Following Richard Branson’s announcement of halting further financial contributions, the stock price of Virgin Galactic experienced a significant drop of over 17% by Monday’s close. This latest complication adds to a series of challenges the company has faced, including recent layoffs and a suspension of commercial flights.
Speaking to the Financial Times, Virgin Galactic’s founder revealed his decision to stop funding Virgin Galactic. He cited post-pandemic financial constraints: “We don’t have the deepest pockets after Covid, and Virgin Galactic has got $1 billion, or nearly,” he said. “It should, I believe, have sufficient funds to do its job on its own.”
This decision comes at a critical juncture for Virgin Galactic, which laid off about 20% of its staff a few weeks ago—amounting to approximately 185 workers—and announced an 18-month suspension of commercial flights. The company is shifting its focus on the development of an upgraded spaceplane, called Delta, which is slated to debut in 2026.
Related article: What to Expect from Virgin Galactic’s Upgraded Spaceplane
Although Virgin Galactic has managed to undertake a series of space flights in recent months, including its latest commercial flight, the overall impact of these achievements has been overshadowed by the company’s broader financial and operational issues. Virgin Galactic’s funding outlook suggests it has enough resources to continue until the planned 2026 introduction of the Delta vehicle, but some industry analysts anticipate the company may require additional investment by 2025, according to the Financial Times.
Despite divesting over $1 billion in shares between 2020 and 2021, reducing its ownership to 7.7%, CNBC says Virgin Group continues to be the second-largest stakeholder in Virgin Galactic (State Street Global Advisors is the biggest). The sell-offs were primarily aimed at supporting Virgin Group’s wider leisure and travel business during the pandemic downturn.
Virgin Galactic, founded in 2004, is seeking to establish a presence in the emerging space tourism market. However, the company’s path forward now appears increasingly challenging, particularly in light of the recent failure of Virgin Orbit, another space-related venture under Branson’s portfolio. Moving forward, it’s now sink or swim for Virgin Galactic.
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