Virgin Galactic shares plummet after frenzy stock market debut

On the 10/29/19 at 7:33AM


Adrien Paredes-Vanheule

Dow Jones Newswire
Virgin Galactic Holdings Inc. on 28 October became the first space tourism company to be traded on the New York Stock Exchange under the ticker SPCE.
(Twitter Virgin Galactic)

The free float concerned 40% of Virgin Galactic's capital. On Monday, the opening price for Virgin Galatic's stocks was $12.34 and rose to $12.93 before closing at $11.75. The company secured a $2.3bn market capitalisation for its trading debuts.

For the purpose of its initial public offering, the firm founded by British billionaire Richard Branson had merged on 25 October with a public investment vehicle Social Capital Hedosophia (also known as special-purpose acquisition company). Social Capital Hedosophia agreed on a $820m deal with Virgin Galactic to acquire a minority stake in the space tourism company and support its funding.

As reported by Dow Jones, Virgin Galactic companies faced a net loss of $138.1m on $2.8m in revenue in 2018. Through six months this year, it tallied losses of $86.7m on $2.4m in revenue. Virgin Galactic is seeking to start commercial operations on mid-2020. The company said it already has customer reservations from more than 600 people in 60 countries representing approximately $80m in total collected deposits, and over $120m of potential revenue.

Other space IPOs on the way

Earlier this year, Asset News had interviewed Mark Boggett, chief executive officer of space-focused private equity firm Seraphim Capital, on forthcoming IPOs in the sector. New space companies, also branded space tech, are the best positioned for future listings in his view.  

"New space IPOs will definitely take place in the next five years. Spire Global would be a good candidate. It is a small satellite operator with 100 satellites in orbit currently and that number will increase by 50% next year. As they need to replace satellites every three to four years, they need significant capital to maintain that constellation. Being a public company with access to fresh capital more frequently would be a sensible approach. In that sense, new space companies with high level capital requirements would go listed while others will remain private for longer," Boggett told Asset News.

He suggested that the IPO trend would be supported by two factors: the consolidation of space market players and the acquisition of emerging companies with new business models and technologies.

"There has not been too much M&A among new space companies yet but we estimate that time is coming. We are looking forward to the first $1bn acquisition of a new space company," he said.

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