Virgin Galactic shares came under pressure on Friday, falling 2% to just over USD 25 per share. For the week, the stock has shaved off nearly one-third of its value.
Founder Richard Branson via Virgin Investments cashed in more than 10 million shares in recent days, raking in USD 300 million in the interim. Branson’s share sale comes weeks after Virgin Galactic completed its maiden spaceflight with a full crew including the billionaire himself.
According to reports, Branson plans to direct the proceeds from the share sale toward the company’s languishing leisure and travel units, which are still dealing with the fallout from COVID-19. In addition, the funds will go toward other ventures, including those that are new or already established.
Branson hasn’t totally cashed out of Virgin Galactic and still owns more than 46 million shares, which at the current share price is worth more than USD 1 billion. Nonetheless, Branson has been on somewhat of a selling spree and also unloaded more than USD 150 million worth of shares in the spring, when the stock was trading in a similar range.
Wall Street Wallop
Virgin Galactic generated a great deal of hype in early July around the time of the fully crewed space mission. During that phase, Virgin Galactic shares were trading in the mid-to-high USD 50s range, but the excitement didn’t last, and shares have since been roughly halved. Investors have clearly moved on, if only for the time being.
For the next couple of months, Virgin Galactic will be focused on maintenance, which is less exciting for Wall Street. As a result, a string of analyst downgrades has hit the stock, which hasn’t helped the sentiment around shares. Morgan Stanely lowered its rating from equal weight to under weight, citing an expected pullback in the stock as the excitement from the historic mission begins to fade.
Credit Suisse also lowered its rating on the stock given that there is not much to look forward to for the foreseeable future. Once Virgin Galactic ramps up for its next space mission, Wall Street firms could flip from sour to positive on the stock.
Virgin Galactic has ambitious plans for frequent spaceflights that could generate billions of dollars in revenue each year, depending on the number of spaceports the company builds. If they pull it off, it could help the long-term performance of the stock.
This article was originally posted on FX Empire