Virgin Galactic shares rocket on US market debut

Shares in Virgin Galactic (VG) have taken off on their market debut in New York, rising by up to 8%.

It became the first space tourism firm to offer shares after the completion of a merger on Friday that saw Sir Richard Branson retain a 51% stake in the business.

The tie-up with Social Capital Hedosophia – a publicly-traded shell company owned by former Facebook executive Chamath Palihapitiya – meant VG could bypass the traditional flotation process.

Virgin Galactic's VSS Unity comes in for a landing after its suborbital test flight on December 13, 2018, in Mojave, California. - Virgin Galactic marked a major milestone on Thursday as its spaceship made it to a peak height, or apogee, of 51.4 miles (82.7 kilometers), after taking off attached to an airplane from Mojave, California, then firing its rocket motors to reach new heights. (Photo by Gene Blevins / AFP) (Photo credit should read GENE BLEVINS/AFP/Getty Images)
Image: Virgin Galactic’s VSS Unity comes in for a landing

He paid $ 800m for a 49% stake.

The business had a market value of $ 2.3bn on completion of the merger.

Shares are trading on the New York Stock Exchange, under the ticker SPCE. They closed the day 1.2% up.

Sir Richard, known for his love of grabbing people’s attention, attended the launch in a space suit.

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He said on the trading floor: “We believe Virgin Galactic is ideally positioned to capitalise on the fast-growing, multibillion-dollar commercial space market and ultimately open space to thousands of new astronauts.

“Today, we accomplished one mission, and as we bring more and more future astronauts to space, we look forward to accomplishing many more.”

Sir Richard Branson was on hand for the launch of the share offering
Image: Sir Richard Branson was on hand for the launch of the share offering

The tycoon is facing stiff competition to win the race to complete a commercial space flight.

Blue Origin, the space business of Amazon founder Jeff Bezos, is the other main contender while Elon Musk’s SpaceX is also in the hunt.

Sir Richard told Sky News in July that he hoped to go up himself next year – followed by the first paying customers – in the wake of two full test flights of VG’s spaceship, the VSS Unity.

Sir Richard Branson has told Sky News he’ll be going into space before tickets are sold to the public.
Sir Richard Branson: I’m going into space

It is hoped that the investment will fund expansion to allow for greater capacity in future.

VG has collected $ 80m in deposits and fares to date. Customers include actor Leonardo DiCaprio and pop star Justin Bieber who have paid around $ 250,000 for a 90-minute flight that allows passengers to experience a few minutes of weightlessness.

Commenting on the race with Blue Origin, VG chief executive George Whitesides told CNBC’s Squawk Box: “Ultimately we think this is going to be a capacity constrained market – more people are going to want to go to space than either of us can bring in terms of service.

He added: “”Globally we think around two million people can experience this over the coming years at this price point.

“Over time we’ll be able to reduce that price point and at that point the market just explodes, it’s 10 times as many at 40 million people.”

The company’s market debut provided some welcome relief for Wall St after a turbulent period for flotations that saw WeWork’s parent abandon its IPO while fitness startup Peloton Interactive was among those struggling.

VG’s launch may well have been supported by improved wider market sentiment that saw the S&P 500 hit a record high on opening – boosted by growing hopes of a breakthrough in the US-China trade war and expectations the US Federal Reserve is to cut interest rates again this week.

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