Virgin Galactic shares tumble on plans to sell up to $500M in stock

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Virgin Galactic’s space rocket successfully launched on Sunday, but its stock is having a tougher time.

Shares of the Sir Richard Branson-founded space tourism company tumbled more than 14 percent to about $42 per share Monday morning after Virgin Galactic announced it may sell up to $500 million in common stock.

Trading of the stock was briefly halted by the New York Stock Exchange shortly after the markets opened due to volatility as it dropped.

The company said in a filing with the Securities and Exchange Commission that it plans to use the proceeds from the sale “for general corporate purposes, including working capital, general and administrative matters and capital expenditures for its manufacturing capabilities, development of its spaceship fleet and other infrastructure improvements.”

It’s common for the stock price to fall after a company announces plans to sell more stock because it dilutes the ownership value of preexisting shares.

Shares of Virgin Galactic were as much as 9 percent higher in premarket trading Monday before the announcement and subsequent wild swing south.

The announcement of the stock sale plans come just one day after Branson flew to the edge of space on the company’s first fully crewed test flight, making him the first of the billionaire space tycoons to take the trip.

Branson wasn’t due to fly until later this summer but moved up his plans after fellow billionaire Jeff Bezos announced that he would be taking his own rocket into space from West Texas on July 20.

He has denied, however, that he was trying to beat the Blue Origin founder.

Sunday’s Virgin Galactic flight paves the way for the company to conduct its last remaining test flight — and to finally begin commercial operations.

The company has already secured more than 600 reservations for its space voyages, with tickets initially running $250,000 apiece.

The company’s successful Sunday flight saw Branson set off with five employees from Spaceport America in New Mexico, about 180 miles south of Albuquerque.

Less than an hour after takeoff, the company’s VSS Eve plane released its rocket at an altitude of 53 miles — farther than the 50-mile boundary considered by the US to be the edge of space.

The crew was then able to unstrap to experience a few minutes of weightlessness before gliding back to the runway.

“Like most kids, I have dreamt of this moment since I was a kid and honestly nothing could prepare you for the view from space,” Branson said in a ceremony with the crew to receive their astronaut wings after landing.

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