Richard Branson's Announcement Causes Virgin Galactic Stocks to Plummet
Virgin Galactic shares plummet as Richard Branson dashes hopes, affirming he won't inject further capital into the space tourism firm
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Virgin Galactic, the space tourism venture launched by Richard Branson, is experiencing a sharp decline in its stock following the billionaire's announcement that he has no intentions to further invest in the company, citing its already "sufficient funds."
At Monday's 9 a.m. ET market open, Virgin Galactic stock had dropped 16%, trading at under $2 per share. Despite achieving a significant milestone by flying its first customers to the edge of space, the company has experienced significant changes including staff layoffs and the development of a new line of suborbital spacecraft to replace their previous vehicle.
Branson mentioned in a Financial Times article that Virgin Group, his investment company, has faced financial difficulties due to the pandemic. However, he also stated that Virgin Galactic has approximately $1 billion, which he believes should be enough for the company to operate independently.
Virgin Galactic's most recent financial filing in November revealed that the company had approximately $1.1 billion in cash and securities. This should be sufficient to sustain the company until the launch of its new line of rocket-powered planes, called Delta, which will be able to transport wealthy thrill seekers and paying customers to the edge of space. The new spacecraft is anticipated to be unveiled in 2026, as announced in a Virgin Galactic news release.
From Virgin Galactic
Virgin Galactic ticket holders have endured an over decade-long wait, but they have finally achieved their goal of going to space. However, the company has also disclosed in its financial reports that it has terminated approximately 185 employees, equating to around 18% of its workforce, on November 7th.
Branson sold a significant portion of his personal investment in Virgin Galactic, amounting to approximately $1 billion in stock between 2020 and 2021. However, Virgin Group, an investment group that primarily manages Branson's personal investments, continues to be one of the largest shareholders of Virgin Galactic, as confirmed by the company.
Following Branson's participation in one of the initial crewed flights to space on the company's VSS Unity rocket-powered space plane in 2021, Virgin Galactic began regular commercial service in 2023.
So far in the current year, the company has launched six batches of passengers to the edge of space, which include test pilots, paying customers, honorary guests, and Virgin Galactic employees. However, in its November financial report, the company announced a change in strategy, stating that it would decrease the frequency of sending customers to space on VSS Unity from once a month to quarterly.
The upcoming VSS Unity mission, Galactic 06, is scheduled for January 2024. However, Virgin Galactic CEO Michael Colglazier announced to investors in November that the company plans to suspend VSS Unity flights next year to focus on preparing their new line of Delta spaceplanes.
Branson added in his comments to the Financial Times that he remains excited about Virgin Galactic and noted the company has "really proved itself and the technology."
