Billionaire Richard Branson can look back on an eventful past: Since 1972, the 70-year-old has founded several hundred companies and, over the decades, created the Virgin Group conglomerate. From hotels to the electronics and wine trade to aviation, the conglomerate includes a wide variety of industries. Virgin Galactic, the first private space tourism company, is still relatively new.
This is particularly close to Branson's heart. At regular intervals, the adventurer stresses that his company will be number one in the tourist conquest of space. But although 600 customers have already paid the roughly USD 250,000 for one of the coveted seats, no commercial flight into orbit has yet taken place. However, the latest developments give hope that the launch is imminent.
While the first test pilots were catapulted to the frontier of space in December 2018, May this year saw the third trip to near-space on the "SpaceShipTwo" rocket aircraft. "We have now flown seven people into space and continue our mission to make space accessible to all," Branson subsequently wrote on Twitter. Virgin Galactic's system is based on the "VSS Unity" space capsule, which carries two pilots, and the "VMS Eve" carrier aircraft. At an altitude of just under 14 kilometres, the VSS Unity was decoupled and continued its journey to an altitude of 89.2 kilometres using its own rocket engine.
The flight, recently launched in Mexico, was another important step toward the Federal Aviation Administration granting a commercial license for reusable spacecraft. And it was far from the last this year. The company plans three more test flights. As early as the flight after next, founder Branson himself wants to get on board. Then from 2022 Virgin Galactic expects to be able to start commercial operations. There is room for a maximum of six passengers in the 18-metre-long capsule, which equates to a turnover of around USD 1.5 million per flight.
On the capital market, the company celebrated its IPO in 2019, people are already eagerly awaiting the start of the "Space Tourism Flights". The company is still writing high losses. In the first quarter of 2021 alone, the loss added up to USD 130 million. The share price is therefore still determined by reports on project development. Both successes and failures cause large swings. For example, a failed test flight last December, during which the rocket engine did not function as planned, caused the share price to plunge by around a quarter.
The reaction of the recent successful flight test was the opposite. Since then, Virgin Galactic's share price has risen sharply and has now more than doubled in value. But it's not just tangible data that's causing swings in the stock; Reddit disciples have also discovered the stock for themselves, shooting it up to a galactic USD 62 earlier this year.
The high volatility of the stock is best used to structure highly attractive soft callable barrier reverse convertibles. The two new BRCs on Virgin Galactic therefore offer top terms: With a maximum term of 12 months and a risk buffer of 45%, a respectable interest rate of 13.00% p.a. is possible with the CHF-denominated product. The USD version even offers a coupon of 14.00% p.a. with otherwise identical features.
Those who prefer a longer-term and broadly diversified exposure to the growth sector may consider the tracker on the Swissquote Space Economy Index (ISIN CH0587306991). The recently launched barometer includes 40 companies whose business models extend into space. In addition to Virgin Galactic, for example, the index also includes manufacturers and operators of rockets and satellites, as well as telecommunications companies. In addition, Airbus and Boeing, the two leading aerospace companies, have also been included in the composition. The certificate reflects the performance of the Strategy Index - less a fee of 0.25% p.a. for the calculation agent and an administration fee of 0.40% p.a. - on a one-to-one basis and without a maturity limit.
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