In 2004, British billionaire Sir Richard Branson dreamed of making commercial space travel a reality and founded Virgin Galactic, the first large-scale company dedicated to private space tourism.
In 2018, Virgin Galactic achieved its first suborbital space flight, and in 2019, the company went public on the New York Stock Exchange. In the field of commercial space flight, Virgin Galactic had been neck-and-neck with Elon Musk’s SpaceX, but their fates have diverged significantly after the pandemic.
In early November, Virgin Galactic announced layoffs of around 18%, citing cost reduction and resource reallocation. Meanwhile, its sister company Virgin Orbit, responsible for satellite launches, filed for bankruptcy at the end of March this year—a stark contrast to SpaceX receiving consecutive large orders.
Last Sunday, Sir Richard Branson dealt another blow to the market by stating that he would not inject more funds into Virgin Galactic because it already has enough capital. After trading opened on Monday in the US stock market, investors fled en masse.
As of Monday’s closing on Wall Street, Virgin Galactic’s stock price plummeted by 17.5% and fell below $2. Since the beginning of this year alone, the company’s stock price has accumulated a decline of 44.7%, which stands out amidst overall gains in the US stock market.
According to Branson himself due to COVID-19 impact his conglomerate—Virgin Group—has encountered some financial issues. As Virgin Group is also a major investor in Virgin Galactic; this may explain Branson’s refusal to further invest.
He also stated that Virgin Galactic has already secured nearly $1 billion in funding and believes that this amount is sufficient for them to achieve their goals independently. This was confirmed in their Q3 financial report where they currently hold approximately $1.1 billion in cash and securities.
This money will be needed to support launching their new larger rocket-powered aircraft series called Delta, which Virgin Galactic estimates may not debut until 2026.
Branson himself has sold off most of his personal investments in Virgin Galactic, selling approximately $1 billion worth of stocks between 2020 and 2021. However, his conglomerate—Virgin Group—remains the largest shareholder in Virgin Galactic.
Aside from Branson’s unsettling investment strategy, there are also signs of unease in Virgin Galactic’s operations. This year alone, the company has launched six groups of passengers to the edge of space, including test pilots, paying customers, honorary guests, and company employees—finally fulfilling their promise of space travel.
But just as commercial travel seemed to be on track again, in November’s financial report, Virgin Galactic announced that they will slow down and no longer aim for monthly spaceflights but instead switch to quarterly flights.
Furthermore, CEO Michael Colglazier stated that the company plans to completely halt flights with their existing spacecraft later next year as they prepare for their new Delta aircraft. Considering that the new aircraft won’t be available until 2026; this means that Virgin Galactic may have to stop receiving customers for close to a year and a half.
Wall Street is eager to know if Branson intends to give up; however he can only reassure investors by expressing continued excitement about Virgin Galactic and how it has proven itself.