Virgin Galactic Holdings Inc (NYSE:SPCE) stock was sent crashing back to earth with a bump by the announcement of a big share issue the day after founder Sir Richard Branson was taken on a trip to the edge of space.
The space tourism company announced that it will issue up to US$500mln of shares.
In the prospectus issued for the fundraising, the company said it intends to use the net proceeds from the sale “for general corporate purposes, including working capital, general and administrative matters and capital expenditures for our manufacturing capabilities, development of our spaceship fleet and other infrastructure improvements.
“We may also use a portion of our net proceeds to co-develop, acquire or invest in products, technologies or businesses that are complementary to our business. However, we currently have no agreements or commitments to complete any such transaction.”
The shares, which had been trading a weightless 7% higher in pre-market trading after the successful flight test at the weekend, tumbled 12% to US$43.38 amid the gravity of early deals on Monday.
It's not the first time the shares have been sent spiralling backwards like a spacewalking astronaut knocked from their perch, with Virgin Galactic facing various hiccups since December, when rockets misfired and the computer lost connection with ground-control during a manned flight test, followed by the discovery of further space ship anomalies in the early months of 2021.
The timing of this whip-round announcement was “carefully managed to take full advantage of the excitement generated by the launch and safe return”, said Danni Hewson, financial analyst at AJ Bell.
Tickets to space
Completion of the flight test on Sunday means that having gained its 'spaceline' licence from the US air authorities, the company is another step closer to being able to take paying customers into space.
But as the US$0.5bn fundraising indicates, this will not come quickly enough for the company, even though it had a seemingly healthy US$617mln of cash at the end of March.
At that same point, the number of ‘future astronauts’ on its waiting list was roughly 600.
Branson confirmed his billionaire space race rival Elon Musk, boss of reusable rocket company SpaceX, was one of the 600, having put down a US$10,000 deposit for a Virgin Galactic ticket.
While the final ticket price is thought to be about US$250,000, this is a drop in the ocean for Musk, whose net worth is around US$160bn.
“Elon's a friend and maybe I'll travel on one of his ships one day,” Branson told reporters.
Musk’s SpaceX is due to take its first paying customers into space later this year and Bezos’s Blue Origin said it will start selling its first tickets for sub-orbital sightseeing tours this year.
Space-ial offer
Having flown to space, Branson announced a competition to “make space more accessible”.
He said Virgin Galactic in partnership with fundraising specialists Omaze were launching a competition where winners will get two seats aboard 'one of the first' Virgin Galactic commercial spaceflights and a tour from Branson of the company's Spaceport America base.
The pair said all donations “will benefit Space for Humanity”, a non-profit organisation whose mission is to “expand access to space, train our leaders of tomorrow and contribute to a culture of interconnectedness” to “cultivate a global network of transformational leaders better equipped to create a sustainable future for us all”.