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Virgin Galactic’s stock plummets after Richard Branson says No More Investments

Following the announcement by founder Sir Richard Branson that he would not be making any more financial investments in the space travel company, Virgin Galactic’s stock (SPCE) saw a 15% decline on Monday.

“After COVID, we don’t have the deepest pockets, and Virgin Galactic has got $1 billion, or nearly there,” Branson said to the Financial Times. I think it ought to have enough money to handle things on its own.

The billionaire launched Virgin Galactic in 2004 and assisted in its SPAC merger public offering in 2019.

Capital-intensive space-related businesses like Virgin Galactic have had to come up with strategies to weather difficult times due to an environment of rising interest rates.

The company’s announcement last month that it would lay off 18% of its workforce and concentrate on a new spacecraft that was anticipated to be more profitable caused the stock to soar by nearly 20% in a single day.

During Virgin Galactic’s third quarter earnings call, Michael Colglazier, CEO, said to analysts, “The big move we’re making here is pivoting the resources that have been put into the Unity flights and redirecting them over to get the Delta Ships done with the cash we have on hand.”

Colglazier also seemed upbeat about the fact that some of its biggest costs—like engineering and plant infrastructure—have already passed.

He stated that “the need for cash on hand is less than you may have seen from us in the past.”

Based on its $450,000 flight tickets, Virgin Galactic may be better positioned to withstand a “higher for longer” interest rate environment than its competitors, according to Andrew Chanin, founder of Procure Space ETF (UFO), who spoke with Yahoo Finance recently.

“Previous experiences have shown us that during challenging recessionary times, the extremely wealthy frequently retain their purchasing power,” Chanin said.

As of now, Virgin Galactic’s stock has dropped by roughly 42%. Before Monday’s decline, shares had increased by almost 50% over the previous month.