Virgin Galactic wants to raise $400 million via a stock offering

Virgin Galactic Holdings Inc (NYSE: SPCE) announced to have raised new capital via a stock offering today. Its shares ended nearly 20% down.

Why did Virgin Galactic stock slip today?

On Friday, the space tourism company said an “at the market” sale of its common stock helped it raise about $300 million.

What did not sit well with investors, though, was declaration that it intends to raise another $400 million via a subsequent stock offering. According to Michael Leshock – a KeyBanc analyst:

We believe Virgin Galactic timed the market well, taking advantage of recent strength to exhaust its prior ATM offering and establish a new programme.

He expects the new offering to dilute the stock by 20% to 25%. Leshock currently has a “hold” rating on the Virgin Galactic stock.

Why is Virgin Galactic raising more funds?

Virgin Galactic plans on using the new funds to develop and expand its spacecraft fleet as it looks to scale its commercial operations.

Earlier this week, the California-based firm said its first commercial space flight will be launched between June 27^th and June 30^th as Invezz reported here. From September onwards, it wants to take tourists to space every month.

The spaceflight company co-founded by Sir Richard Branson ended its first quarter with close to $900 million in cash and securities. But building its business over the next four years will cost it up to $2.0 billion, as per Wall Street.

At writing, Virgin Galactic stock is up 25% versus the price at which it started the year 2023.