Virgin Galactic Chairman Chamath Palihapitiya Sells Entire Personal Stake Worth $213 Million
- 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.
46 responses to “Virgin Galactic Chairman Chamath Palihapitiya Sells Entire Personal Stake Worth $213 Million”
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I see George Whitesides is also departing…
https://www.bloomberg.com/n…
…which for some reason makes me think about rats and sinking ships 🙁
My thoughts exactly
I can see why you’d think that. But I think Whitesides was more sloth than rat. His exit seems to very much resemble those of Gerst and Hill from NASA – first get moved to some nothingburger kicked-upstairs “job,” then get shown the door after a decent interval for job-hunting elsewhere.
But I agree that VG could well slip beneath the waves before year’s end without ever having flown a paying customer or made good on any of its other big talk.
Yes, ship is sinking… The leaders are cashing out… Wonder how soon before it fully implodes.
Doug, you should pull everything together you have written over the years into a good tell all book on the failure of the Ansari-X Prize, Burt Rutan and Virgin Galactic. All the hype since 1996. It will sell well.
The sad thing is it could have turnout well if Sir Richard Branson hadn’t bought into the Ansari X-Prize hype and Burt Rutan’s desire for a bigger Spaceship. Of course he is in an excellent position to play a victim of bad information – “I trusted them”
The first really.bad.move was using a hybrid motor instead of tapping one of their Mojave neighbors for a KISS liquid engine. As I remember there were several options including XCOR.
Yes, afraid to sail their own ship. Okay I’m a fan of XCOR especially when ULA got interested (VG never got that kind of interest from outside – if even the legacies didn’t think VG had anything….). Not wishing ill luck on VG, just blaming them a little bit for squandering something that could have been great. Oh well, there’s always next year (VG theme song)
Maybe this time there isn’t next year.
The problem was that Burt Rutan was an airplane designer who had no knowledge of rocket engine technology. To him engines were something you simply ordered and not developed. Then there was his fixation with air launch systems, again, since as an airplane designer it is what he knew how to do. The great thing about SpaceX and Blue Origin is both have shown that for spaceflight air launched systems are the equivalent of airships to air transportation.
Yep, he hit all the politically correct talking points about “saving the planet” so he will get a pass on it.
In the words of George Carlin “the earth will be just fine. It’s the humans that will be fucked.” Or words to that effect.
Pump and dump. We’ve watched the pumping operation, now the fat rats dump and leave the rubes who bought in to pay the price. It’s ugly to look at, but this is the cycle that most entrepreneurs work for. Given the fact that most enterprises fail to product a viable product that will survive in the marketplace, this is the very cycle that the business community engineers. The right embraces and worships it, the left is offended and wants to destroy it. Experimentation in the lab shows that it’s the cycle that results in a society with the best compromises of outcomes for most of the people in a society and move it along. But it can be governed. This is us. This is humanity, look at it. Understand it, and try to make it better. Learn from the people who tried to overturn it, only to make a system far far worse for everyone involved. But know and understand the kind of person who runs these operations are rapists and not ‘family men’.
One of the unfortunate side effects of all the chicanery is that people with ideas that might work and make a modest profit are damaged by several items. One is the investor search for the big quick buck and aversion to the hard slog of creating a reasonably profitable business. Another is the risk aversion caused partially by the high failure rate of the big quick buck investments. Anything perceived as having a 90% failure rate is not going to attract investors that would be satisfied with a 20% annual ROI.
As far as I can tell, the majority of useful innovation comes from in house development for existing product lines. Diametrically opposed to betting the company risks chasing rainbows. There are millions of incremental improvements that will be unnoticed by the majority that make our lives better over the decades.
The spectacular breakout successes are fantastic, but there is a downside to the attitude. One of them is the desire to control these madmen for their own good.
Yes, the breakthroughs are just like wildcatting oil wells, 9 out of 10 fail. The problem is picking the one which will strike oil. That is why free markets economies have been so successful in driving progress since the Industrial Revolution, anyone gets to try and the market picks the winners. But as in any evolutionary system there are lots of failures along the way.
American business expectations are totally out of whack. They got established in Dixie, and the Chinese know how to titillate them and stoke them to modern highs. Slavery damaged this country in so many ways. Expectations on return on investment is one of the major blows dealt the United States. At this point the Old Protestant Yankees are gone. They’ve faded away. Dixie won the peace of the post Civil War US.
I think you are making it too complicated and rolling off the road to a degree. As I do reading this comment before posting. Many of the investor expectations are out of whack. Successful businesses are not almost by definition. And there are quite a few examples of both that one can cherry pick as examples.
I like to think about corrective actions going forward acknowledging the problems and still working the strengths. To me, the number one problem is that expectations of ROI are mismanaged in so many directions from minimum wage to corporate finance to purchase of a house. There is a constant barrage of chatter on Getting It Now, with a strong sub current of It’s someone else’s fault,. To the degree that these memes are accepted, they can become toxic. And they are so pervasive because they tell people what they want to hear instead of what they need to know.
Another sub current of the problem is the desire to apply force to solve an issue instantly instead of letting it work itself out. The force used in the War on Drugs or the attempts to force employers to pay a Living Wage are a couple of examples of trying to apply external force to an interior problem and carry failure in their initial approach. Same as attempting to force business to conform to some standard other than seeking profit, which also carries the seeds of its’ own failure.
Going forward, I think the keys will be in shifting towards a more honest evaluation of exchanging quality for quality in the direct dealings with people And walking away from third parties trying to control that which should be none of their business. Let the wildcatters get rich or go broke on their own terms while mainstream business continues along the “normal” 5-10% profit margin that is so much of the foundation of national prosperity. Let banks take their own risks on over lending to people that should settle for more modest houses in their own self interest. Let people entering the labor force understand that a business is and should be in business to make money by supplying a product or service, and therefore pay is based on what they produce and not what they or some third party thinks they need.
There are plenty of abuses by business, politicians, pressure groups and such to go around. But attacking perceived wrongs with a quick fix is often counterproductive to working the underlying problems. Working a small business as I do, I see a lot of skewed expectation that does not admit to a quick fix.
The libertarian rhetoric sounds as good as how communism CAN work …. maybe. But these things have all been tried over past 30 years. And they’ve been disasters. Yes they have not be instituted in their most pure and distilled form, and like the communists, no doubt, you’d argue it has not been tried yet because of that. Meanwhile the two power blocs that use government force to institute policy have crept past us, and one of them by co-opting those libertarian business men and providing them the predictable business returns that come from use of force that they turned off in the US. Do you know what a free business man does? He goes to a government controlled economy for predictable return on investment. That’s just the real world reality of what happens. And the free market nation fails in the face of competition from mixed mode economies who can tune their enterprises to win against the free marketeer or better yet, buy him out, or co-opt him.
I disagree with almost every sentence of this comment. That is unusual as I normally have considerable respect for your thoughts even when in disagreement. It is quite certain that we see the world through a very different lens.
I will limit my comment to saying that most libertarian principles have created prosperity in the limited amounts tried, and communism has failed in the limited amounts tried. And that a free business man that goes to a government controlled economy is not a free business man.
The overwhelming majority of businessmen don’t give a hoot about business or political theory let alone purity. They care about one thing. Maximal payback for minimal investment. They go where the money is, and the only freedom they’re interested is the freedom to pursue it wherever it is to be found.
Obviously there are many that operate, or try to operate as you say. The ones that stay in business know they have to take care of their customers and their employees in their own self interest. Except for government contracting and corruption , the ones you discuss don’t last.
Most of the work I do is still verbal and handshake agreements. The only times I have been burned in the last couple of decades is when there was a written contract. Most people are good. Enough are not to reinforce your opinion.
I would argue that a lot of serial entrepreneurs are also as I describe. When you’re running a real business that manufacturers and sells real product, you don’t have time for anything else.
The problem is how to govern it without killing off the economic innovation. The SEC has been one solution, forcing the financials to be published and transparent while lawsuits by shareholders are another and would be appropriate here. The third option would be better educating the small investors most of whom aren’t able to understand financial statements or make use of the tools available to do due diligence on their investments.
I think Western Europe as done a very good job of governing this process without killing it.
How so? Specifically what do they do that is different?
Their industrial sector is intact and delivering products the world wants. SpaceX aside, the US industrial base is getting its ass kicked by the American industry that was shipped to Asia. Their business men are held prisoner within the bounds of the EU and regulated. They’re still plenty rich.
Several of their sectors are state owned like Airbus and so do not need to show a profit, or innovate. High tariff walls keep the domestic markets for them, for example a 10% traffic on automobiles versus the Pre-Trump administration tariff of 2.5% on automobile imports into the U.S.A. When President Trump tried to follow similar policies he was attacked as being “anti-free trade”. Most of wealth of their business leaders is from their investments outside the EU, like Sir Richard Branson.
But they do show profit, maintain employment, maintain investment in tools and production capability. They’re winning where the free market loses again and again. Look at how the Chinese can react to the economic upheaval of Covid. Because they own the tools, and can do real world work. Even during Trump the trade defect with China constantly climbed. The last time I heard the trade defect go down with China was during the Obama administration. American businessmen have no interest in owning tools or dealing with the difficulties of keeping a work force. That’s why they keep losing to the state regulated industries overseas.
That and those state regulated industries stealing western innovations and technology. The problem is President Trump didn’t raise the tariff barriers high enough and there wasn’t enough time for them to really take effect.
In terms of COVID, China was lucky to get hit with the “B” strain that was harder to transmit, not the easier to transmit “C” strain that ran loose in the West. They also were able to lock their borders down without anyone crying Xenophobia and Discrimination. Vaccination and masks are only part of the solution, the other part is strict travel restrictions including mandatory quarantines so once you clear a region of it, it doesn’t return, which was the real secret of China, Taiwan, New Zealand and numerous Pacific Islands that controlled it. It is just the same basic science that has always worked against infectious diseases, but which interfered with folks wanting to “jet set” around the world.
https://www.news.com.au/wor…
Coronavirus Australia: Three different strains of virus identified by Cambridge University researchers
APRIL 11, 20207:23AM
Victoria Craw
“Surprisingly however, researchers found the A variant was not Wuhan’s dominant virus type. Instead, mutated versions of A were found in Americans that lived in Wuhan and A-type viruses were also found in patients in Australia and the US.
Type B is derived from A and separated by two mutations. This was the main type found in Wuhan city and across East Asia.
However it has not been found much beyond East Asia, suggesting a “founder event” in Wuhan or some form of resistance to the strain outside of Asia.
Instead, a third virus strain known as C – which is the “daughter” of B – has been found across Europe and is also present in Sydney, according to the virus tree.”
Europe has also had a chronically much higher unemployment rate than has the U.S. The EU GDP has been losing ground to that of the U.S. for a long time.
The reason the trade deficit with China climbed under Trump was because the U.S. economy was great and people had more money to spend on Chinese goods. The reverse was true under Obama during the Great Depression 2.0.
American business has no problem with owning tools and employing people. What they had a problem with was the highest corporate tax rate in the world. That made putting the tools and people almost anyplace else a better deal. Trump did a lot to fix that. Now it seems the Usurper administration is fixing to undo all that.
No they’re not. The standard of living in Europe has been well below that of the U.S. for decades – as I saw first-hand when I worked there for a couple of years in the late 70s – and the gap may well be widening given that the average citizen of a European country is a decade older than the average American. Then there’s the new “energy poverty” now rampant in places like Germany because of idiotic “Green” policies like abandoning nukes for windmills.
Then use kerolox.
At the time SS1 was being developed, Tim Pickens owned a 12k kero/Lox engine. He was the propulsion guy On it at the time. Burt made the call on the hybrid.
Yes, the Ansari X-Prize rushed the development of SpaceshipOne, which was being fully funded by Paul Allen independent of it, resulting in poor choices being made that carried over into SpaceshipTwo. It is one of the ways the Ansari X-Prize set back the development of Space Tourism by a generation. The other was by distracting Sir Richard Branson, who actually registered the VG name before the Ansari X-Prize was founded, from seeking designs to fund. Instead he let the Ansari X-Prize pick the design with the disastrous results we have seen.
On net, given the information I have, I disagree that the X-Prize set the industry back. It generated interest where it hadn’t existed before. That the threads created by it didn’t visibly pan out makes it look worse than it was IMO. In the tangled threads of development, I consider it quite possible that the interest generated contributed to some people getting involved that have made a difference. Neither side of this argument is provable as far as I know, and I have no wish to generate yet another “yes it was, no it wasn’t” thread. So I’ll leave it at that.
One long standing problem in space advocacy is the belief that building interest in space somehow leads to progress. There is no evidence of that even in terms of NASA funding while there is no evidence that the Ansari X-Prize attracted anyone to Space Tourism that made a difference. It had zero impact on Paul Allen, Sir Richard Branson, Jeff Bezos or Elon Musk. The number of customers who signed up for VG is about the same that signed up for the proposed Phoenix Tourist rocket in the early 1980’s.
NASA and the excitement it generated with the secondary pulse of sci-fi movies in the 70’s and 80’s pumped the generations of space exploration the US has done above and beyond the rest of the world. I think you’re reading of events is wrong. For me it was Voyager. I went thru a Solar System nerd kick when I was in 4th grade so was pretty well familiar with the limits of our understanding of the gas giants even then. When Pioneers and 10 and 11, and Voyagers 1 and 2 kicked down the door of the outer Solar System I was hooked. For most people it was Apollo. It’s till a very lasting and effective pulse from that era. Everything else has faded except that. VG did find a willing customer base, but it could not serve even them. VG sold first class easy space travel, and found a willing customer base in the people who fly first class. The rest of us fly economy. People have latched onto Space X because they believe they can deliver. Don’t you worry, your Musk moment in the sun is coming. When people start flying in those large launch vehicles and reach out to settle space. The fever is going to catch again. You should feel confident, it’s going to be led by the Doge, and he thinks like you. You right wing authoritarian types are going to love it.
It may have inspired some individuals to spend their life working for NASA or its contractors just as a chance encounter as a kid with a dinosaur fossil inspired some to study paleontology, but in terms of funding it’s impact has been near zero. The viewgraphs Jeff Bezos is using for space habitats are no different than those used by space advocates in the 1970’s. And the habitat design is as much fantasy eye candy as it was then. Really there has been no movement, not even in levels of public support for NASA funding, since Sputnik.
Funny how advocating freedom and individual choice has become “authoritarian”, while the liberals who claim not to be authoritarians use authoritarian tactics to ban books and those who don’t agree 100% with them. Have you ever read the “Bridge at Andau” by James Michener who was a life long member of the Democratic Party? You should, it is very enlightening on those subjects. The current Democratic politicians are acting much like the McCarthy Era Republicans from the 1950’s or the Hungarian socialists, doing things they don’t like for “our own good”.
I like Elon Musk just because he isn’t doing viewgraphs but building rockets, rockets big enough they might actually be able to do something useful in space besides sending a couple of astronauts into orbit or a few small spacecraft to the planets. Really, IF, and that is IF, it works as advertised Starship/Super Heavy will be the first real breakthrough in space access since the 1960’s. And if not at least the videos are entertaining. Time will tell.
As for Mars, again it is just a pipedream to settle it, like suborbital tourism, going from one deep gravity well to another one with even worst local conditions to address. It makes no sense and is what happens when you aren’t able to shed your Earth Chauvinism and look at space settlement realistically. As I said before it won’t appeal to 99.99998 percent of humanity, and won’t attract much government, but the 100,000 or so of the 7.8 billion on Earth who will be able to adapt to living in actual space settlements will leave the Solar System to their descendants starting with the Moon and asteroids. As for Earth, the tech spinoffs from space settlement, near 100% recycling and CEA, will make the Earth a much better place to live and enable civilization to survive climate change without having to return to the pre-industrial era.
It’s you left-wingers who are the authoritarian types – as has been quite adequately demonstrated over the past year or so. Your accusations are entirely a matter of psychological projection.
Yes, but SpaceshipTwo is a dead end technology that couldn’t lead beyond such simple short parabolic stunt flights.
My limited Spanish renders your name roughly as Cheap Frank in English. But I believe you are Italian? Is that somewhere close to the true meaning?
There are so many inputs to decisions made historically that it is difficult to say if one of us would have made it differently given the facts that Burt had available and his personal history. Hindsight makes it easy to criticize, as does lack of skin in the game. I think hybrid is the wrong choice now, and I thought so at the time being surprised that the 12K wasn’t used.
All rockets are unsafe in that aspect because of the energy the fuel represents. Actually you could say the same for airplanes, steam locomotives and non-electric automobiles and trucks. The same energy needed to make them go also makes them dangerous in terms of fire and explosions. There was just such an explosion in California when a SUV full of immigrants suddenly caught fire and exploded.
No exemption for electric power either. Batteries have plenty enough energy density to be fire hazards as any number of incidents, both large (Dreamliner) and small (laptops, cell phones) have shown in recent years.
The problem is that those investment advisors usually get paid on commission or quarterly results so their interests are not aligned with their clients whereas the flight crew has the same interest in reaching their destination as their passengers. Those investment advisors/managers are rewarded short term while clients are seeking long term security. The focus on quarterly results by the large investment and retirement funds since WWII is one of the reasons the stock market, and corporations traded on it, have developed a short term focus (quarterly earnings) at the expense of long term strategy.
That is because entrepreneurs are focusing on IPOs instead of building companies. Two changes that would change the dynamics would be the end of quarterly earnings reports by public traded corporations and much stricter standards for IPOs. The business press needs to also do a more professional job of reporting on firms like they used to do. Few business reporters even have backgrounds anymore in economics or business.
It’s not going to happen. American business today is about the flash in the pan. It’s all about the IPO, and then the pump, and then the dump. That why the enterprise is made in the first place to set those processes into motion. It’s not about making a product and selling it.
We already have “stricter standards” for IPOs in the form of Sarbanes-Oxley. That hasn’t been good for IPOs, entrepreneurial innovation or investors.
Companies have been making quarterly earnings reports for a lot longer than there’s been an SEC to file them with.
Good luck with the business press. As with the rest of the press, they’re almost all idiots, people with ideological axes to grind or both.
Yep, short term thinking that has replaced a long term perspective. And schools have made it worst with their focus on standardized testing and industrialize learning.