From heaven to hell: Virgin Galactic falls 86% from highs and loses the value of its stock market debut

After a stratospheric first half of 2021, Virgin Galactic went into a tailspin and in 2022 it does not seem that it will be able to take flight. The company created by Richard Branson closed the week at $8.61, below its 2019 stock market debut, down 86.51% from its all-time high of $62.8.

The company went public in October 2019 thanks to its merger with a SPAC (special purpose acquisition company, for its acronym in English) closing in its debut at $11.75 per share. Less than a month later it would mark intraday lows at 6.90 and a closing low of $7.22, but until this week it had not finished a session so low as to lose $9 per share.

The company is currently in what looks like a rush forward, after announcing a few days ago the issuance of up to $500 million in convertible bonds due 2027 to “accelerate the development of its space fleet.” Investors, who had already been disenchanted for months, once again punished the firm, which has lost more than 30% so far this year.

Nor does the public relations problem caused by whoever helped the firm go public and who currently serves as spokesperson for the company’s board, Chamath Palihapitiya, help. The businessman pointed out in a podcast that he co-directs that he does not care about the persecution of Uyghurs in China, for which Virgin Galactic has been forced to point out that Palihapitiya does not speak on behalf of the company, where they defend human rights.

In this framework, in addition, Bank of America has lowered the target price of the share to twelve months to 10 dollars, half of the 20 dollars that they previously estimated. Among the 9 analyst firms that have valued Virgin Galactic in the last quarter, the median target price is $23.29.

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After the great success of its first suborbital flight, with which last July, things have only gotten worse. In October, they delayed the start of commercial flights until the last quarter of 2022 to examine the results of the tests and improve the safety elements of the aircraft’s materials.

A few weeks later, Virgin Galactic presented its third-quarter results, with a loss of $0.32 per share, worse than the estimated $0.28, even though revenues of 2.5 million far exceeded 1.4 million. what analysts expected. The firm also announced that a hundred people had already given a deposit of 150,000 dollars to reserve their seat on the first commercial flights, whose price amounts to 450,000 dollars.

Meanwhile, the competition has not stood idly by. Just days after Branson’s own first suborbital trip, it was Jeff Bezos with Blue Origin who took to the skies. Unlike Virgin Galactic, the Amazon co-founder’s company repeated twice more before the end of 2021, with the last flight in December carrying six astronauts. Additionally, it was reported in October that Blue Origin was in the process of developing a commercial space station in conjunction with Sierra Space expected in “the second half of this decade.”

What seems clear is that it is a booming market. In fact, according to a report by Space Capital, space infrastructure companies received a total of 14.5 billion dollars in private investment last year, 50% more than in 2020.

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