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Virgin Galactic shares fell back to earth with a bump after the spaceflight company announced plans to sell up to $ 500million (£ 360million) of shares – just one day after company founder Richard Branson flew to the edge of space.
Virgin Galactic’s share price had risen around 9% in pre-market trading on Monday, but changed course and fell 14% after the company announced plans to sell shares to raise funds .
The company, founded by billionaire entrepreneur Branson in 2004, revealed in a filing with the United States Securities and Exchange Commission that it has entered into a distribution agency agreement with Wall’s investment banks. Street Credit Suisse, Morgan Stanley and Goldman Sachs.
Virgin Galactic has stated that it intends to use the proceeds of the sale “for general corporate purposes, including working capital, general and administrative matters, and capital expenditures for its operational capabilities. manufacturing, the development of its fleet of spacecraft and other infrastructure improvements “.
While investors initially praised the success of Virgin Galactic’s first full crew test flight, existing shareholders were unhappy with the prospect of their holdings being diluted by the proposed share issue, which has caused the share price to fall.
Virgin Galactic shares are currently worth over $ 43, giving the company a market value of around $ 11.8 billion, although they remain nearly a third below their record high of nearly 63. $ in February of this year.
Branson’s journey from Virgin Galactic’s operational base at Spaceport America in the New Mexico desert to the edge of space and back was seen as a key milestone in the company’s goal of launching a space service. commercial next year.
The flight allowed the British entrepreneur to seal his place as the first of rival “billionaire space barons” to make the trip.
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The race for commercial space is intensifying, and billionaire Amazon founder Jeff Bezos is just over a week away from making his own flight in his New Shepard rocket, named after Alan Shepard, the first American astronaut in space, and manufactured by the Bezos company Blue Origin.
The Branson-based company, formed to develop commercial spacecraft and cater to future space tourists, experienced several false starts after first predicting paying passengers would be sent into space by 2008.
Virgin Galactic plans two more test flights before the company aims to start commercial services in 2022. Virgin Galactic chief executive Michael Colglazier told the Financial Times on Monday that the company hopes to complete at least one flight per day from each of its spaceports in the future.
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