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Virgin Galactic shares fell on Monday after the company asked to sell up to $ 500 million of common stock. This follows the commercial spaceflight company’s successful test flight with founder Sir Richard Branson.
Virgin Galactic shares – which trade under the ticker SPCE – fell 6% after news of the $ 500 million stock sale that took place after the company’s full crew test flight in the suborbital space on Sunday, a major step in the race for commercial space and a step towards the company’s commercial service goal in early 2022.
The shares were last at around $ 46.13, after rising as much as 7% in pre-market trading. Inventory has doubled so far this year in anticipation of this progression to sales.
“We view Branson’s success as a massive marketing stunt for Virgin Galactic that will be impossible for the public to ignore,” Ken Herbert, equity analyst at Canaccord Genuity, told clients. The company has a buy rating but a target price of $ 35 on the stock, which is below its current level.
VSS Unity’s spacecraft launched above the New Mexico skies on Sunday, with two pilots guiding the vehicle carrying the billionaire founder and three Virgin Galactic employees. VSS Unity fired its rocket motor and accelerated to more than three times the speed of sound while climbing to the edge of space.
“We see this as important on the way to getting passenger flights off the ground, which we assume will happen in early 2022,” AB Bernstein analyst Douglas Harned told customers. The company has a market performance rating on Virgin Galactic.
Virgin Galactic’s VSS Unity is designed to accommodate up to six passengers with both pilots. The company has approximately 600 bookings for tickets on future flights, sold at prices between $ 200,000 and $ 250,000 each. Although passenger ticket sales have yet to be announced, Bernstein expects them to sell for a higher price, between $ 400,000 and $ 500,000.
Virgin Galactic also announced its partnership with raffle company Omaze to offer a two-seat chance on “one of Virgin Galactic’s first commercial space flights” early next year.
“The flight is symbolically important in boosting consumer confidence and the demand for space tourism,” Harned said. “A successful test flight by Blue Origin including founder Jeff Bezos, scheduled for July 20, should spark increased interest in the industry, which would benefit both companies.”
In 2004, Branson founded Virgin Galactic to transport private passengers into space. Branson was not supposed to fly on Sunday’s space flight, but after fellow billionaire Jeff Bezos announced he would be flying on his company’s Blue Origin first passenger flight on July 20, Virgin Galactic revamped his schedule – in the goal of flying Branson nine days before Bezos.
Launched before Bezos or Elon Musk, Sunday’s flight means Branson is the first of the billionaire space company’s founders to pilot his own spacecraft.
AB Bernstein said the theft’s success and subsequent ticket sales may well be a short-term upside catalyst for the title, but haven’t changed their long-term outlook. The company noted that it would not be short as it has experienced tremendous volatility due to the reaction of retail investors to the events.
– with reporting from CNBC’s Michael Sheetz and Michael Bloom.
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