Shares of Virgin Galactic Holdings (NYSE:SPCE) climbed 5% on Tuesday after NASA selected it for a flight services contract. The deal value is small, but offers a new source of revenue for the early-stage space tourism company.
Virgin Galactic had originally hoped to start flying tourists into space this year, but with pandemic-related restrictions slowing test flights revenue-generating missions are now a goal for 2021.
In the meantime, the company is making progress building a relationship with NASA. The government space agency said late Monday it had selected Virgin Galactic and Masten Space Systems to provide flight and integration services for payloads as part of NASA's Flight Opportunities program.
The new contract awards run through July 31, 2023, and have a total combined value of $45 million. NASA uses the program to acquire space on commercial flights for tests and experiments requiring reduced gravity.
In one sense, splitting $45 million over three years barely moves the needle for Virgin Galactic.
Then again, this is a company that booked no revenue in the third quarter. And given the uncertainty about the total space tourism market -- with its $250,000-per-seat price tag -- a second line of business is reason to cheer.
The bull case for Virgin Galactic still revolves around space tourism and its higher potential revenue. But a growing relationship with NASA is a plus for any space-focused company, and the shares are moving higher on Tuesday as a result.