Virgin Galactic Stock Under Pressure as Chairman Chamath Palihapitiya Sells His Stake for $213 Million

By Mariliana Fotopoulou Friday, March 5, 2021

Virgin Galactic chairman Chamath Palihapitiya.

Virgin Galactic chairman Chamath Palihapitiya sold his personal stake of $213 million in the spaceflight company, according to the filing with the SEC, or US Securities and Exchange Commission. As a result, Virgin Galactic stock (SPCE) is trading about 6% lower in pre-market trading today.

Virgin Galactic Stock Under Pressure

The billionaire entrepreneur offloaded 6.2 million of his Virgin Galactic shares at an average price of $34.32 this week, as per the filing. Palihapitiya and his partner Ian Osborne now have a remaining stake of 6.5% in the space-tourism business, which translates to 15.8 million shares. Palihapitiya previously sold $100 million in shares in December 2020.

Virgin Galactic stock has soared roughly 150% since the company’s merger with Social Capital’s special-purpose acquisition company (SPAC) in 2019.

Since then, Palihapitiya has founded a number of SPACs that have merged with companies from various sectors, including health insurance, financial services, real estate, and more. Among these companies are also Opendoor Technologies Inc. and Clover Health Investments Corp.

This has helped Palihapitiya make massive profits, with the billionaire entrepreneur securing over $4 billion through blank-check companies. Facebook’s early senior executive has largely contributed to the growth of SPACs.

Virgin Galactic’s merger with Social Capital made the startup the first publicly-traded space-travel business in the world. Virgin Galactic has secured around $800 million through the merger, including Palihapitiya’s direct investment of $100 million.

Virgin Galactic stock is down around 49% since the business delayed its next space flight. The space-travel company is now worth roughly $7.2 billion. The space business made its public debut in October 2019, following the merger with Social Capital.

“Virgin Galactic is making history again today as it becomes the world’s first and only publicly traded commercial human spaceflight company,” said former CEO George Whitesides at the time.

“For the first time, anyone will have the opportunity to invest in a human spaceflight company that is transforming the market.”

However, the road to growth was not easy for the space-travel business, even though hundreds of clients are waiting for their 90-minute space flights, priced at $250,000 per person.

In 2014, one of the company’s space jets broke up in mid-flight, killing one pilot and injuring another and halting the company’s plans.

The space industry has seen a number of financial stories recently. Startup Savant reported earlier this week that Spire Global entered into a SPAC merger with NavSight Holdings.

Summary

Virgin Galactic chairman Chamath Palihapitiya offloaded his personal stake of $213 million in the space-travel business, paving the way for Virgin Galactic stock to fall 6% Friday.

About the Author


Headshot of Mariliana Fotopoulou

Mariliana has an MSC in Consumer Analytics and Business Strategy. She has a special interest in fast-moving industries and Big Data.

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