Virgin Galactic’s Next Challenge: The Flight of the Vested?

Richard Branson and other passengers float around in weightlessness. (Credit: Virgin Galactic)

by Douglas Messier
Managing Editor

This was supposed to be the Summer of Virgin Galactic. The company would complete the three remaining suborbital flight tests of SpaceShipTwo VSS Unity, the second one with Richard Branson aboard. The company’s newest space tourism vehicle, SpaceShipIII, would begin its flight tests.

Once VSS Unity tests were complete, engineers would spend four months making a series of repairs and upgrades to the spacecraft and its WhiteKnightTwo mothership, VMS Eve. And then in early 2022, the company would use both spaceships to fly tourists on suborbital joy rides that were originally projected to begin 15 years earlier in 2007.

Sounds easy enough, right? It wasn’t. The Summer of Virgin Galactic went about as well as the Summer of George on Seinfeld. If best laid plans of mice, men and Costanzas often go awry, Virgin Galactic’s schedules are guaranteed to move significantly to the right. Years to the right.

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Bank of America Rips Virgin Galactic for Failure to Disclose Out of Airspace Mishap on Richard Branson Flight

Richard Branson and other passengers float around in weightlessness. (Credit: Virgin Galactic)

Editor’s Note, Sept. 26: 2021: Story updated to reflect that Richard Branson began selling $300 million worth of Virgin Galactic shares on Aug. 10 the day before the FAA notified the company of a mishap during the July flight that carried the billionaire to space. The sale continued through Aug. 12.

by Douglas Messier
Managing Editor

Analysts at Bank of America who cover Virgin Galactic’s publicly-traded stock are not amused by the company’s failure to disclose that a SpaceShipTwo suborbital flight carrying founder Richard Branson flew outside of its assigned airspace on July 11, resulting in an investigation by the Federal Aviation Administration (FAA) and the grounding of the company’s only operational space plane.

“Point blank, in our view, it is unacceptable to have an event during a flight that, per FAA regulations, is considered a mishap and then claim that the mission was a full success,” analyst Ronald Epstein wrote in a note to investors. “The old adage, it’s easier to ask for forgiveness than permission, generally is a poor strategy in aviation.”

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Book: Virgin Galactic’s President Moses Believed Company’s Flight Projections were a “Pipe Dream”

Richard Branson’s space tourism company used similar numbers to go public on the New York Stock Exchange. Were investors duped?
Michael Moses

by Douglas Messier
Managing Editor

Nicholas Schmidle’s book about Virgin Galactic and SpaceShipTwo is coming out on Tuesday. In an essay he wrote for The New York Times, he recounted how Virgin Galactic President Michael Moses didn’t believe the company’s own flight projections when they were presented to him by its then-chief financial officer.

At one point, I was leaked a cache of internal documents. Some revealed the depth of Virgin Galactic’s oftentimes shaky grip on reality.

In 2013, Mike Moses, at the time Virgin Galactic’s senior vice president for operations, was sent an email containing a chart from Virgin Galactic’s chief financial officer at the time, Ken Sunshine. The chart showed a radical uptick in flight operations, projecting 75 flights in 2015, 194 in 2016, 229 in 2017 and 264 in 2018. “No chance in hell,” replied Mr. Moses, who is Beth’s husband. “These numbers are a pipe dream.” (Mr. Moses, through a representative, declined to comment on those emails.)

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SPACovirus Sweeps Space Sector

Richard Branson celebrates the first Virgin Galactic trade on the New York Stock Exchange. (Credit Virgin Galactic)
Wall Street’s latest easy money craze has attracted a growing number of space companies. But, just because they can go public, should they?

by Douglas Messier
Managing Editor

Seven space companies have gotten caught up in the SPACovirus sweeping through Wall Street. The impact on the space industry is going to be interesting to watch.

A SPAC is a special purpose acquisition company. It’s a publicly traded investment firm that, with outside investors, acquires or merges with another company, and then takes the acquisition public under its own name.

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Branson Wants to Take Virgin Orbit Public Through SPAC

Virgin Orbit Cosmic Girl Boeing 747 takes off from the Mojave Air and Space Port. (Credit: Virgin Orbit)

First Virgin Galactic. Now Virgin Orbit.

The Wall Street Journal reports that Richard Branson has hired Credit Suisse Group AG and LionTree LLC to take Virgin Orbit public through a special purpose acquisition company (SPAC) at a valuation of up to $3 billion.

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Wall Street Thinks Most SPACs are a Joke

Richard Branson celebrates the first Virgin Galactic trade on the New York Stock Exchange after merging with a special purpose acquisition company (SPAC). (Credit Virgin Galactic)

by Douglas Messier
Managing Editor

Over at Fast Company, William D. Cohan says professional investors and financial analysts have a low opinion of the special purpose acquisition companies (SPACs), which are being used by Virgin Galactic and six other space companies to go public. (SPACs are an inside joke on Wall Street, and the joke is on you)

SPACs are investment vehicles that are already publicly traded on the stock exchange. Their goal is to acquire or merge with other companies, which then go public under their own names.

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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.

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Virgin Galactic Chairman Declares We’re Not a Bubble Stock as Shares Slide

Chamath Palihapitiya (Credit: SCH)

by Douglas Messier
Managing Editor

Virgin Galactic Chairman Chamath Palihapitiya was on a financial news network yesterday denying the stock was a bubble, a claim that hasn’t aged well in the short term.

With shares soaring to a high of $41.55 only a week ago, they are hovering at around $23 as I writing this story. The shares were offered at $12 when Virgin Galactic went public last Oct. 28 and rose sharply in recent weeks.

The shares slid after Virgin Galactic reported a larger than expected loss for the fourth quarter 2019 and hinted at delays in the start of commercial suborbital flights, which were to have started in June. Analysts have downgraded the stock based on the earnings report.

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2019: A Busy Year in Suborbital Flight

Blue Origin’s New Shepard reusable, suborbital rocket. (Credits: Blue Origin)

by Douglas Messier
Managing Editor

Last year was a busy one for suborbital flights as Jeff Bezos’ Blue Origin and Richard Branson’s Virgin Galactic conducted a combined four flights of their crewed suborbital vehicles. Despite hopes to the contrary, neither company flew paying tourists on their spaceships.

There were also 26 sounding rocket launches that carried scientific experiments and technology payloads above the atmosphere. The year saw:

  • Japanese startup Interstellar Technologies conduct a successful launch of its Momo commercial sounding rocket;
  • Texas-based Exos Aerospace continue to struggle with its reusable SARGE booster; and,
  • the first suborbital launch ever achieved by college students.
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Virgin Galactic Adds Members to Board of Directors

WhiteKnightTwo and SpaceShipTwo take off at 7:11 a.m. PST from the Mojave Air and Space Port. (Credit: Kenneth Brown)

New York, USA, October 10, 2019 (Virgin Galactic PR) — Social Capital Hedosophia Holdings Corp. (“SCH”) and Virgin Galactic today announced that Wanda Austin, Craig Kreeger and George Mattson have agreed to join the board of directors of Virgin Galactic Holdings, Inc. (“VGH”), the company resulting from the pending business combination transaction involving SCH and Virgin Galactic. The board appointments are contingent on approval by SCH’s shareholders and the completion of the business combination between SCH and Virgin Galactic.

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A Short Review of Virgin Galactic’s Long History

SpaceShipTwo fires its hybrid engine. (Credit: Kenneth Brown)

by Douglas Messier
Managing Editor

Today, Sept. 27, marks the 15th anniversary of Richard Branson announcing the launch of Virgin Galactic Airways. It’s been a long, winding road between that day and today, filled with many broken promises, missed deadlines, fatal accidents and a pair of spaceflights.

This year actually marks a double anniversary: it’s been 20 years since Branson registered the company and began searching for a vehicle the company could use to fly tourists into suborbital space.

Below is a timeline of the important events over that period.

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Virgin Galactic-Social Capital Hedosophia Deal Goes Further

A view from inside the cockpit. (Credit: Virgin Galactic)

At a meeting on Monday, shareholders of Social Capital Hedosophia (SCH) gave approval to the public company to move forward with an $808 million merger deal with Sir Richard Branson’s Virgin Galactic.

“Holders of 66,333,089 of the Company’s ordinary shares, which represents 76.9% of the ordinary shares outstanding and entitled to vote as of the record date of August 8, 2019, were represented in person or by proxy,” Social Capital said in a document filed with the Securities and Exchange Commission (SEC).

The shareholders approved two resolutions. The first extends the date for completing the merger from Sept. 18 to Dec. 18, 2019.

The second resolution “extends the date on which the Trustee must liquidate the trust account established in connection with the Company’s initial public offering” if the SCH and Virgin Galactic do not complete the merger by Dec. 18.

Under terms of the deal, SCH would own up to approximately 49% of the combined space tourism company, which would be publicly traded. SCH founder Chamath Palihapitiya would become chairman of the board.

For more details about the deal, read the announcement here.

It’s Showtime for Virgin Galactic’s Latest Cash Infusion Plan

Richard Branson with the pilots of SpaceShipTwo. (Credit: Virgin Galactic)

CityAM reports that Sir Richard Branson’s $808 million deal to merge Virgin Galactic with venture capitalist Chamath Palihapitiya’s Silicon Valley investment vehicle faces a crucial vote of confidence on Monday.

Would-be shareholders will vote on whether to back the entry via investment vehicle Social Capital Hedosophia (SCH), or whether to withdraw their cash entirely.

SCH was formed in 2017 and already trades on the New York Stock Exchange. It plans to merge with Virgin Galactic, bringing the space travel venture onto the market in an unconventional move which would avoid the traditional risks of an Initial Public Offering.

The deadline for this is fast approaching, and looks set to be missed, however, which would see SCH go into liquidation.

In that case, investors get back $712m (£578m) next week. They will vote tomorrow on whether to allow this to happen or whether to postpone the deadline for a merger until December and subsequently keep their cash in the Virgin Galactic float.

Virgin Galactic and Social Capital Hedosophia announced the merger, actually a reverse acquisition, two months ago. The deal would see Palihapitiya become chairman of the company and Adam Bain join the board. Bain previously served as chief operating officer of Twitter.

Virgin Galactic is currently spending about $16 million per month ($190 million annually),. according to a presentation filed with the Securities and Exchange Commission (SEC).

Virgin Galactic previously received an investment of $390 million from an Abu Dhabi’s sovereign wealth fund. Branson broke off a MOU with Saudi Arabia for a $1 billion investment with an option for $480 million more in Virgin Galactic, Virgin Orbit and The Spaceship Company.