Virgin Galactic Chairman Chamath Palihapitiya Sells Entire Personal Stake Worth $213 Million

Chamath Palihapitiya (Credit: SCH)
  • Move follows Palihapitiya’s sale of shares worth nearly $98 million in December
  • Virgin Galactic shares continued weeks-long decline after news broke
  • Palihapitiya indirectly owns a large stake through Social Capital Hedosophia

by Douglas Messier
Managing Editor

Virgin Galactic Chairman Chamath Palihapitiya has sold 6.2 million personal shares in the suborbital space tourism company worth about $213 million. The sale zeros out his personal stake in Virgin Galactic.

The move follows Palihapitiya’s sale of 3.8 million shares worth $97.8 million in December. The nearly $311 million gain is more than triple the $100 million he personally invested in Virgin Galactic when it went public 16 months ago.

Palihapitiya continues to indirectly own 15.75 million shares with investor Ian Osborne through Social Capital Hedosophia (SCH) Holdings. SCH is a special purpose acquisition company (SPAC) that took Virgin Galactic public through a merger in October 2019.

Palihapitiya told CNBC that he remained fully committed to Virgin Galactic. He said he needs the money to fund a new venture that will help fight climate change.

Shares in Virgin Galactic slid by as much as 18 percent in the wake of the news on Friday. Shares are currently down by just under 11 percent to $26.98.

Virgin Galactic’s shares peaked at $62.80 on Feb. 11, which was two days before the start of a launch window that would have seen the SpaceShipTwo suborbital rocket plane VSS Unity make its first suborbital flight test in nearly two years.

Virgin Galactic then postponed the flight until May due to the need to make modifications to the ship to deal with electromagnetic (EM) interference. EM caused VSS Unity‘s computer to reboot in flight as the vehicle was attempting to fire its engine on Dec. 12. The reboot resulted in an aborted suborbital flight test.

The required modifications to VSS Unity have pushed back the completion of the vehicle’s flight test program to late summer or early fall 2021. A total of four additional tests are planned. Commercial space tourism flights will not begin until early 2022.

Prior to going public, Virgin Galactic and SCH forecast that commercial flights would begin in June 2020. The schedule has thus slipped by 18 months in the 16 months since Virgin Galactic began trading on the New York Stock Exchange on Oct. 28, 2019.

A key reason for the delay was a nearly catastrophic failure that occurred during VSS Unity’s second suborbital flight test in February 2019. The vehicle’s horizontal stabilizer was severely damaged during the flight. Then-Vice President of Safety Todd Ericson said he was amazed the company didn’t lose the vehicle and the three-member crew.

Modifications to VSS Unity delayed its return to flight for more than 14 months. The vehicle made glide flights on May 1 and June 25, 2020. It was not until Dec. 12 that Virgin Galactic attempted another powered suborbital test. The flight was aborted due to VSS Unity‘s computer reboot.

The on-going COVID-19 pandemic has slowed progress on the flight test program over the past year.