NEW YORK (BLOOMBERG) - Virgin Galactic Holdings filed to sell as much as US$500 million (S$676 million) in shares following a rocket-powered test flight by founder Richard Branson that won Wall Street praise as a "marketing coup."
The success of the hour-long mission to more than 80 km above Earth boosted Virgin Galactic's plan to start offering tourism trips next year. But the shares tumbled the most in almost seven months after the disclosure on Monday (July 12) of the potential stock sale, which suggested the company's need for additional funds as it prepares its commercial debut.
"Welcome to the dawn of a new space age," Mr Branson told guests on Sunday at the Spaceport America complex near the town of Truth or Consequences, New Mexico.
Mr Branson's achievement is a "massive marketing coup" for Virgin Galactic that will be hard for the general public to ignore, Canaccord Genuity analyst Ken Herbert said in a research note. "The challenge now will be for the company to maintain the momentum and establish a flight plan in 2022 that can demonstrate a repeatable and increasing commercial launch cadence."
Virgin Galacticshares plunged 17 per cent to US$40.69 at the close in New York, the biggest decline since Dec 14. The volatile shares, which have seesawed in recent weeks, doubled this year through July 9 as the company got its test-flight programme back on track.
Virgin Galactic plans to begin working through a backlog of around 600 confirmed customers in early 2022. The company has said it will resume ticket sales after the summer's test flights, with executives saying that fares will be higher than the prior price of US$250,000 a seat.
A price of US$300,000 should be attainable, suggested Will Whitehorn, a former president of Virgin Galactic who helped establish the company.
"Now that it works, I think they'll be able to sell it at a premium," he said.
The suborbital journey kicks off a landmark month for the future of space tourism, with Mr Branson demonstrating Virgin Galactic's capabilities nine days before Amazon.com founder Jeff Bezos plans to fly on a rocket made by Blue Origin, his space venture. Both companies envision businesses catering to wealthy tourists willing to pay top dollar for a short period of weightlessness and an unforgettable view of the Earth and heavens.
Virgin Galactic's test flight demonstrated that such trips - once the stuff of science fiction - are becoming increasingly realistic.
While mostly accessible only to a tiny number of super-wealthy customers, they would add a new dimension to a burgeoning industry of private-sector space companies with plans for voyages to the International Space Station and new human outposts.
Mr Branson and his fellow crew members experienced a few minutes of weightlessness as the Unity reached its peak altitude.
"So I looked out the window and the view is just stunning," operations engineer Colin Bennett said afterward. "It's very Zen; it's very kind of peaceful up there as well."
Mr Branson, who founded Virgin Galactic in 2004, said the memories of seeing the Earth from space will stay with him.
"I'm never going to be able to do it justice," he said. "It's indescribably beautiful."