Virgin Galactic (SPCE +1.42%) has been impressing a loyal group of customers and investors with its vision of commercial space tourism and its focus on making suborbital spaceflight accessible to private astronauts, researchers, and professionals through astronaut training.
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Yet the company's financial numbers highlight a stark disconnect between that long-term vision and current operating reality. While Virgin Galactic may not go bankrupt in the near term, the deterioration in its fundamentals is severe enough that a zero-share price outcome can no longer be ruled out.
Negligible revenues and soaring costs
Virgin Galactic's financial performance remains deeply challenged, even nearly 25 years after the company was founded. In the third quarter (ending Sept. 30), revenues were just $0.4 million, attributed to future astronaut access fees, while total operating expenses were $67 million. This imbalance translated into a net loss of $64 million and a negative free cash flow of $108 million. Management also expects fourth-quarter free cash flow to remain deeply negative, at $90 million to $100 million.
NYSE: SPCE
Key Data Points
Hence, Virgin Galactic remains highly loss-making as it heads into 2026. The company's operating model for 2026 and 2027 involves 125 space missions per year of its initial fleet of two SpaceShips, with ticket prices of around $600,000 per seat. This is expected to generate nearly $450 million in annual revenues and $100 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
But this scenario assumes near-perfect execution, high pricing power, and no significant project delays. Until commercial service actually begins and ramps up, such projections remain theoretical and difficult to rely on.
Cash burn, equity dilution, and balance sheet stress
Virgin Galactic's heavy cash burn has further increased its risk. While the company exited the third quarter with $424 million in cash, its quarterly cash burn of around $90 million to $100 million (assumed to be equal to its fourth-quarter free cash flow estimate) leaves little margin for error. Hence, any slipup in commercialization timelines or failure to dramatically reduce costs can create a need for external financing.
Those challenges were reinforced by Virgin Galactic's recently completed December 2025 "capital realignment." The company repurchased around $354.6 million of its 2.50% convertible notes due 2027, but issued new first-lien debt of $212.5 million, due 2028, with an interest rate of 9.8%.
At the same time, the company also sold 2.2 million shares of common stock and issued pre-funded warrants exercisable for roughly 8.4 million shares through a registered direct offering. The company has also granted purchase warrants covering 31.7 million shares in a private placement. Hence, while the company has extended its debt maturity to 2028, it has taken on higher-interest debt, diluted its equity, and even created additional dilutive pressure for existing shareholders.
Hence, it's evident that Virgin Galactic may not need catastrophic failure to justify reaching a near-zero share price. Aerospace development requires heavy investment in engineering, manufacturing, and rigorous safety and compliance processes. Any misstep in execution or adverse capital market conditions could erode shareholder value over time, potentially leading the company to bankruptcy.
