"Demand for tickets remains strong."
That was Virgin Galactic's (SPCE 1.23%) opening line when announcing its first-quarter 2022 earnings on Thursday last week, describing how the company lost $93 million on $319,000 in revenue -- but progressed to record "approximately 800 Future Astronaut reservations" for flights to space and back aboard its small fleet of spaceplanes.
But here's the thing: Virgin Galactic first revealed that it had 600 reservations in hand way back in December 2018. And this means that over the nearly three-and-a-half years since making that announcement, the company has actually added only about 200 new customers to its reservations list -- which, I have to say, is not a lot of new space tourism customers.
Slow sales ...
Granted, Virgin Galactic fans may argue that the company only actually resumed sales of tickets in February, and so that's 200 new customers in just the last three months. Fair point. But Virgin Galactic announced it was doubling the price of its space tickets to $450,000 back in August 2021. Presumably, anyone who bought a ticket after February at least started thinking about buying a ticket around August, when the price changed.
So, by my count, that's still 200 tickets sold in nine months -- and this raises a crucial question for Virgin Galactic shareholders: Why are tickets selling so slowly of late?
... and high prices
Partly, I suspect, it's because the ticket price is now much steeper. (Recall that those first 600 tickets sold for prices ranging from $200,000 to $250,000.)
But also partly, I suspect potential customers are looking at Virgin Galactic -- which still hasn't flown a commercial flight to space and just postponed initiation of that service until Q1 2023 -- and they're comparing it to Blue Origin, which has flown four commercial flights already and is flying groups of space tourists to orbit about once every two months now.
... and uncertain service
These would-be space tourists are thinking that maybe Blue Origin is simply better at this business than Virgin Galactic. It's more experienced and has developed a record of success in safely flying tourists to space and back that Virgin Galactic has yet to match. And when weighing their options on which space company to spend their space tourism dollars on, they're leaning toward the more proven operator -- and the one that has already begun operating.
Now, does this mean that once Virgin Galactic starts flying next year, it can turn things around? Maybe. But by the time Virgin Galactic makes its first commercial flight, Blue Origin is still going to have flown probably eight times already, if not more.
Long story short, Virgin Galactic had better "light this candle" soon if it wants to capitalize on this trend.