With an official agreement inked last week, the Federal Aviation Administration (FAA) just cleared billionaire Richard Branson’s commercial space flight company, Virgin Galactic, for takeoff.
“The agreement provides procedures for the safe integration of commercial, licensed space launch operations into the National Airspace System from Spaceport America,” according to Virgin Galactic’s statement.
So far, Branson has accepted applications from about 580 people to fly aboard the vessel, SpaceShipTwo.
Tickets cost $250,000 apiece.
The mission promises to cross the “Karman Line,” a theoretical boundary 100 kilometers above the Earth that the International Aeronautical Federation considers to be outer space.
Branson and his family plan to be on the first flight, which will leave from “Spaceport,” an 18,000-acre “spaceway” in New Mexico.
Spaceport was specifically built to be the home of commercial space missions.
The FAA will work with local air traffic control to clear airspace.
Virgin Galactic hasn’t released an official date yet for SpaceShipTwo’s inaugural mission.
Nonetheless, since another key obstacle has been removed, I just asked my Wall Street Daily team of analysts to begin deconstructing SpaceShipTwo’s technology.
Specifically, I want to know exactly which companies are actively contributing to the manufacturing process. Particularly the companies that are doing the innovating.
Reason being, I expect the market to bestow at least a 40% premium to any company whose parts make it aboard the first flight.
Can you imagine the hype this event is going to receive?
Although it’s early on, my analysts have started deconstructing the engine.
The fuel is a type of thermoplastic called polyamide that was developed by Mojave, California-based Scaled Composites, which is a privately held company.
The vehicle’s hybrid engine is manufactured by Sierra Nevada, which is also a privately held company.
Undoubtedly, as more details come to light, we’ll find publicly traded companies contributing to both Sierra Nevada’s and Scaled Composites’ efforts.
Onward and Upward,
Founder, Wall Street Daily
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Use Caution When Companies Rely on Friendly Analysts
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Companies that favor bullish stock analysts in conference calls tend to underperform the market over ensuing quarters.
Research from Harvard and the London School of Economics finds that companies that use the services of favorable stock analysts experience more negative future earnings surprises and more future earnings restatements than companies that don’t use the services of these friendly analysts.
The research showed that companies have more success in hiding bad news when using favorable analysts. Of course, this is news that negatively affects stock prices once it becomes public. Additionally, these companies experience fewer earnings forecast beats.
As a result, the research showed that an investment strategy that shorts these stocks produces a 12% annual return.
Trouble in the Chinese Real Estate Market
Economists have long said that the Chinese real estate boom was unsustainable, and would eventually force leadership in China to make some hard choices.
Well, after nearly two decades of higher prices and construction starts, the Chinese real estate market has stalled – causing significant consequences for the country’s economy.
Prices for both new and existing construction are falling, while the number of deals is drying up. Real estate developers are furloughing workers and delaying new projects across the entire country.
In the latest data point, Chinese housing starts plummeted 25% in April from a year ago, while industrial production, steel and cement output slowed to a snail’s pace.
Inventories of unsold homes in Beijing have risen to 12 months’ supply, and in “tier two” cities, the inventory of unsold homes has risen to about 15 months.
China is increasingly susceptible to a disorderly correction because of the sharp decline in growth. And this poses serious headwinds to U.S. companies with significant exposure to China.