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Is Virgin Galactic Stock a Smart Investment?

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Could this be the ultimate long-term stock investment?

Space tourism company Virgin Galactic Holdings (SPCE -5.20%) went public in 2019, but has generated virtually no revenue since then, and any space flights with paying customers are still quite a long way off. In this Fool Live video clip, recorded on March 15, Fool.com contributors Matt Frankel, CFP, Dan Caplinger, and Brian Withers discuss Virgin Galactic and whether it could be worth a look for forward-thinking investors.

Matt Frankel: Virgin Galactic was Chamath [Palihapitiya]'s first SPAC investment. It's often credited with starting the SPAC movement in the first place in 2019. This is the space tourism pioneer. Its goal is to make space tourism accessible to everybody. That's not going to happen yet. The first flight, I think he was selling for $250,000 a ticket. The long-term plan is to have 400 flights a day going, or thereabouts, and to generate billions and billions of dollars in revenue. I look at this as a company that could be a great investment when my kids are 60. What do you guys think of Virgin Galactic and what am I missing in terms of the shorter-term investment case?

Dan Caplinger: I don't think that they're really, I mean, from a short-term business perspective, we're basically at a developmental stage. To me, it looks a lot like the binary choice that you get with clinical-stage biotech-type investments, where you're at a test flight phase, if we eventually have a successful test flight, gets people into orbit, then this thing is going to do really well. If there are problems, insurmountable problems with the technology, then it could be catastrophic. So you really have this binary situation. The one thing I will say though, is that there is some optionality in terms of, even if the space flight stuff doesn't work, they're also working on things that could make supersonic flights, like transcontinental flights over oceans, make the flight times a lot shorter on long routes and that could be helpful going forward.

Brian Withers: I'm just going to pitch in. I don't know about the short-term opportunities for this stock. Annual revenue actually declined 94% year over year. They didn't have any revenue in Q4. Their revenue was really around taking government payloads into space. Interestingly enough, the three launch, they have 600 people signed up and $80 million of deposits for people who want to go into space. They had to cut it off. 

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