(Reuters) - Richard Branson-backed Virgin Galactic Holdings Inc SPCE.N fetched a valuation of around $2.3 billion on its market debut on Monday, after shares in the first publicly traded space tourism company popped before fizzling out.

The listing for Branson’s Virgin Galactic is a crucial step for the Brit as he competes with fellow billionaires Elon Musk and Jeff Bezos in the budding space tourism market.

UBS, an investment bank, has estimated that the business of outer-orbit travel will become a $3 billion industry by 2030.

Virgin Galactic went public through a merger with Social Capital Hedosophia Holdings Corp, a publicly traded shell company, or special purpose acquisition company (SPAC), led by former Facebook executive Chamath Palihapitiya.

The stock rose as much as 9.7% to $12.93 before paring gains to close at $11.75 per share, down slightly from where shares for Social Capital had been trading on Friday.

Social Capital had invested $800 million for a 49% stake. Branson, with a 51% stake, retains control of the company which had a market cap of $2.3 billion following the announcement of the merger completion on Friday. Palihapitiya is chairman of the combined company.

This raised much-needed funds for Virgin Galactic after Branson in 2018 said the company would suspend discussions with Saudi Arabia’s Public Investment Fund over a planned $1 billion investment after the murder of Saudi journalist Jamal Khashoggi.

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Through a SPAC deal, Virgin Galactic was able to avoid the risk of struggling to sell shares to investors in a traditional IPO process given that the funding has already been raised.

Virgin Galactic has yet to turn a profit and incurred net losses of $86.7 million in the first six months of 2019.

Several other loss-making companies, including Uber Technologies Inc UBER.N and fitness start-up Peloton Interactive Inc PTON.O, have struggled since going public earlier this year.

An IPO of shared office company WeWork was scrapped last month after investors raised concerns over its burgeoning losses and poor corporate governance.

“This is a shaky environment for companies with grand visions but unproven models” said Matthew Kennedy, senior IPO market strategist at Renaissance Capital.

Branson is racing against competitors Blue Origin, the space business of Amazon.com Inc AMZN.O founder Bezos, and Elon Musk's SpaceX to bring tourists into space.

Hundreds of people from 60 countries, including actor Leonardo DiCaprio and pop star Justin Bieber, have paid or put down deposits to fly on one of Virgin’s suborbital flights.

Some of Virgin Galactic’s ticket holders have been waiting over 14 years for their trip. A 90-minute flight, which allows passengers to experience a few minutes of weightlessness, costs about $250,000.