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Virgin Galactic stock crashes, wipes off $1 billion market cap

By Yashasvini on Jul 13, 2021 | 04:33 AM IST

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Following the $500 million share sale announcement, Virgin Galactic Holdings saw a reversal in the premarket gains of 8%, trading down nearly 18%. The fall wiped off more than $1 billion from the company's market capitalization.


Bolstered by the success of the rocket-powered test flight by founder Richard Branson, Virgin Galactic Holdings Inc. filed to sell as much as $500 million in shares. Reuters reported that the sale would account for up to 4% of Virgin Galactic's total outstanding shares as of their last close. The disclosure of the potential share sale on Monday led a to steep fall in the company’s shares.


Virgin Galactic aims to begin flying commercial customers by early 2022. The test flight covered more than 50 miles (80 kilometers) above Earth within an hour. The company flew into space for the fourth time on Sunday since 2018 beating Blue Origin's Jeff Bezos. The billionaire space race rivalry includes Branson, Bezos, and SpaceX CEO Elon Musk. The former Amazon CEO and his brother Mark will be flying to space on July 20.


Virgin Galactic's shares have risen 84% this year due to the optimism surrounding space travel. The sentiment that has driven this boost is that space travel will become mainstream with technological advancements and falling costs, reported Reuters. Swiss investment bank UBS has pinned space tourism to be a $3 billion annual market by 2030.


But the shares tumbled after the disclosure Monday of the potential share sale, which suggested the company’s need for additional funds as it prepares its commercial debut.


At the time of publishing, Virgin Galactic’s stock was down by 17.93% trading at $40.38.


(With inputs from Reuters)

Picture Credits: Virgin Galactic

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