Yesterday's big oil price plunge, merging into today's, has set off another panic in the market, and stocks in general are suffering additional losses as the afternoon wears on. As of 1:35 p.m. EDT, the S&P 500 index of companies is down more than 2.5% ... and Virgin Galactic (SPCE 4.48%) stock is down three times that -- 8.6%. (It was actually down more than 12% earlier today.)
Why is Virgin Galactic down so much, though? Believe it or not, it has absolutely nothing to do with the price of oil. (Actually, flying Virgin's WhiteKnightTwo mothership aircraft on space tourism missions would probably benefit from cheaper oil and cheaper jet fuel refined from it).
Instead, I suspect Virgin Galactic's decline has much more to do with the troubles of its sister company, also 51% owned by VG founder Sir Richard Branson: airline Virgin Atlantic.
Yesterday, you see, in a public appeal by blog, Branson asked the government of the United Kingdom once more to extend to Virgin Atlantic a massive $620 million commercial loan to help bail the company out of the mess created by COVID-19-inspired travel bans and customer aversion to flying in the age of coronavirus.
Virgin Atlantic, it seems, is going through "the most challenging time we have ever faced" (says Branson) and is on the verge of "going bust" (reports Britain's Guardian newspaper). Its founder is being pressed hard to salvage Virgin Atlantic, the crown jewel of his corporate empire. In an attempt to save it, he's even offering to mortgage his private island!
Now what might that mean for Virgin Galactic, one wonders? Well, if Branson is focusing all his efforts on saving one of his companies -- one that has an actual business and a 36-year-history of profitable operation behind it -- it's reasonable to wonder whether he will have any time or money left over to spend on Virgin Galactic, which has yet to complete one single commercial flight.
Investors can be forgiven for wondering at this point: If Branson ends up being able to save only one of his companies from the looming recession, which one will he pick...and how much longer will Virgin Galactic be able to survive?