Virgin Galactic announces reverse stock split to boost share price

WASHINGTON — Virgin Galactic has approved a reverse stock split intended to boost the company’s stock price and stave off its delisting.

The company announced after markets closed on June 12 that its board of directors had approved a 1-for-20 reverse stock split, which will take effect after markets close on June 14. Under this plan, 20 current shares of Virgin Galactic will be converted into 1 new one. share.

The 1-for-20 reverse split is the high end of the proposal the company presented to shareholders in April. At the time, the company said it was considering options between a 1:2 and 1:20 split, with the exact value to be determined by the board if shareholders approved the plan at its meeting. annual on June 12.

The reverse consolidation effectively increases the stock price by a factor of 20 at a time when the stock price had fallen below minimum levels set by the New York Stock Exchange (NYSE). “The primary objective of the reverse stock split is to increase the market price per share of the Company’s common stock to meet the minimum bid price per share required for continued listing on the NYSE,” the company said in a press release.

Virgin Galactic shares closed June 12 at $0.85 and had been trading below the stock market’s minimum price of $1 for much of the past two months. The company announced on May 29 that it had received notice from the NYSE that the average closing price of its stock had been less than $1 for 30 consecutive trading days. This notice gave the company six months to increase the stock price or be delisted from the stock exchange.

The company’s stock price has been declining since 2021 highs where, on two occasions, Virgin Galactic shares traded above $50. The falling stock price was one factor in the company’s decision last November to phase out operations of its existing suborbital spaceplane, VSS Unity, and lay off some employees in order to conserve cash. , focusing on the development of the new Delta-class spaceplanes. which offer lower costs and higher flight fares.

At a June 5 conference hosted by TD Cowen, Michael Colglazier, chief executive of Virgin Galactic, said the company was sticking to that plan. He noted that the company had about $870 million in cash and equivalents at the end of the first quarter.

“This amount of money, we have said, is enough to build our first two Delta ships and put them into commercial service,” he said. “And we estimate that these first two vessels in service generate approximately $450 million in revenue with significant contribution margin and cash flow, putting the company on a positive cash flow footing.”

Virgin Galactic shares were down more than 12% as of midday June 13.

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