Virgin Galactic shares have taken a hit after the spaceflight business announced intentions to sell up to $500 million (£360 million) in stock – only a day after the company’s founder, Richard Branson, made a journey to the edge of space.
The stock of Virgin Galactic had gained by nearly 9% in pre-market trade on Monday but then fell by as much as 14% after the firm announced it planned to sell shares to generate money.
In a statement to the US Securities and Exchange Commission, the business, which was created by billionaire entrepreneur Branson in 2004, announced that it had engaged in a distribution agency arrangement with Wall Street investment banks.
The profits of the sale will be used for “general business objectives, including working capital, general and administrative affairs, and capital expenditures for its manufacturing capabilities, development of its spacecraft fleet, and other infrastructure improvements,” according to Virgin Galactic.
While investors were originally thrilled with Virgin Galactic’s successful first fully crewed test flight, current shareholders were not pleased with the possibility of having their holdings reduced by the proposed share issuance, resulting in a drop in the stock price.