I made some pretty wild assumptions on SPCE

Mar 18, 2022

I've been looking at this company and I've been trying to justify a positive valuation in the future. The only way that you can make sense of investing in this company is if you stretch your assumptions not for 5 but for 10 years from now. The biggest factor that will contribute to making that company profitable and scalable is the DELTA class that is suppose to be completed in 2025/ 2026. In the earnings call they said that they are projecting to be profitable in 2026 and they are working to create a system where they can build up to 6 delta ships per year efficiently. So in my Discount model calculations I've used the current ship classes up to year 4 and basically they are losing money for the next 4 years as they are trying to reduce the cash burn. From the 5th year to the 10th year I'm assuming that they will add 3 Delta ships per year to their fleet. After all the calculations that i conjured my intrinsic value comes to 46 dollars per share if they don't do a stock dilution, "they probably will to float the company till profitability". I'm assuming that I'm going to be half wrong with my assumptions and the intrinsic value for the next 10 years comes up to 23 bucks. The current price is 9 dollars per share. That is still 61% undervalued from my 23 dollar projections. So I think its a good buy from here. At least for the next couple of years. If they run out of money that is a different story.

Mar 18, 2022

Note

I forgot to mention that they have crazy pricing power when it comes to their tickets since there aren't other companies that are doing what they are doing. If they decide they can start selling tickets for a mill and there are still going to fill some spots.

Mar 20, 2022

Note

I revisited my calculations and saw a few misses on my part. The I.V. now comes in at 17.50