Virgin Galactic’s space tourism business is struggling to take off. With testing setbacks, losing several key executives and shares of the company’s stock being sold, the start date of Virgin Galactic's commercial service continues to be pushed back and investors’ confidence in the company is dwindling.
The latest hit comes with the company’s share price tumbling as Sir Richard Branson cashed out on $150 million of Virgin Galactic stock as he and four entities under his control (including Virgin Group), sold 5,584,000 shares, according to an SEC filing. Just last year the investor sold $500 million shares. However, the Virgin Group still remains the largest shareholder in Virgin Galactic as they own a quarter of the company.
Virgin Group intends to use the cash from this sale to “support its portfolio of global leisure, holiday and travel businesses that continue to be affected by the unprecedented impact of COVID-19,” the company said in a statement.
This loss comes just a month after another crucial shareholder, Virgin Galactic Chairman Ch-ah-mat Pali-ha-pi-tiya, who in 2019, helped take the company public, sold roughly $213 million shares which was all of his personal stake in the company with the intention to reinvest in fighting climate change.
Analyst ratings of Virgin Galactic are also slipping. Only four out of the 10 analysts covering the stock have a “buy” rating, compared to six months ago when eight out of eight analysts covering the stock rated shares “buy,” according to Barrons.
One thing Virgin Galatic has to look forward to is the test flight of SpaceShipTwo vehicle come May. It’s crucial this test flight is a success as the first attempt failed last December.
“Valuation is complicated by long-term uncertainty,” Bernstein analyst Douglas Harned wrote in a note Tuesday. “A catastrophic failure by any provider could have a crushing effect on demand for all. We expect risk per flight to be low. But, as activity ramps, chances of an accident would increase.”
We have hope this test launch could be a giant leap toward commercial space travel.