Virgin Galactic (SPCE)’s space tourism business is struggling to take off as the pandemic and testing setbacks keep pushing back the start date of its commercial service. And its founder Sir Richard Branson’s aggressive stock selloff is hurting investors’ confidence in the company.
Last year, Branson cashed out $500 million worth of Virgin Galactic shares as the pandemic took a toll on Virgin Group’s other travel and leisure businesses. This week, the billionaire dumped another $150 million of Virgin Galactic stock, a Wednesday SEC filing revealed.
Branson, and four entities under his control (including Virgin Group), sold 5,584,000 shares of Virgin Galactic at prices between $26.85 and $28.73. Its share price tumbled 14 percent on Thursday.
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. Virgin Group remains the largest shareholder in Virgin Galactic, owning a quarter of the company.
Last month, another key shareholder, Virgin Galactic Chairman Chamath Palihapitiya, who helped take the company public in 2019, sold all of his personal stake in the company, worth about $213 million. Palihapitiya said he plans to redirect the money “into a large investment towards fighting climate change.”
The news adds to the already mounting uncertainty among investors over Virgin Galactic’s future. Analyst ratings are slipping. Six months ago, eight out of eight analysts covering the stock rated shares “buy,” per Barrons. This month, only four out of 10 analysts covering the stock have a “buy” rating.
In May, the company is going to test fly its SpaceShipTwo vehicle again after 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.”
On the operational side, Virgin Galactic has also lost several key executives in recent months. Its chief financial officer Jon Campagna left the company in March. (He was replaced by Doug Ahrens, an outside hire.) Longtime CEO George Whitesides, who switched to a new role called chief space officer last July, left the same month to pursue unspecified opportunities in public service. He remains as Virgin Galactic’s Space Advisory Board Chair.
Late last year, Virgin Galactic’s chief operating officer Enrico Palermo, who was in charge of the manufacturing of the SpaceShipTwo vehicle, left to return to his native Australia as the new head of the Australian Space Agency.
Virgin Galactic is currently headed by Michael Colglazier, a former Disney executive, who joined in July to replace Whitesides.