Investing

Billionaire Branson’s Virgin Galactic Files To Sell $500 Million In Stock One Day After Reaching Space

Topline

Virgin Galactic, the British-American aerospace company founded by ebullient billionaire Sir Richard Branson, filed to sell up to $500 million in stock to investors Monday morning, just one day after completing a historic flight to space that drew massive fanfare and (briefly) boosted share prices.

Key Facts

In a Monday regulatory filing, Virgin revealed it’s entered into an agreement to sell up to $500 million in stock at market prices, though it hasn’t yet disclosed when it plans to do so.

As part of the disclosure, the 17-year-old firm touted its first successful spaceflight, carrying a full crew of two pilots and four mission specialists, on Sunday.

The company says it plans to use net proceeds from the offering to develop its spaceship fleet, improve infrastructure and “co-develop, acquire or invest” in products that are “complementary” to its business.

Shares of Virgin, which enlisted Credit Suisse and Morgan Stanley for the offering, sank more than 10% within minutes of the announcement, reversing premarket gains of nearly 5%.

Big Number

$1.2 billion. That’s how much Virgin’s market cap, now about $10.8 billion, plunged after the announcement. Branson and his Virgin Group retain a 24% stake in the company.

Key Background

On Sunday, Branson and his crew flew over 50 miles above the Earth’s surface, experiencing weightlessness for eight minutes and marking the first time a billionaire left the planet on his own spacecraft—beating out Jeff Bezos and Elon Musk, whose companies Blue Origin and SpaceX have similar space ambitions. The successful flight is the second in a series of test runs intended to get the company ready for its first commercial passengers, who are expected to start flying next year, assuming all goes well.

Tangent

Virgin Galactic has been a big favorite among Reddit traders plowing into heavily shorted stocks this year. As fellow meme stocks GameStop and AMC Entertainment skyrocketed during a first-quarter trading frenzy, Virgin shares spiked more than 150% to an all-time closing high above $54.50 in early February. Though they’ve fallen about 20% since, current prices of about $43 are still nearly 15% higher than the average one-year target for shares (of $37.90) among analysts on Wall Street.

Further Reading

Richard Branson’s 17-Year Journey Into Space: How The Virgin Founder Became First Billionaire To Fly Own Rocket (Forbes)

Live: Inside Richard Branson’s Journey To Outer Space (Forbes)

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