Virgin Galactic Holdings (“SPCE”) is going to be a ten-thousand bagger. This means it will go up ten thousand times from the current “low” valuation of only $5.6 billion. Here is my investment thesis:
Thesis: Virgin Galactic Holdings is deep value stonk with an infinite total addressable market (“TAM”). As more people get the coronavirus (“Lung Annihilator”) there will be more demand from people wanting to go to outer space to escape the coronavirus. Plus, there is an option upside that Greta Thunberg (“Angry Child”) is right and planet earth is doomed. If Angry Child is right, then Virgin Galactic is a million bagger – means lots of money.
Business Overview: Virgin Galactic is spaceship company ran by Richard Branson – that creepy blonde hair guy who looks like ape in the original movie Planet of the Apes. If Buzz Lightyear was still alive, he would own this stonk. Space is cool because that is where Star Wars takes place and also where aliens live.
Valuation: Virgin Galactic Holdings has no revenue and will likely have tons of operating losses in the future. The Company is currently trading with a market cap of $5.6 billion and an enterprise value of $5.5 billion. Because Virgin Galactic Holdings doesn’t have revenues, I am just going to take Microsoft Corporation’s (“MSFT”) income statement and pretend that it is Virgin Galactic Holding’s income statement.
Source: Morningstar Microsoft Income Statement
Microsoft generated $134 billion in revenues and $49 billion in operating profit in the trailing twelve months. Since Virgin Galactic has an enterprise value of only $5.5 billion, Virgin Galactic is trading at an EV/EBIT of only 0.11x and EV/Sales at 0.04x. These are deep value metrics meaning Virgin Galactic is undervalued stonk. This is the power of substituting other company financials into the company you are valuing. This is called having a CFA and one of the smartest finance things you can do.
Risks: Can’t think of any.
Conclusion: Virgin Galactic is the deepest value stonk on the market. If you take the $5.5 billion enterprise value and substitute billion with million then Virgin Galactic only has 5.5 million market cap. This is the power of finance. You can just make up numbers because you are smart and everyone else is dumb.
