Kerrisdale Capital says Virgin Galactic is posing as a space-tourism company

After Cathie Wood’s Ark Invest sold its remaining stake in Virgin Galactic Holdings Inc (NYSE: SPCE) last month, the spaceflight company is under attack again, and this time Kerrisdale Capital Management is the assailant.

Kerrisdale Capital is short on SPCE

In its tweets on Friday, Kerrisdale Capital lashed out that Virgin Galactic pretends to be a space-tourism company but has technology that is costly, uncompetitive, unappealing, and downright ‘dead end’. Announcing that it is now short on SPCE, the investment management firm’s censure read:

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“Do rich people really want to pay $300K to get blasted up to an altitude that most countries on Earth wouldn’t even consider ‘space’, feel weightless for ~3 minutes, then fall right back down with no fuel or parachute?”

According to Kerrisdale Capital, Virgin Galactic’s commercial spaceflights, even after seventeen years of delays and disasters, promise an experience that is too inadequate to be called space ‘tourism’ and not even close to an even bigger term that Virgin Galactic uses itself – space ‘exploration’.

How does Virgin Galactic compare to its rivals?

Virgin Galactic’s spaceflights have so far failed to reach the Karman line. In comparison, Jeff Bezos’ Blue Origin is scheduled for its first human spaceflight on 20^th July that will presumably take six astronauts above the 100 kilometres space border.

Elon Musk’s SpaceX is also committed to achieving its goal of multi-day excursion trips into the Earth’s orbit. With rivals aiming bigger and investing in advanced technology, Virgin Galactic has lost its first-mover advantage.

In its report on Friday, Kerrisdale Capital also highlighted that tests of Virgin Galactic’s systems have so far caused four casualties and warns that the company’s outdated technology might kill more in the future.

Virgin Galactic’s performance in the stock market

The news comes after Virgin Galactic’s successful test flight in late May that fuelled an over 50% gain in its stock in the past two weeks. Despite Kerrisdale’s barbs, the NYSE-listed company jumped roughly 3% on market open on Friday. The stock, however, lost the entire intraday gain later on.

At the time of writing, Virgin Galactic is exchanging hands at $31 per share that gives it a market cap of $7.46 billion. In comparison, it had started the year 2021 at a much lower $23.21 per share. The spaceflight company performed largely upbeat in the stock market last year with an annual gain of close to 100%.