Virgin Orbit completes $37 million stock sale

It appears that Virgin Orbit has just completed a $37 million sale of new common stock, valued at $0.0001 per share, and equal to about 10% of the company.

Hat tip to stringer Jay, who writes, “To me, it is like V.O. is printing money. They have already lost most of the value of the original stock, they are losing about $20 million a quarter, and they just raised $37M.”

Virgin Orbit had planned in 2022 about eight launches. It completed two, and then got blocked by the UK bureaucracy, completing no more launches for the rest of year while it waited months for permits to launch from Cornwall. During that time it could not launch its other customers because it only had one 747 in its fleet to launch its rocket.

No launches means no income. To keep the company afloat Branson has had his larger company Virgin Group transfer first $25 million and then another $20 million to Virgin Orbit. This stock sale appears to be another effort to keep Virgin Orbit above water.

The endless and unexpected delays getting permits to launch from Cornwall now suggests that some people in the UK government might not like Branson, and took this opportunity to sabotage him. Pure speculation I know, but not beyond the realm of possibility.

Bad news for Branson

Two stories today suggest that Richard Branson’s space empire continues to totter.

First, a judge ruled that the fraud lawsuit against Branson by other stockholders in the suborbital tourist company Virgin Galactic can go forward.

The suit claims Branson concealed safety problems while he sold off the bulk of his own stock at top dollar. Only after he had dumped his stock were those problems revealed, and the stock price plummeted, now trading at less than 10% of the peak in February 2021, when Branson sold.

Second, it appears that though Branson’s satellite orbital company Virgin Orbit is operational, it is not going to launch as many satellites this year as expected, and thus required an investment of $25 million on November 4th from Branson’s Virgin Group to stay liquid.

Branson clearly wanted to be a major player in space. In the end, he has mostly failed, though once again Virgin Orbit remains a viable launching company for smallsats.

Virgin Galactic losses 3x higher than last year

Even as Virgin Galactic has announced a contract with Axiom to fly a zero gravity suborbital training flight for one of its astronauts, the company also posted its 2021 third quarter statement, revealing losses three times higher than the previous year.

The company posted a net loss of $146 million for the three months ended Sept. 30, compared with a $48 million net loss in the same period last year. The widened loss was in part driven by increased research and development cost, which came at $97 million in the June-September quarter, three times higher than last year.

The company posted a net loss of $146 million for the three months ended Sept. 30, compared with a $48 million net loss in the same period last year. The widened loss was in part driven by increased research and development cost, which came at $97 million in the June-September quarter, three times higher than last year.

Quarterly revenue was only $767,000, down 70 percent from a year ago. Virgin Galactic hasn’t started commercial service of its suborbital spaceflight. The company currently makes money by taking deposits for future flights and providing engineering services to other companies.

Company officials still say that it will begin flying customers in the second quarter of ’23, as promised, though it also appears that the demand for its business has plummeted. At the same time, it reports it has $1.1 billion in its coffers for future development.

A look back at Virgin Galactic’s failed history

Link here. Doug Messier has probably provided the best news coverage of every up and down (mostly down) of Virgin Galactic since its beginning. As he notes at the beginning of his article:

A lot can happen in 18 years.

A mother can go from holding her newborn baby in her arms to sending her child off the college for the first time. In between, the child has learned to walk and talk, endured the rigors of puberty, and spent at least 13 years in school.

During that same time, Virgin Galactic essentially accomplished nothing, while wasting billions in private investment capital. Meanwhile, Richard Branson pumped and dumped, getting out when the getting was good and leaving others to hold the bag.

Definitely worth the read. The story of Virgin Galactic demonstrates the risks inherent in capitalism and freedom. Freedom allows for big dreams, but before you commit to any dream you better look it over very carefully or you might be burned.

Virgin Galactic stock crashes

Capitalism in space: For the first time since Virgin Galactic became a publicly-traded company two years ago, its stock on January 6th dropped below its initial offering price.

On Thursday, stock of the space tourism company fell to as low as $11.30 before rising back to $11.90 by the afternoon. When the company merged with a special purpose acquisition company to go public in 2019, its debut price was $11.75.

In the two years in-between, the price was pumped up to as high as $62, during which the company’s founder, Richard Branson, sold off about 80% of his stock, reducing his holdings from 51% of the company to only 11% and walking away with about $1.25 billion in cash.

Right now the company’s future is very much in question. It has delayed all of its commercial suborbital flights until late this year, if then. Meanwhile, Blue Origin is flying commercial suborbital tourist flights, and the orbital space tourism market is ramping up quite successfully. With no ability to enter that orbital market, Virgin Galactic appears to be at a dead end.

More Spaceport America corruption allegations flung about in New Mexico

New allegations of corruption and lawbreaking against Michelle Lujan Grisham, the Democrat Party governor of New Mexico, were revealed in a lawsuit filed this week by the former chief financial officer of Spaceport America, Zach DeGregorio.

Zach DeGregorio, the former Chief Financial Officer of Spaceport America, alleges that one of Grisham’s political appointees, Alicia Keyes, encouraged him to falsify an economic impact study. He also alleges that Keyes mishandled a bond refinancing for the purpose of defrauding the state. When DeGregorio attempted to report the wrongdoing, he claimed, he was threatened with investigations and a firing.

…The lawsuit also alleges that Spaceport America’s chief client, Virgin Galactic, and its CEO, Richard Branson, bribed Lujan Grisham in exchange for “essential business” status during COVID-19 shutdowns. The governor’s office met with Virgin Galactic shortly before Grisham “ma[d]e changes to the NM Spaceport Authority board,” “ma[d]e staffing changes at the NM Spaceport Authority,” and “made operational changes at the NM Spaceport Authority that benefited Virgin Galactic at the expense of other customers and the NM taxpayers,” according to the lawsuit.

You can read the actual filing here [pdf].

DeGregorio resigned in 2020 after filing an earlier complaint alleging that the CEO of Spaceport America, Daniel Hicks, had broken several laws in operating the spaceport. In the new lawsuit DeGregorio also alleges that Hicks tried to illegally access his email account to read private emails concerning these allegations.

Spaceport America was established a previous Democratic Party governor, Bill Richardson, based on Richard Branson’s false promises that Virgin Galactic would soon be flying hundreds of tourist flights yearly, thus attracting other space-related business to New Mexico. Since then all the state has gotten from the spaceport is expenses, almost no business, and a lot of scandal. This story is not the first, and I suspect it will not be the last, especially if Virgin Galactic goes bankrupt in the next few years (something I personally expect).

What Spaceport America will likely not get is actual business. It can’t work for orbital flights, being in the interior, and there isn’t enough orbital runway business to sustain it, especially since there are thousands of other runways to choose from.

Virgin Orbit merger produces only half the investment capital expected

Capitalism in space: It appears that the merger of Virgin Orbit with the special purpose acquisition company (SPAC) NextGen Acquisition II has produced only half the investment capital that had been expected.

The merger had expected to produce $483 million in investment capital for the rocket company. Instead it has produced only $228 million because many shareholders of NextGen cashed out before the merger occurred. Apparently, these shareholders did not have confidence in the Virgin Orbit, and feared their stock value would drop once the merger was completed.

It appears that Virgin Orbit has been stained by the failure of another Richard Branson space company, Virgin Galactic, to deliver on its promises. Virgin Orbit has successfully completed two orbital flights, and is expected to complete a third shortly. Unlike Virgin Galactic, it has done what it said it would, though it took longer than predicted (delays that were not unreasonable considering it was a startup rocket company). Investors have looked at the collapse of Virgin Galactic stocks, and have decided they do not wish to gamble their money on another Branson space company, no matter how successful.

Class action securities fraud lawsuit filed against Virgin Galactic

Capitalism in space: In what will likely be the first in a number of similar legal actions, a lawsuit was filed against Virgin Galactic earlier this month accusing the company and a number of upper management individuals of securities fraud.

A class action lawsuit was filed in New York on Dec. 7 alleging securities fraud by Virgin Galactic, which went public on the New York Stock Exchange (NYSE) in October 2019 after merging with Chamath Palihapitiya’s Social Capital Hedosophia (SCH).

Named in the lawsuit are Virgin Galactic Holdings, CEO Michael Colglazier, former CEO George Whitesides, former current chief financial officer Doug Ahrens, and former chief financial officer Jon Compagna.

The lawsuit was filed amid years-long delays in the start of commercial human suborbital flights that have caused a sharp decline in the value of the stock. Virgin Galactic began trading on the New York Stock Exchange at an opening price of $12.34 on Oct. 28, 2019. The stock is now trading at $14.46 having previously soared to a high of $62.80.

The article description of the condition of the company’s WhiteKnightTwo carrier plane and its suborbital craft VSS Unity suggests that the likelihood of further tourist flight could be low.

It is also interesting that Richard Branson is not named, as he clearly played a part in any such action. He also conveniently sold most of his stock in the company when its price was on the high end of its roller coaster. It could be the plaintiffs left him out in order to keep his substantial financial big guns from firing back at them.

More lawsuits are expected however, and we should not be surprised if both Branson and Palihapitiya get included at some point.

Branson sells another $300 million in Virgin Galactic stock

Capitalism in space: Richard Branson has sold another $300 million of his Virgin Galactic stock, reducing his share in the company to only 11.9%.

When Virgin Galactic went public, Branson sold off 49%, so that he was still the majority owner with 51% holdings. Since then, he has made more a billion dollars reducing his holdings to a point where today he is a very minor player in the company. Meanwhile, after that one suborbital passenger flight in July, that included Branson, the company has delayed further commercial suborbital flights until late next year while it overhauls WhiteKnightTwo and Unity.

Branson’s entire strategy with this company sure looks like a classic case of a pump-and-dump scheme. He pumps the company up for fifteen years, goes public, and then times his stock sales to maximize the value of the stock. And in the process he gets out before the company begins any commercial operations, when its viability will finally be demonstrated clearly.

Questions raised about Branson’s most recent Virgin Galactic stock sale

It appears that both Virgin Galactic and Richard Branson might have violated SEC regulations when they sold more than $800 million in stock this summer without notifying buyers of the FAA investigation into the anomaly on Branson’s July 11th suborbital flight that has now grounded all SpaceShipTwo flights.

On July 12, Virgin Galactic announced in a Securities and Exchange Commission filing that it was selling $500 million worth of common stock. The filing did not mention that during its edge-of-space flight the day before, its aircraft deviated from its air-traffic-control clearance, a mishap that would ultimately trigger a Federal Aviation Administration investigation and lead to the indefinite grounding of its space-tourism operation.

The FAA began investigating on July 23, a spokesperson told Insider. On August 11, the agency grounded Virgin Galactic’s rocket plane.

In an August 13 SEC filing, Richard Branson, the English billionaire who founded Virgin Galactic in 2004, said that in the previous three days, he had sold roughly 10.5 million personal shares, a stake worth about $300 million.

Let’s review the timeline.

July 11: The flight occurs, with high winds forcing it outside its planned flight path.
July 12: Virgin Galactic sells $500 million in stock, without mentioning the anomaly.
July 16: By this date the company was required to inform the FAA of any anomalies during the flight.
July 23: The FAA initiates its investigation..
August 11: The FAA grounds Virgin Galactic.
August 13: SEC filing reveals Branson had sold $300 million in stock without mentioning the anomaly.
September 1: New Yorker article reveals investigation of anomaly.

Though no investigation had been started, Virgin Galactic must have known about the flight anomaly when it sold its $500 million in shares on July 12, right after the flight.. By August, when Branson sold his $300 million in shares, that investigation was on-going. Yet he also failed to mention the anomaly.

As I have said before, Branson has all the markings of a conman. He has very carefully been selling stock, reducing his share in the company in the past two years from 51% to 18%, with each stock sale carefully timed to take advantage of some event that pumped up the stock’s price.

All in all, the pattern by Branson suggests he really does not have much faith in Virgin Galactic’s future.

Flight anomalies occurred during Branson’s suborbital flight in July

Capitalism in space: According to a New Yorker story today, the suborbital flight of Richard Branson in July experienced several flight anomalies that the article suggests should have caused it to end early before reaching space.

The rocket motor on Virgin Galactic’s ship is programmed to burn for a minute. On July 11th, it had a few more seconds to go when a red light also appeared on the console: an entry glide-cone warning. This was a big deal. I once sat in on a meeting, in 2015, during which the pilots on the July 11th mission—Dave Mackay, a former Virgin Atlantic pilot and veteran of the U.K.’s Royal Air Force, and Mike Masucci, a retired Air Force pilot—and others discussed procedures for responding to an entry glide-cone warning. C. J. Sturckow, a former marine and nasa astronaut, said that a yellow light should “scare the [“#$%#] out of you,” because “when it turns red it’s gonna be too late”; Masucci was less concerned about the yellow light but said, “Red should scare the crap out of you.” Based on pilot procedures, Mackay and Masucci had basically two options: implement immediate corrective action, or abort the rocket motor. According to multiple sources in the company, the safest way to respond to the warning would have been to abort. (A Virgin Galactic spokesperson disputed this contention.)

Aborting at that moment, however, would have dashed Branson’s hopes of beating his rival Bezos, whose flight was scheduled for later in the month, into space. Mackay and Masucci did not abort.

Virgin Galactic’s response, including the FAA’s statement, can be found here. The company noted that the flight deviation occurred because of unexpected high altitude winds. The FAA’s comment I think provides some reasonably perspective:
» Read more

Boeing to buy part of Virgin Orbit for $3.2 billion

Capitalism in space: In a stock market merger/investment deal, Boeing is going to buy a part ownership in Virgin Orbit for $3.2 billion, with the deal to close by the end of the year.

After the deal completes, Branson’s Virgin group will hold about 68 per cent of Virgin Orbit. Abu Dhabi’s sovereign wealth fund, Mubadala Investment Company, is an existing investor in Virgin Orbit and will have about 17 per cent, while the Pipe and other private investors will hold about 15 per cent of the group. Boeing’s share was not disclosed.

My first thought was that Boeing wanted to get into a space company that was doing things better than anything Boeing was trying. And considering that Virgin Orbit a Richard Branson space company, albeit one with some real success, that indicates how badly everything else is at Boeing

My second thought was: Where is Boeing getting the cash? My impression is that because of its various problems with the 737-Max, it has sold almost no planes in the past two years, and has even had to refund money from many purchasers. Its cash flow with Starliner is nil until they fly it. SLS has brought them money as the contract is cost-plus, but hardly enough to pay for this deal.

My third thought was that this deal indicates the continuing cash problems at Branson’s Virgin Group. The Wuhan panic cut airline traffic significantly. It appears Branson is still digging for cash to bail out these operations.

Branson sells more than ten million shares of Virgin Galactic

Capitalism ?in? space? Continuing his steady off-loading of Virgin Galactic stock since the company went public, Richard Branson has sold another 10.5 million shares, lowering his steadily shrinking ownership share another 4% to 18% total.

The sale garnered him $300 million in cash.

When the company went public in 2019, Branson reserved for himself 51% ownership. Since then he has periodically sold off large chunks, usually well timed to specifically planned events that worked to pump up the stock’s price. This last sale obviously was planned to take advantage of the publicity following Branson’s own suborbital flight in July.

While Virgin Galactic might have a future in suborbital space tourism, I remain very skeptical. It certainly does not have a future in the larger orbital market, as it has no experience building real rockets (Virgin Orbit was spun off this company years ago, taking with it all that experience). Thus, the company has very limited possibilities. As the orbital market grows and becomes dominant, I can’t see there being that much long term interest in short suborbital hops.

I think Branson agrees with me, which is why he is getting out when the getting is good. That he is following the classic and very corrupt method of “pump and dump” only solidifies my belief that he is an outright con-man.

That the mainstream press continues to genuflect before him only tells us how corrupt and incompetent that press has become.

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.

The bell of freedom rings in space

The Liberty Bell
“Proclaim liberty throughout all the land and the
inhabitants thereof.” Photo credit: William Zhang

Not surprisingly the mainstream press today was agog with hundreds of stories about Richard Branson’s suborbital space flight yesterday on Virgin Galactic’s VSS Unity spaceplane.

The excitement and joy over this success is certainly warranted. Back in 2004 Branson set himself the task of creating a reusable suborbital space plane he dubbed SpaceShipTwo, modeled after the suborbital plane that had won the Ansari X-Prize and intended to sell tickets so that private citizens would have the ability to go into space.

His flight yesterday completed that journey. The company he founded and is slowly selling off so that he is only a minority owner now has a vehicle that for a fee can take anyone up to heights ranging from 50 to 60 miles, well within the U.S. definition of space.

Nonetheless, if you rely on the media frenzy about this particular flight to inform you about the state of commercial space you end up having a very distorted picture of this new blossoming industry. Branson’s achievement, as great as it is, has come far too late. Had he done it a decade ago, as he had promised, he would have achieved something historic, proving what was then considered impossible, that private enterprise, using no government resources, could make space travel easy and common.

Now, however, he merely joins the many other private enterprises that are about to fly into space, with most doing it more frequently and with far greater skill and at a much grander scale than Virgin Galactic. His flight is no longer historic. It is merely one of many that is about to reshape space exploration forever.

Consider the upcoming schedule of already paid for commercial manned flights:
» Read more

Virgin Galactic finally flies Richard Branson on its reusable suborbital Unity spacecraft

Capitalism in space: After almost two decades of development and almost as many false promises by Richard Branson, Branson today finally flew on his SpaceShipTwo ship dubbed VSS Unity.

Unity was taken to about 45,000 feet by the carrier airplane WhiteKnightTwo, where it was released and its engines fired.

Once VSS Unity’s rocket engine cut off, the spacecraft’s momentum took it to an altitude of around 90 kilometers. This is above the minimum altitude of 80 kilometers required by the US Air Force, NASA, and the FAA to grant astronaut wings, and is above the discernible atmosphere. This apogee, or maximum altitude, is below the Federation Aeronautique Internationale (FAI) recognized boundary of space at 100 kilometers, which SpaceShipOne crossed twice to claim the X-Prize in 2004.

The craft spent around five minutes in weightlessness, with the crew evaluating the experience and looking at Earth and space from 17 windows on the craft, before they strapped back into their seats for reentry.

I have embedded below the fold the live feed, cued to just before Unity was dropped from WhiteKnightTwo. The commentary is far less offensive than the blather on the official live feed, but they end up losing the view from their live feed and switched to the Virgin Galactic live feed, rewinding it to pick it up just before the drop. You then see that feed, with good images and with all the blather, but no interior video during the weightless period. I suspect they want to edit that footage before releasing it, just in case anyone had vomited or Branson looked uncomfortable in any way.

Overall, Virgin Galactic deserves congratulations for finally accomplishing this flight. That it took so long and occurred just before the start of commercial manned orbital flights unfortunately pops the balloon on this achievement. The flight was so short that it now seems somewhat disappointing compared to the upcoming orbital tourist flights.

The next suborbital flight by Blue Origin on July 20th, and unlike today’s Virgin Galactic flight, will carry the first paying passenger, making it the first wholly financed and built private commercial space flight.
» Read more

Watching Virgin Galactic’s suborbital flight on July 11th

Capitalism in space: Virgin Galactic has now made available the live stream for its planned suborbital flight on July 11th that will also carry the company’s founder, Richard Branson.

I have embedded the live stream below the fold. Though the company has not announced an actual launch time, according to that stream the broadcast is now scheduled to begin at about 9 am (Eastern). The flight itself should last about ninety minutes total, from takeoff of the carrier airplane to landing of both it and the suborbital spacecraft, VSS Unity.

The weightless portion of the flight will last about four minutes or so. Unity will get to more than 50 miles altitude, which meets the American definition of space but not the international standard of 67 miles. For more details about the flight, see this article.

Expect the broadcast to be filled with endless hype and blather about how “spectacular” and “amazing” and “wonderful” Virgin Galactic is. And yes, what the company is doing is very cool, a privately financed manned spacecraft capable of reaching space, returning to Earth, and then flying again. Unfortunately, both suborbital companies (Virgin Galactic and Blue Origin) seem to think they have to convince people of this obvious fact on their broadcasts, and scream it at the viewers endlessly. They would be wiser to take SpaceX’s soft-sell approach: State once what they are accomplishing and then simply report on what actually happens, with no breathless commentary.

I don’t expect that to happen however. Thus, I’m not sure I can stomach hours on end of Virgin Galactic PR hype on Sunday, especially considering that this spaceflight by Branson is more than a decade late. His own endless hype for the last fifteen years, promising over and over again that he would be flying in mere months, has soured me from any desire to listen to more. Maybe I’ll go on a hike instead.
» Read more

Bezos vs Branson: Virgin Galactic to do suborbital flight on July 11th carrying Richard Branson


Capitalism in space: Virgin Galactic today announced that it is now planning its first passenger flight of its VSS Unity suborbital spacecraft on July 11th, and that flight will carry Richard Branson as one of its passengers.

[Aleanna Crane, vice president of communications for Virgin Galactic] said that the last flight had been so flawless that the team had decided to test the cabin experience. “Who better to test the full cabin experience than Richard Branson?” she said. “He is flying as a mission specialist, and he has a role like the rest of the crew.” The craft will carry three other Virgin Galactic employees in the cabin seats in addition to the two pilots up front.

…The company plans to broadcast the flight beginning at 9 a.m. Eastern time on July 11. The SpaceShipTwo rocket, named Unity, will be carried under an airplane named White Knight Two to an altitude of 50,000 feet before being dropped. Unity’s engine will then ignite, taking it up to higher than 50 miles. At the top of the arc, passengers will float for about four minutes before the space plane re-enters the atmosphere and glides to a runway landing.

By flying on July 11th, Virgin Galactic — and Branson — will beat Blue Origin — and Jeff Bezos — by nine days in accomplishing the first passenger suborbital flight. Blue Origin’s July 20th flight however will be carrying the first paying customer, while Virgin Galactic’s flight will not.

For Branson making this flight ahead of Bezos is almost essential. He has been promising this flight now for more than fourteen years, always declaring it was only months from happening. It never did, and the years dragged on and on with no achievement or Virgin Galactic suborbital tourist flights. To get beaten now would be quite embarrassing, to put it mildly. Yet, to only win this race by mere days remains embarrassing as well, since Virgin Galactic was supposed to do this more than a decade ago and did not.

Regardless, both flights are stunts intended to garner publicity and encourage ticket sales for future suborbital flights. And while there appears to be some market interest in these suborbital flights, both are mere pipsqueaks to the coming orbital tourist flights by SpaceX, Axiom, and the Russians, with Boeing to follow shortly thereafter.

FAA approves commercial launch license for Virgin Galactic

Capitalism in space: FAA today approved Virgin Galactic’s commercial launch license, allowing it to fly commercial paying tourists on its suborbital spacecraft, VSS Unity.

When Virgin Galactic will begin doing so remains uncertain. There have been rumors that the company is thinking of quickly scheduling a flight carrying Richard Branson for July 4th, thus beating Jeff Bezos’s planned July 20th into space. However, the company has denied this, referring back to its announced schedule.

Virgin Galactic has previously set out a schedule for this year, as it continues to mold the kind of service it plans to offer its commercial customers. This would see four of the company’s employees climb aboard Unity (along with the two pilots) for the next flight, to get a sense of the experience that future ticketed passengers will enjoy.

The flight after that is likely to see Sir Richard himself go to the edge of space, as a statement of readiness for commercial service.

And it’s then on the subsequent outing that the company is expected to start earning revenue from carrying people – although this is a mission that has been block booked by the Italian Air Force, which is going to put several payload specialists aboard Unity to supervise a number of microgravity experiments.

Regardless of when Branson’s first flight will be, that first commercial flight will come about fourteen years after the date Branson first predicted for such a flight. In 2004 he predicted he would fly by 2007 after hundreds of test flights, followed then by more hundreds of commercial flights each year. None of that ever happened, nor does it look like the flight numbers will ever approach his prediction.

Investors sue Virgin Galactic for stock fraud

Capitalism in space: A federal complaint has been filed against Virgin Galactic, claiming the company made false and misleading reports concerning its financial state.

Investor Shane Levin and other unnamed plaintiffs claim in their complaint that Virgin Galatic CEO Michael Colglazier, former CEO George Whitesides, CFO Doug Ahrens and former CFO Jon Campagna knowingly presented incorrect financial statements to inflate the company’s stock price and entice buyers.

The lawsuit is seeking class-action status and unspecified damages, in addition to legal fees.

Also today an anonymous source claimed that, assuming Virgin Galactic can get FAA approval, the company has suddenly changed its test flight schedule and is now planning to fly Richard Branson on its SpaceShipTwo Unity spacecraft on July 4th. This would have Branson reach suborbital space about two weeks ahead of Jeff Bezos, who is presently scheduled to fly on a suborbital flight his own New Shepard spacecraft on July 20th.

Branson for almost two decades has promised he would fly on the first commercial operational flight of SpaceShipTwo, while also promising repeatedly that this flight was only months away. All of those promises were bunkum. Now faced with Jeff Bezos grabbing that first flight, Branson is suddenly scrambling to finally get it done, even if it means disrupting Virgin Galactic’s already announced test schedule.

The first story above tells us something about the honesty of Virgin Galactic’s finances. The second story tells us something about the trustworthiness of its management and engineering. I might consider the pace of Blue Origin in the past five years to have been far too slow, but they have at least shown a careful deliberate path to flight. Bezos’ July 20th flight might be a stunt, but it is being done to demonstrate his trust in his product.

Not so much from Branson and Virgin Galactic. For Branson, feeding his ego seems more important.

Bezos to fly on first manned New Shepard suborbital flight in July

Capitalism in space: Jeff Bezos announced today that he and his brother Mark will be passengers on the first manned commercial New Shepard suborbital flight, now scheduled to launch on July 20th.

“I want to go on this flight because it’s a thing I wanted to do all my life. It’s an adventure. It’s a big deal for me,” Bezos says in the brief video.

In that video, Bezos asks his younger brother Mark, to accompany him on the flight. “I think it would be meaning to have my brother there,” he said.

Mark Bezos accepted. “I wasn’t even expecting him to say that he was going to be on the first flight,” he said in the video. “And when he asked me to go along, I was just awe-struck.”

Right now the high bid in the auction for the other passenger seat remains stuck at $2.4 million. The bidding ends on June 12 with a live auction instead of an online one, but it appears that whoever bid that amount has no competitors and will be the passenger.

As for Bezos’ flight, his announcement means he will beat out Richard Branson for this honor. Bezos’ victory is especially embarrassing to Branson, who had been promising everyone that he would be the first suborbital passenger on his Virgin Galactic SpaceShipTwo suborbital spacecraft for almost twenty years. Those promises were bunkum. Bezos meanwhile made no such promises, and will deliver.

If you had to choose between these two car salesmen, who would you pick?

I however would choose neither. These suborbital car salesmen are fighting over the honors to launch what is equivalent to a rowboat. Elon Musk’s SpaceX is meanwhile building the equivalent of an ocean liner (Starshp) even as it is about to launch the equivalent of the first passenger steam ship (Falcon 9 with paying civilian passengers). I pick Musk.

A detailed review of Virgin Galactic

Link here. The article not only provides a thorough review of the company’s most recent test flight and what it did and did not accomplish, it takes a look backward to reevaluate Virgin Galactic’s history, including the many engineering problems in the past few years that have slowed development and risked lives.

The most shocking aspect of this story is this fact:

The fact that VSS Unity was broken was never disclosed to Social Capital shareholders who approved the merger, or to investors who bought the stock after the merged companies went public under Virgin Galactic’s name on the New York Stock Exchange on Oct. 28, 2019.

The source who revealed the near-fatal February 2019 flight to Parabolic Arc questioned whether withholding that information from shareholders was legal under securities laws. A number of law firms have launched investigations into Virgin Galactic recently. Their primary focus seems to be the steep drop in the company’s stock price earlier this year. (It has rebounded sharply since the flight test.) But, perhaps they will carefully review the company’s public disclosures regarding the condition of VSS Unity.

In reviewing the building competition between Virgin Galactic and Blue Origin to fly the first commercial passengers, the article also confirms many of the same observations I have made about both companies.

Read it all. It shines light beyond the pr blather that you will get from most modern media as they rewrite press releases.

Virgin Galactic reveals issue with WhiteKnightTwo

Capitalism in space: On the same day that Virgin Galactic unveiled a $130 million loss in its first quarter report, it also announced that it might have to delay the next flight of its Unity suborbital spacecraft because of an undisclosed “wear-and-tear issue” on its carrier airplane.

From the second link:

[Mike Moses, president of space missions and safety], in response to later questions from analysts, did not disclose the specific component of the aircraft that was at the heart of the issue, but described it as a “family of items that relate to fatigue and long-term stress” of the airplane. It was not an issue with the number of flights of VMS Eve, which first flew in 2008 and has made fewer than 300 flights since.

Engineers are currently examining the plane to determine if additional maintenance is needed now to correct that problem, with an update expected next week. Virgin Galactic had planned to perform work on the plane this fall during a downtime that would also include work on VSS Unity, but Moses said engineers are now looking at whether some of that work needs to be moved up.

If maintenance is needed now, it would delay the schedule of flight tests for SpaceShipTwo, but Moses said it was “a little too early” to know how long that would be.

They had previously announced that the next flight would be in May. They will decide in the next week whether to delay it.

Meanwhile, the company’s stock price continues to tumble, dropping from a high of about $62 earlier this year to a low of about $14 today. And I would say that the price is still over-priced. The path to profit for Virgin Galactic has become extremely narrow, with few options and not much margin, especially with Blue Origin now only two months away from its first commercial suborbital tourist flight.

Richard Branson started Virgin Galactic shortly after the SpaceShipOne won the Ansari X-Prize in 2004, promising hundreds of commercial passenger flights per year in only a few years. Seventeen years later no such flights have ever occurred. Worse, not only will Blue Origin likely do the first commercial suborbital flight first, SpaceX and Axiom are likely to complete the first orbital tourism flights before Virgin Galactic.

No harm to Branson however. He has sold off most of his stock in the company, and did it when its price was still high.

Virgin Galactic delays quarterly earnings report

Waiting for Godot: Even as Blue Origin is finally about to announce the start of commercial ticket sales for its New Shepard suborbital spacecraft, Virgin Galactic has delayed release of its first quarter earnings report so that it will be released after, not before, that Blue Origin announcement.

Virgin Galactic claims the six day delay is in order to adjust numbers due to a new SEC requirement announced in mid-April. However, placing it after Blue Origin’s announcement instead of just the day before minimizes what would have been a very ugly-looking public relations disaster.

Whatever the actual reason for the delay, the prospect of delivering yet another dismal earnings report only hours before Blue Origin’s announcement could not have been an attractive one for Virgin Galactic CEO Michael Colglazier and new CFO Doug Ahrens. The quarterly earnings call is a major opportunity to influence Wall Street analysts who make recommendations on whether to buy or sell the company’s stock.

Virgin Galactic is expected to report a significant loss with minimal or no revenues as it struggles to complete the flight test program for its SpaceShipTwo suborbital vehicle, VSS Unity. Virgin Galactic’s net lost was $273 million for 2020, including a $74 million net loss for the fourth quarter.

Virgin Galactic’s stock has been taking a pounding lately. After opening at $10.75 on the first day of trading on Oct. 28, 2019, the stock soared to a high of $62.80. It is now trading at $22.15, having lost all of its gains for the year.

That both Richard Branson, the company’s founder, and Chamath Palihapitiya, the big investor when the company went public, have both sold off large portions of their stock in the past few months has also contributed to the bad press. Both took advantage of the high stock prices and apparently got out when the getting was good.

I fully expect this company to fail in the next year or two. If it doesn’t it surely will never achieve any of the many grandiose promises put forth by Branson for almost two decades.

Branson sells off more of his Virgin Galactic stock

He’s getting out while the getting is good: In the past three days Richard Branson sold another $150 million worth of his Virgin Galactic stock.

The stock price for these sales was about $27, more than twice the value when the company went public in November 2019.

Including his stock sales in May ’20, Branson has now sold about 30% of his share in the company, leaving him holding only about a 20% share. Essentially, Virgin Galactic is no longer his company.

Meanwhile, Virgin Galactic now says it will not begin tourist flights until ’22. Whether it can survive that long is another question. It certainly hasn’t delivered on any of Branson’s endless grandiose promises, beginning almost two decades ago in 2005.

The sad story of Virgin Galactic

Link here. This so-called suborbital space tourism company, which for years has promised to fly tourists on suborbital flights to space but failed to do so, appears now to be trying to shift gears and instead make itself into a company building supersonic airplanes.

Richard Branson’s dream of a suborbital Virgin Galactic vehicle zipping passengers between distant cities at hypersonic speeds above Mach 5 (6,174 km/h, 3,836 mph) is dead. At least for now.

In August, the space tourism company he founded pivoted to a slower supersonic Mach 3 (3,704 km/h, 2,302 mph) business jet. Virgin Galactic unveiled a mission concept for an aircraft that would carry 9-19 passengers at a cruising altitude of 60,000 ft (18,288 m).

Since Branson began selling off his stock in May and became a minority owner in the company, the new management has apparently shifted its focus away from suborbital space tourism to building a supersonic airplane for commercial travel on Earth.

The problem is that there are already a lot of companies working to do this, and Virgin Galactic is in last place, even as it scrambles to find new investment capital simply to begin development.

After sixteen years, this company has so far accomplished nothing, while spending probably more than $2 billion in private capital. It now wants more, even as Richard Branson has sold off his stock at a nifty profit. (I am no stock market expert, but if I has any interest in buying stock (I do not), this would not be the stock I’d buy.)

Branson however is not entirely off the hook. His entire empire, built on transportation and tourism, is in big trouble because of the Wuhan panic. It might now all collapse, tragically crashing to Earth as did the first SpaceShipTwo several years ago.

Spaceport America in New Mexico fires its head

The board of Spaceport America, Virgin Galactic’s launchsite for its SpaceShipTwo suborbital manned spacecraft, yesterday fired its long time Executive Directory Dan Hicks, at the same time governor of New Mexico removed one board member.

Hicks, the spaceport’s CEO since 2016, has been on administrative leave since June while allegations of mismanagement and abuse of authority have been under investigation by the New Mexico State Auditor and the New Mexico Spaceport Authority, the public body governing the spaceport.

The McHard Accounting Consulting firm, a forensic accounting firm based in Albuquerque, conducted an investigation which was then referred to the state auditor. Keyes informed a state legislative committee this summer the allegations included potential criminal activity.

Spaceport American had been made gigantic promises by Richard Branson back in the mid-2000s, including hundreds of tourist flights per year on SpaceShipTwo, all of which would bring lots of cash to the spaceport and to New Mexico. All came to naught. I suspect those failed promises are somehow connected to the accusations here.

Branson picks West Virginia to build test hyperloop underground train

Another Branson scam? Richard Branson’s new big venture to build a hyperloop magnetic underground train to transport cargo and people, dubbed Virgin Hyperloop, has chosen West Virginia as the location to build its first test prototype.

Virgin Hyperloop has picked the U.S. state of West Virginia to host a $500 million certification center and test track for billionaire Richard Branson’s super high-speed travel system, the company told Reuters. The center will be the first U.S. regulatory proving ground for a hyperloop system designed to whisk floating pods packed with passengers and cargo through vacuum tubes at 600 miles (966 kmph) an hour or faster.

Later, Branson announced the decision in a press conference on Thursday, joined virtually by U.S. Transportation Department Secretary Elaine Chao, the state’s Republican governor Jim Justice, and U.S. Senators from West Virginia Shelley Moore Capito, a Republican, and Joe Manchin, a Democrat.

…Construction is slated to begin in 2022 on the site of a former coal mine in Tucker and Grant Counties, West Virginia, with safety certification by 2025 and commercial operations by 2030, the company said.

Forgive me if I think is this nothing but a Branson con-job of the taxpayers and his investors. For example, though the company has raised $400 million of investment capital, much of that came from UAE investors. Considering that Branson took other Arab investors for half a billion on his Virgin Galactic scam, which after fifteen years has never flown an operational flight and will likely never make a dime of profit, I find this investment from the UAE astonishing.

Though the article doesn’t state where the remaining $100 million of cash came from, I suspect it is taxpayer money, from both federal and state coffers.

I am very dubious any of this will ever happen. A decade hence I expect the system will still be in development, with Branson calling for more tax dollars and new investors. Maybe by then he’ll do what he did with Virgin Galactic, go public and he sell his stock for a big profit, leaving others holding the bag.

Branson selling 25% of Virgin Galactic shares to save airline business

Capitalism in space:It appears that Richard Branson is selling about 25% of shares in Virgin Galactic in order to prop up his airline and travel businesses that have been crushed by the Wuhan flu panic.

Branson’s Virgin Group may sell as many as 25 million shares in the space-travel firm, with the proceeds going to his leisure and travel businesses, according to a statement on Monday. The 69-year-old Briton is trying to save Virgin Atlantic, which has struggled to qualify for a UK-supported loan program aimed at helping businesses survive the worldwide coronavirus pandemic. He’s seeking outside investors for the airline, while also weighing an infusion of his own funds.

The irony here is that Virgin Galactic has been a big financial money sink since its inception in the mid-2000s, having never flown a single customer in its fifteen-plus year existence. However, Branson has bamboozled a lot of people into buying its stock in the past year, since it went public, causing the stock to rise from its initial price of about $12 to about $18 to $20. This sell-off gives Branson an almost 100% profit on the stock, a good deal indeed for him, even if the company never makes a dime.

He says he is pumping the money back into his other businesses, but we shall see.

What the sale means however is that Branson no longer has a majority share in Virgin Galactic. The biggest shareholder is now Social Capital Hedosophia, created by venture capitalist Chamath Palihapitiya.

Virgin Galactic stock drops 25% since IPO on Monday

Capitalism in space: While this article focuses more on jabs taken by the head of British Airways against Richard Branson and Virgin Galactic, it contains one tidbit of real note:

Shares in Virgin Galactic have fallen by more than a quarter since it went public at the start of the week, wiping more than $600m (£464m) off its value.

On Monday, the initial offering price for stock in Virgin Galactic was $12.93. At the moment it is trading in the mid-$9 dollar range, with the low earlier today of $9.09. Overall the stock lost about 25% of its value in a week, indicating properly that its value had been inflated by Branson and his partners in that initial offering.

But then, inflating the value of Virgin Galactic has been Richard Branson’s mode of operation since 2004 when he founded the company. I continue to wish the company success, but have become exceedingly skeptical about it.

And to change my mind the company is going to have to finally actually accomplish something, rather than make empty promises that never come true.

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