Virgin Galactic takes step into the yonder but should we go beyond meat?

Virgin Galactic sees its IPO as Beyond Meat reveals latest results, should investors ‘boldly go’ with either?

Article updated: 29 October 2019 10:00am Author: Michael Baxter

What was the most expensive holiday you have ever had? I doubt that it cost more than the Virgin Galactic planned proposition, around $2,500 a minute.

Of course, I exaggerate a tad. Virgin Galactic Holdings is not only planning to offer 90 minutes on a rocket, including a few minutes in space, for $250,000, you get a weeks training/preparation, too.

Virgin Galactic Holdings, which is merging with Social Capital Hedosophia, which is investing $800 million as part of the deal, is now listed on the New York Stock Exchange.

Is it a good investment? Well each flight can take six passengers, so at $250,000 each, according to my abacus, that works out at $1.5 million a trip.

Apparently, the company has a waiting list of 600 people. Leonardo DiCaprio and Justin Bieber among those on the list.

The plan is that after the initial trips, the ticket price will go up, before eventually falling to the tens of thousands of dollars.

According to Richard Branson, people who have experienced a few minutes in space — a bit of weightlessness and some pretty fine views — say the experience has been transformative.

According to UBS, the space tourism market is set to grow by 10 per cent a year between now and 2030, hitting $3 billion by that year.

The report stated: “A big factor is declining costs. Reusable rockets, innovative launch methods and other improvements are quickly bringing down hardware and labour costs, making it much more reasonable to send satellites, supplies and even people into space. In addition to technology, the space supply chain has gone through a consolidation, driving down manufacturing and other input costs.”

I note two key words/phrases from that: reusable rockets and satellites. Space tourism is fun an’ all, but the big bucks lie in projects that offer more than holidays — communication satellites for example, and one day, but probably not in my lifetime, mining in space.

Branson, with Virgin Galactic and Virgin Orbit, along with SpaceX (founded by Elon Musk) and the Jeff Bezos space business, Blue Origin, are all in this space — or is that, ‘going into space?’

Will there be big bucks? Yes, eventually. But ‘eventually’ can be a very long time-frame, in the meantime, expect hype and dreams that turn into business nightmares. Bezos has got deep pockets, Musk is a long-term thinker and Branson, well he is Branson.

As for investors: tread with care and remember to keep your feet on the ground.

Beyond Meat

The question, of course, is when space travel really becomes a reality, and mining in space means journeys that take months, what will the space travellers eat? In the era of sea exploration, ships would often bring some livestock on board for their voyages. I find it hard to imagine Daisy the cow, Peter the pig and friends, accompanying space travellers, at some point allowing them a meal of steak or pork, but I can imagine stem cell technology creating meat without actually needing animals.

Cultured meat is an incredibly important technology for the future that really could save humanity, but I am not so sure about plant based ‘meat.’

I guess cows eat grass, so why can’t we create fillet steak from grass? But of course, the likes of Beyond Meat, and Impossible Foods, don’t, as far as I know, sell fillet steak made from plants. Neither do they sell lobster-alternative plant based food. They do focus rather a lot on burgers.

Beyond Meat is listed on the NASDAQ and has just posted its first quarterly profit — $4.1 million.

Plant based meat substitutes are incredibly exciting products — traditional meat is so inefficient. If we are to simultaneously win the war against climate change and feed a growing global population, we need alternatives to meat.

I just wonder whether plant based meat substitutes provide an interim solution. At the moment, cultured meat is massively expensive and far from being commercially available. That will change, eventually.

The 2020s may well be the decade for plant based meat substitutes. The 2030s are more likely to be the decade for cultured meat. When the markets cotton on to this, valuations might be affected.

These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees

Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.

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