Virgin Galactic has confirmed a reverse stock split in an effort to stop the company from tumbling out of the New York Stock Exchange.
The stock took a sharp dive on the announcement, which was at the top end of a proposal put to shareholders ahead of the company’s June 12, 2024, annual meeting.
The proposal gave a range of 1-for-2 through 1-for-20 reverse stock splits. The board of directors opted for the latter, and the markets were swift to punish the company. Shares fell to $0.73 at the time of writing, a drop from $0.92 shortly before the announcement was made.
In the heady days of early 2021, Virgin Galactic’s shares sat above the $50 mark but have fallen in the years since as the commercial realities of regularly flying humans on sub-orbital lobs have become all too clear.
Virgin Galactic said: “The primary goal of the reverse stock split is to increase the per share market price of the Company’s common stock to meet the minimum per share bid price requirement for continued listing on the NYSE.”
The reverse stock split proposal in April came as the company’s shares teetered around the one-dollar mark. Falling below this valuation for 30 consecutive working days can result in a delisting from the exchange.
According to Virgin Galactic, “The Board believes that the Reverse Stock Split would facilitate our ability to raise additional equity capital in particular, including due to the expected resulting increase in the per share price of our common stock.
“The Board believes that an increased price per share of common stock following a Reverse Stock Split would enhance our ability to raise growth capital.”
The spaceflight company could certainly use the cash. It recently flew the final operational flight of VSS Unity and is now on hiatus from taking paying passengers on suborbital flights until its Delta class vehicles become operational in 2026. However, as any observer of spaceflight will attest, there is every chance of this goal being delayed.
The announcement of the reverse stock split, particularly at the higher end, indicates that Virgin Galactic does not see its share price increasing in the short term. ®
