Virgin Galactic Holdings Inc., a space tourism company founded by Richard Branson, has faced significant challenges and skepticism from investors in recent years. After a volatile stock performance, a 1-for-20 reverse stock split was implemented to meet New York Stock Exchange listing requirements, but the stock has since lost much of its artificially created value. Individual investors, who own more than half of all Virgin Galactic shares, have expressed concerns about the company’s sustainability due to delays in launching trips and high cash burn.
In 2021, the company restated its 2020 results due to accounting issues, and key investors such as Chamath Palihapitiya and Richard Branson sold significant portions of their shares. Launch delays have been a recurring issue, with Virgin Galactic not carrying its first paying customers until 2023.
However, some analysts remain optimistic about Virgin Galactic’s future, citing the potential for frequent flights of its next-generation Delta ships to clear a backlog of ticket holders and generate future sales. The space tourism industry still faces limited competition, with Jeff Bezos’ Blue Origin yet to announce pricing for tourist flights.
Despite these potential positives, many investors have grown despondent due to a lack of news and delays in the company’s operations. Some have expressed concerns about the company’s cash reserves, with Virgin Galactic reporting a decrease in cash and cash equivalents from $416 million in 2022 to $195 million in 2023.
Despite these challenges, some investors remain hopeful about the future of space tourism and are willing to continue holding onto their shares in Virgin Galactic. However, the risks associated with the investment are significant, as the stock’s value could either grow exponentially or flatline.
