Space Travel One Step Closer To Reality As Richard Branson's Virgin Galactic Files To Go Public

Richard Branson's Virgin Galactic is one step closer to realizing his space-tourism dream as the company is set to list shares on a public exchange.

What Happened

Branson himself invested most of the more than $1 billion in capital poured into Virgin Galactic since 2004, according to The Wall Street Journal. The company already has an agreement in place to raise $800 million through a merger with Social Capital Hedosophia Holdings IPOA, which will buy a 49% stake in the new company.

Virgin Galactic expects to use the proceeds from the IPO and Social Capital to finance the business until its spaceships can fulfill its purpose and generate a profit. The company already has around 600 people who combined for $80 million of deposits to reserve a spot on a spaceship, Social Capital's Chamath Palihapitiya told CNBC.

Why It's Important

Virgin Galactic is a business that will deliver to investors "software-like margins," Palihapitiya said. Despite the fact that the business will be "flying people to space," it will look "like a software business under the hood" which offers investors a "really compelling risk-reward."

Virgin Galactic's path to profitability isn't as long as many would assume, Palihapitiya said, as the company is projected to become profitable on an annual basis by August 2021 with commercial operations starting in less than a year. Over a five- to 10-year period the company expects to offer hypersonic flights that can fly Los Angeles to Beijing in less than two hours.

Social Capital's stock traded higher by 2.6% at $10.70 in Tuesday's pre-market session.

Related Links:

Virgin Galactic Moves Ahead In The Space Race

OK, Here's The Plan: Elon Musk Lays Out Strategy For Mars Colony, International Rocket Travel