric they refer to on multiple occasions at the very time they’re meant to be ramping up their volume. They swap between $10m & $20m quite a lot when it quite them, in short they’re looking for rich white dudes.
According to their own calculations, below, at $250k a ticket they were already set to make 66% margin. A price rise suggests these calculations are very wrong indeed and the reported efficiencies simply haven’t been found. Will they find them, who knows but a price rise suggests this is unlikely.
They have just opened up to take more reservations however only 14% paid the old sticker price of $250k with 11% paying less than $199k. If I had an old reservation I’d be flipping it for a tidy profit.
By the end of 2021 they should have flown 712 people with a goal to have made $12m (EBITA). So far they’ve flown 0 paying passengers and are likely to rise a further $500m in a stock offering. Profitability will likely be pushed back to at least 2024.
I have more but don’t want to stretch everyone’s attention span any longer.
Those 250,000 people might want to check the refunds policy. I still can’t believe the luncacy of a rocket powered plane being controlled by 1) Fly by wire and 2) An ape in pants wiggling a stick in reaction to what’s going on at that speed/altitude.
They’re aiming for 100 flights and it feels like it’s only a matter of time until there’s another crash with this set up.
Konrad surveyed 223 people with net worths greater than $1 million
They spoke to a small group of people and extrapolated to 250,000. You don’t need a degree in statistics to know this is a flawed survey with a small sample size.
His “attractive outlook is boosted by supply ramping with additional spaceships driving capacity to 660 flights/year by 2030 up from capacity of roughly 36 [a year] today,” wrote the analyst in a Tuesday report.
Capacity for 36 this year? Sounds like my wallet, it has the capacity for 100 £50 notes, shame it only had 1 in it!
Yeah don’t no why they surveyed people with a net worth greater than 1 million.They will need at least 10 million to even think off spending $450,000 going to space.
This share price as definitely going be very volatile for the next few years I see it dropping back below $15 over the next 6 months.
