The billionaire space race is hotting up and Richard Branson might currently be at the head of the leader-board ahead of Jeff Bezos, but Virgin Galactic’s shares took a tumble from space, the day after Branson completed his edge of space flight.
Virgin Galactic revealed in a filing to the US SEC that they had entered into a distribution agency agreement with prominent Wall Street Investment Banks, including Credit Suisse.
A spokesperson for Virgin Galactic said that they intended to use the proceeds from the sale for things like infrastructure improvements and other general corporate use, such as working capital and general administrative matters.
Investors had initially been pleased with the first crewed test flight featuring Branson, but the existing shareholders were deterred by the news that the space flight firm was going to be selling off up to $500 million dollars (£360 million) worth of shares, thus diluting their holdings and causing a sharp drop in share price.
The test flight was launched from Spaceport America, Virgin Galactic’s operational base in New Mexico. It was seen as a crucial step towards the company’s goal of commercial space flight service by 2022.
It was deemed even more important given the number of false starts the venture has had since its formation in 2004 and the passing of the prediction to have a commercial space flight with paying passengers by 2008.
Virgin Galactic’s share price looked good initially after the flight, having risen by 9% in pre-market trading, but after the announcement that they intended to sell off shares to raise funds, that took a sharp reverse course and saw share prices dropping by 14%.
With shares currently worth $43, Virgin Galactic is currently valued at $11.8 billion, though this is a fairly drastic change from their record high of $63 per share in February, leaving them in worse shape by almost a third.
Still, with the historic flight, Branson has sealed his place as first among the billionaire space barons, and one step closer to commercial space tourism.