Virgin Galactic shares crash after Branson flight
Capitalism in space: The price of the stock for Virgin Galactic plummeted 17% shortly after Richard Branson’s flight on July 11th, experiencing its worst day in more than a year.
The drop occurred shortly after the company announced it was going to sell an additional $500 million in new shares.
Virgin Galactic, which trades under the ticker SPCE, fell 17.3% after it filed notice of its stock sale offering with the Securities and Exchange Commission. Trading in Virgin Galactic was briefly halted Monday morning due to volatility.
The drop in price is likely a reflection of several things, none of which reflects negatively on the overall bright picture for commercial space. First, the release of new stock meant the supply was greater than demand, and thus the price dropped. Second, Branson’s flight, while grand, also highlighted its limitations. While there certainly appears to be a market for suborbital tourism, I suspect the arrival of regular and likely increasingly cheaper orbital flights will cut into this market. In comparison, a short five minutes of weightlessness cannot compare with spending a week in orbit.
Third, Virgin Galactic as a company has nowhere to go. The rocket is essentially an engineering dead end. It can do suborbital flights relatively cheaply and quickly, but the demand for such flights is limited, especially with the arrival of relatively cheaper orbital access.
Capitalism in space: The price of the stock for Virgin Galactic plummeted 17% shortly after Richard Branson’s flight on July 11th, experiencing its worst day in more than a year.
The drop occurred shortly after the company announced it was going to sell an additional $500 million in new shares.
Virgin Galactic, which trades under the ticker SPCE, fell 17.3% after it filed notice of its stock sale offering with the Securities and Exchange Commission. Trading in Virgin Galactic was briefly halted Monday morning due to volatility.
The drop in price is likely a reflection of several things, none of which reflects negatively on the overall bright picture for commercial space. First, the release of new stock meant the supply was greater than demand, and thus the price dropped. Second, Branson’s flight, while grand, also highlighted its limitations. While there certainly appears to be a market for suborbital tourism, I suspect the arrival of regular and likely increasingly cheaper orbital flights will cut into this market. In comparison, a short five minutes of weightlessness cannot compare with spending a week in orbit.
Third, Virgin Galactic as a company has nowhere to go. The rocket is essentially an engineering dead end. It can do suborbital flights relatively cheaply and quickly, but the demand for such flights is limited, especially with the arrival of relatively cheaper orbital access.