“There’s a setup [in the market] where there’s no real growth, there’s no unique stories and there’s nothing that can give you long-term outlook.” Chamath Palihapitiya

KEY POINTS

• Virgin Galactic Chairman Chamath Palihapitiya identified a combination of factors as driving the stock’s recent rally, including current U.S. market conditions.
• “There’s a set-up [in the market] where there’s no real growth, there’s no unique stories and there’s nothing that can give you long-term outlook,” Palihapitiya said.
• Palihapitiya quantified the interest from potential Virgin Galactic customers, saying the nearly 8,000 people saying they want to fly to space translates to about $2.4 billion in future revenue for the company.
• “There is a clear winner in electrification,” says Chamath Palihapitiya, one of Facebook’s first executives and the founder of hedge fund Social Capital.
• People are focusing too closely on the “window dressing” of Musk’s behavior and not enough on the “main course,” which is Tesla itself and its competitiveness in the marketplace, he says.

Virgin Galactic Chairman Chamath Palihapitiya thinks the recent rally by Wall Street’s favorite speculative stock is not the sign of a bubble, pointing instead to the space tourism company’s growing demand from possible customers.

Shares of Virgin Galactic have tripled since the beginning of the year. But, asked whether he thinks the stock is getting ahead of itself, Palihapitiya identified a combination of factors as driving shares higher, including the current U.S. market conditions and the demand Virgin Galactic is seeing from potential customers.

“There’s a setup [in the market] where there’s no real growth, there’s no unique stories and there’s nothing that can give you long-term outlook,” Palihapitiya said on CNBC’s “Squawk Box” on Wednesday.

Palihapitiya added that this setup for Virgin Galactic’s stock rally “also applies to Tesla,” saying “those two things are the most similar stories.”

“When a company comes along that has a unique narrative and is trying to do something that is differentiated, high margin and could theoretically grow for 10 years … these things get re-priced in ways that are non-traditional,” Palihapitiya said.

Virgin Galactic as a business is “making amazing progress,” he said, although the company’s timeline for beginning commercial operations appears to have been pushed back. The company told investors ahead of its October stock debut that commercial flights would begin in the first or second quarter of this year, setting a target for 16 flights in 2020. But that schedule has slipped, as often happens in the space industry, with CEO George Whitesides telling shareholders on Tuesday that the company’s main goal this year is to safely fly founder Sir Richard Branson to space. Generating significant revenue this year, then, is not the company’s current focus.

Tesla

“Betting against entrepreneurs who are changing the world has never been a profitable endeavor.” Chamath Palihapitiya

Demand for Tesla cars is strong and exceeds other players in the electric-car market.

Palihapitiya states that, “All of that stuff doesn’t matter. It doesn’t change the fact that tens of thousands of consumers are buying that car faster than they can get their hands on it. It doesn’t change that as soon as you sit inside that car, your definition of what is expected is altered forever,” he said.

“At the end of the day, whether you like his [Elon Musk] style or not, his substance is irrefutable,” Palihapitiya said. “People are betting against his style. Betting against entrepreneurs who are changing the world has never been a profitable endeavor.”

In the end, Palihapitiya is taking a long view on Tesla.

Read on: https://www.cnbc.com/2020/02/26/virgin-galactic-chairman-doesnt-think-spce-stock-is-a-bubble.html

https://www.cnbc.com/2019/04/30/chamath-palihapitiya-musk-is-the-clear-winner-in-electric-cars.html