Virgin Galactic shares tumble as company says it’s raising $425 million in debt

Its stock fell more than 16% at one point during Thursday morning’s trading, hitting a low of $10.36 a share. This is a far cry from the all-time high of $62.80 recorded in early 2021.

The company issues at least $425 million — and possibly as much as $500 million — in convertible bonds, a type of debt instrument, in a private placement.

Virgin Galactic said in a statement that it intends to “use the net supply proceeds to fund working capital, general and administrative matters and capital expenditures to accelerate development of its spacecraft fleet in order to facilitate high-volume commercial service.”
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The damage to the company’s stock has only worsened over the past few months for the company.

Since Virgin Galactic gained international attention by launching Branson into space in July 2021, the company has faced significant delays. A report from the New Yorker revealed that the cockpit warning lights went out during Branson’s flight and that the space plane had traveled outside its designated airspace for 41 seconds. The Federal Aviation Administration suspended all flights pending review, which concluded in September and gave Virgin Galactic complete clarity.
However, the company is delaying the start of commercial services, citing unrelated technology upgrades, and is not expected to fly paying customers before October. At the time Virgin Galactic went public in 2019, it was touting plans to start commercial service in 2020.
Meanwhile, Virgin Galactic’s main competitor in the sub-orbital space tourism game, Blue Origin, directed by Jeff Bezos, has launched three successful manned missions for celebrities and fee-paying clients.

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