Virgin Galactic falls after it gets set to sell $500 million in stock following Branson’s flight

Virgin Galactic’s shares slipped Monday after the company filed for the sale of up to $ 500 million worth of common stock. This follows the successful test flight of the commercial space company with founder Sir Richard Branson.

Virgin Galactic, trading under the ticker SPCE, fell more than 11% after filing its public sale offer with the Securities and Exchange Commission. Trading in Virgin Galactic was temporarily suspended on Monday morning due to volatility.

On Sunday, the company successfully completed its fully manned test flight into suborbital space, a major milestone in the commercial space race and a step towards its goal of commercial service in 2022

The shares traded hands at $ 43.56 at around 10:45 AM ET after rising as much as 7% in pre-trading hours. In anticipation of this advance toward commercial services, the stock is up more than 80% so far this year.

“We see Branson’s accomplishment as a massive marketing coup for Virgin Galactic that the public cannot ignore,” Canaccord Genuity equity analyst Ken Herbert told his client. The company has a buy rating for the company, but has also set a price target of $ 35 on the stock, which is below its current level.

The company’s spacecraft, VSS Unity, launched over the New Mexico skies on Sunday, with two pilots driving the vehicle with the billionaire founder and three Virgin Galactic employees. VSS Unity fired its rocket engine and accelerated to more than three times the speed of sound as it ascended to the edge of space.

“We see this as important as we move towards the admission of passenger flights, which we expect to take place in early 2022,” said Douglas Harned, analyst at AB Bernstein, of his clients. The company has a market performance rating from Virgin Galactic.

Virgin Galactic’s VSS Unity is designed to accommodate up to six passengers along with the two pilots. The company has approximately 600 reservations for tickets for future flights, which sell for prices between $ 200,000 and $ 250,000 each. While passenger ticket sales have not yet been announced, Bernstein expects a higher price tag between $ 400,000 and $ 500,000.

Virgin Galactic also announced that it is partnering with sweepstakes company Omaze to offer a two-seat chance on “one of Virgin Galactic’s first commercial space flights” early next year.

“The flight is symbolically important in building consumer confidence in space tourism and increasing demand for space tourism,” said Harned. “A successful test flight of Blue Origin with founder Jeff Bezos, slated for July 20th, should generate further interest in the industry that would benefit both companies.”

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In 2004, Branson founded Virgin Galactic to fly private passengers into space. Branson hadn’t previously been expected for Sunday’s spaceflight, but after his billionaire Jeff Bezos announced he would be flying on July 20 on his company’s Blue Origin company’s first passenger flight, Virgin Galactic arranged his flight schedule – with a destination for Branson nine Days before Bezos to fly.

Sunday’s flight, which takes off from Bezos or Elon Musk, means Branson will be the first of the multi-billion dollar space company founders to drive his own spaceship.

AB Bernstein said the success of the flight and subsequent ticket sales could well be a short-term upside catalyst for the stock, but it didn’t change its long-term outlook. The company determined that it would not sell the stock short as it saw tremendous volatility caused by retail investors who responded to the events.

– With reports from Michael Sheetz and Michael Bloom of CNBC.

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