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Virgin Orbit Plans First Satellite Launch in 2 Months

By Rich Smith - Oct 6, 2019 at 11:13AM

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Virgin thinks it can make its way to orbit -- but can it compete with SpaceX?

Good news, space fans!

Virgin Orbit, the rocket-launching sibling to Sir Richard Branson's space tourism company Virgin Galactic, is now just two months and two flights away from putting its first satellite in orbit.

Announcing the advent of its newest "LauncherOne" test rocket late last month, Virgin laid out its plans to officially entering the space race. After "prepping and practicing" on the ground for a few weeks, Virgin said it plans to conduct a "captive carry flight" with a modified Boeing 747 "Cosmic Girl" flying aloft with its new rocket in a few weeks. Then comes Virgin's very first orbital launch. 

Cosmic Girl deploying a LauncherOne rocket

Image source: Virgin Orbit.

"In about six weeks, eight weeks, we will be firing the engines on the next drop test and heading at eighteen and a half thousand miles per hour around the Earth in orbit, beginning to drop off satellites," said Branson in a talk on September 16 -- meaning the first orbit launch will probably take place anywhere from late October to mid-November. And it sounds like Virgin will rapidly ramp up launches thereafter, promising multiple "launches to space later this year." 

Known customers for these launches include satellite communications start-up OneWeb, and also the U.S. Air Force, which has hired Virgin Orbit defense subsidiary "VOX" to launch a small satellite out of a runway in Guam. 

What it means to investors

All of that is certainly fascinating to space fans, but what does it mean to investors?

First and foremost, it's important to point out that you cannot invest in Virgin Orbit -- at least not yet. The merger between holding company Social Capital Hedosophia (IPOA) and Virgin Galactic, announced back in July, is not expected to close before Q4 2019, and will not include a transfer of ownership of Virgin Orbit in any case. And no other plans to make Virgin Orbit publicly tradable have been announced. 

That may come as a disappointment for investors looking to get in on the ground floor of a new space company, there being so very few pure space plays available for investment. But it could actually be a good thing -- in the sense of preventing you from losing money. The reason: Virgin Orbit's business model remains unproven at present, and is potentially vulnerable to disruption from incumbent space provider SpaceX.

As you've probably heard, SpaceX -- which made its mark launching large satellites into orbit for corporations and the U.S. government -- has recently expanded its business model to incorporate mass launches of smaller satellites on monthly smallsat launches utilizing its reusable Falcon 9 rocket.

And here's the thing: Virgin Orbit is expected to charge anywhere from $10 million to $12 million to launch a payload of up to 500 kilograms into Low Earth Orbit. Viewed optimistically, that works out to a launch cost of about $20,000 per kilo. But in what feels very much like an attempt to smother the small rocket launch industry in its cradle, last month SpaceX lowered the pricing on its small satellite rideshare program to just $5,000 per kilogram -- only a quarter of what Virgin Orbit will have to charge -- and announced it will be launching monthly to accommodate rideshare customers. 

Granted, Virgin Orbit's launches will offer a lot more flexibility than SpaceX can. The company is planning to deploy as many as "six or eight" Cosmic Girl-LauncherOne systems around the world, giving it the ability to launch a satellite from literally any point an airplane can reach above the globe, into any orbit a customer might desire. That might turn out to be enough of a "product differentiator" to enable Virgin Orbit to compete with SpaceX. Whether the added flexibility is worth a price tag 400% of what SpaceX charges, however, remains to be seen. 

Long story short, Virgin Orbit is on a short flight path to orbit today. Whether its flight has a happy ending or not remains to be seen.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of Social Capital Hedosophia Holdings. The Motley Fool has a disclosure policy.

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