What happened
Interest in the space tourism industry soared in June. Investors took notice early in the month when Jeff Bezos, founder of the privately held Blue Origin space company, announced he would join his company's first passenger mission into space in late July. That helped boost shares of fellow space tourism company Virgin Galactic Holdings (SPCE -11.74%). But it was additional news directly from Virgin Galactic that helped drive more-significant gains later in the month. Shares ended the month up 47.3%, according to data provided by S&P Global Market Intelligence.
So what
Virgin Galactic has been operating its test flights under license from the Federal Aviation Administration (FAA). But that license did not include passenger flights until now. On June 25, the FAA gave approval for a full commercial license to operate its spacecraft with passengers. That followed a successful May test flight, after which the company's full analysis confirmed all the flight objectives were achieved.
View from Virgin Galactic test flight. Image source: Virgin Galactic.
The analysis validated the performance of several flight controls, cabin environment data, and successful pilot runs of three research experiments that will help generate revenue in the future. After FAA approval for passenger flights was announced, Virgin Galactic stock shot up 39%, representing the majority of its June gains.
Now what
Investor activity also rose with that important news. The 30-day average daily trading volume jumped by 50% in the last week of June, according to data by YCharts. As a speculative growth investment, the ability to commercialize is a significant step for investors.
The company still plans another three test flights, and a detail about the next one stirred further excitement for the company subsequent to the end of the month. In announcing plans for its first fully crewed test flight, planned for July 11, the company said its founder, Sir Richard Branson, will be among the crew.
Branson's presence will be for "testing the private astronaut experience" to prepare more for future paying passengers, the company said. But it also marked the final stretch of a billionaire race to space between Branson and Bezos. If the flight occurs as planned on July 11, Branson will beat Bezos' flight by nine days.
While that race isn't directly meaningful for the commercialization of the business, the competition between billionaire founders to join their respective flights to space is garnering plenty of publicity. Investors should keep their excitement in check, however, and be sure to focus on the business and valuation once flights -- and revenue generation -- begin to occur regularly.
