Virgin Galactic Took Richard Branson to Space. Paying Customers Are Next.

Virgin Galactic shares, which have attracted a big retail following, fell 17% on Monday after the company said it could sell up to $500 million in stock.

At the crux of Galactic’s business model will be whether demand for space travel is sustainable. Analysts have been trying to figure that out, looking at various comparatives, from the use of private jets to the number of people who have climbed Mount Everest.

“It’s like a Venn diagram” of thrill-seekers and high-wealth individuals, said Ron Epstein, an aerospace industry analyst at Bank of America.

The 90-minute flight was a critical marketing moment after years of slow progress and setbacks. A devastating 2014 failed launch resulted in the death of a Virgin crew member.

“I think and hope we showed the world today it’s going to be possible to see this planet from space, and what that could be like,” Chief Executive

Michael Colglazier

said after Sunday’s launch. “The scale which [we] were able to share that with the world through this live stream was really important.”

Mr. Branson’s role was to assess the experience for a private customer, from training, to how the company helps passengers build confidence before takeoff, to the actual launch into space, Mr. Colglazier said. For new astronauts, that process is being streamlined to between five and seven days, he said.

Mr. Branson said he has inserted himself into the customer experience of many of his entrepreneurial ventures, including airlines, cruise lines and trains. “I’ve written down 30 or 40 little things that will make the next experience for the next person who goes to space with us that much better,” he said at a press conference Sunday after the flight.

In the next few months, two more flights are set to take off, one more manned by Virgin crew and a second carrying members of the Italian Air Force. Starting next year, the company’s commercial space flights will begin in earnest from 2022 as it aims to increase to some 400 flights a year.

To get to that number of flights, Mr. Colglazier estimates the company will likely need “high-single-digit to low-double-digit number of spaceships.” From there, Virgin Galactic is preparing to build additional spaceport facilities, potentially in other countries.

About two million people can afford to go to space, according to equity analysts at Vertical Research Partners, with that high-net-wealth population growing at around 6% each year. It estimates that Virgin needs to transport around 1,700, or about 0.08% of those individuals, to space each year for its model to work.

What aspiring astronauts are willing to pay isn’t yet clear. Blue Origin received more than 20 bids in excess of $4.8 million to grab the first seat on its first passenger mission next week, which analysts say indicate a high level of untapped demand. Space tourism could generate close to $4 billion in annual revenue by 2030, according to an estimate from

UBS

last year. Virgin says it is aiming to generate $1 billion for every spaceport it constructs.

As of March, Virgin Galactic had about 600 bookings, priced at an average of $250,000, with $80 million in deposits from would-be astronauts. UBS estimates that the price point for tickets will likely rise to between $300,000 to $400,000 per ticket, with prices potentially becoming more accessible as operations scale and costs reduced.

Ticket sales were paused after the 2014 catastrophe. Mr. Colglazier said the plan is to release a next tranche of tickets toward the end of summer or early fall.

Write to Benjamin Katz at ben.katz@wsj.com and Micah Maidenberg at micah.maidenberg@wsj.com