Wednesday , October 28 2020

Virgin Galactic wins space tourism race to float on stock market – The Guardian, Theguardian.com


Publicity-hungry billionaires must have a space venture, and here’s Sir Richard Branson’s:Virgin Galactic is now a stock market-listed companywith a $ 2.4bn valuation. Actual space tourists won’t depart until next year, but Branson has beaten Elon Musk and Jeff Bezos in getting his business floated in New York.

Galactic, despite the whizzy-looking planes, is quite a simple financial bet. It’s a punt that multimillionaires can be persuaded in droves to part with $ 250, 000 – the price of a ticket to ride from New Mexico to 50 miles above the Earth’s surface and back. Galactic is projecting revenues of $ 590 m and top-line earnings of $ 270 m in 2023, by which time it expects to have flown 3, 242 passengers. Who are they all supposed to be?

The marketing pitch is that a trip on Galactic makes for a more entertaining holiday for the super-rich than a tootle around the Med on a floating gin palace. A Philip Green-style cruiser costs $ 500, 000 a week to hire, apparently. And a private island comes in at $ 230, 000 a week, according to Branson’s crew, who presumably have the inside track on Necker’s rental rates. Thus Galactic, according to the grim prose in the listing documents, “offers a unique value proposition relative to comparably priced ultra luxury travel and transportation experiences”.

September 2004SirRichard Bransonannounces launch of Virgin Galactic, saying passengers could be flown into space by 2007 – 08.

December 2005A contract is signed for a new Philippe Starck-designed spaceport forVirgin Galacticin New Mexico – to take tourists to space. The likely flight date is now 2008.

June 2006Plans are mooted for a European base to allow flights into the Aurora Borealis, with potential flight dates of 2011 – 12.

July 2007Three people are killed in an explosion during a test of rocket systems to be used in Branson’s venture. The victims were employees of California-based aerospace firm Scaled Composites.

July 2008The Virgin Galactic mothership, which will take the passenger rocket-plane into near space, is unveiled. The first space flights are now due in 2010.

October 2011The Virgin Galactic spaceport opens. Test flights are due in late 2012.

June 2014Google is reportedly in talks to acquire a stake in Virgin Galactic, but no deal is ever confirmed.

November 2014A test pilot dies when Virgin Galactic SpaceShipTwo crashes in the Mojave desert.

December 2018Virgin Galactic stages its first successful flight to the edge of space, 50 miles up. In October, Branson space trip with him onboard could happen ‘in months and not years.

Viewed that way, one can see how the numbers might stack up. Galactic reckons it needs only 0.1% of the “high net worth” market, defined as those with assets of at least $ 10 m, to climb aboard in the first few years. If the calculation is that 0.1% also don’t give a damn about their carbon footprint, that’s probably accurate, sadly.

All the same, best not to over-rely on the marketing brochure. Demand is surely near-impossible to predict once early-adopters have had their fill. For a 90 – minute ride, even the idle rich might regard $ 250, 000 as steep.

And a single mishap (rememberthe fatal accident in testing in 2014) would ground the entire project. Valuing Galactic at $ 2.4bn at this stage of its development looks other-worldly. Getting to the stock market is one thing; justifying the capital outlay is another.

Just Eat bid battle – nothing to see here

It’s a scandal, apparently. Well, one sub-plot inthe £ 5bn bid battle for Just Eatcertainly appears odd at first glance. One bidder, Prosus, owns 22% of Delivery Hero, which is in the process of dumping a few million shares in Takeaway.com, the other bidder.

Since Takeaway’s offer for Just Eat is entirely in the form of shares, Delivery Hero’s gradual sell-down could be seen as naughty. One effect is to depress the price of Takeway’s stock, and thus the value of its offer. In the process, Prosus’s cash bid will seem more attractive by comparison. Cat Rock, a vocal 5.6% shareholder in Takeaway, wants the authorities to intervene and halt what it calls “market manipulation”.

Come on, though, this is not a case of dirty tricks. The crucial point is that nothing is being hidden from Just Eat shareholders, who can see exactly how many Takeaway shares are being sold by Delivery Hero, and when. They are free to form a view on where Takeaway’s stock might trade without temporary selling pressure.

Indeed, in assessing the merits of the two bids, it will be crucial to have an opinion on the long-term value of a Just Eat / Takeaway combination. Cat Rock reckons Just Eat, which stands at 761 p today, is headed to £ 12 if the deal happens. If other shareholders agree, it will get what it wants and Prosus’ cash offer at 710 p will fail.

As it happens, both bids currently look short of a few toppings. But the Delivery Hero wrinkle is a side-show. Just Eat investors have all the information they need and don’t require the authorities to hold their hands. There is no scandal here.

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HSBC’s stand-in boss offloads staff to sure up stock

When the revenue line looks wobbly, fire a few thousand staff. This is the way atHSBC, and so it’s no revelation that the stand-in chief executive, Noel Quinn, is reverting to the usual medicine. He was vague on details, but it’s not hard to decipher his analysis that “previous plans are no longer sufficient” to improve the performance of misfiring divisions.

The weak share price fell a further 3.7%, and one can understand why. If 237, 000 employees is too many, where’s the evidence that 227, 000 would be exactly the right number to produce the required returns on capital? Even ignoring the long-term risks from over-exposure to Hong Kong, HSBC has become a mystery stock.

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