Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Virgin Galactic's Shares Dropped 6% Today

By Travis Hoium - Dec 18, 2020 at 12:59PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Are insiders bailing on Virgin Galactic?

What happened 

Shares of space company Virgin Galactic ( SPCE -3.45% ) fell as much as 6% in trading on Friday as investors digest some large insider sales this week. The drop didn't last long and at 12:10 p.m. EDT shares were down just 1.4% on the day. 

So what

Last weekend, Virgin Galactic had to abort a test flight after a communication glitch prevented VSS Unity's engine from igniting. That was followed by chairman Chamath Palihapitiya selling 3.8 million shares in order to fund other ventures next year. 

Virgin Galactic aircraft flying over Phoenix.

Image source: Virgin Galactic.

Yesterday, Virgin Galactic filed a shelf registration for all of the shares controlled by Richard Branson, Chamath Palihapitiya, Ian Osborne, and Boeing ( BA -1.64% ), who collectively control the board and own nearly half of Virgin Galactic. In total, the registration is for nearly 113 million shares of stock.

Now what

One of the fears in owning a growth stock like Virgin Galactic in the long term is that insiders aren't in for the long haul. To be a truly disruptive space company, Virgin Galactic will take a decade or more to mature, and we're still early in that process. So, insiders who control the board of directors selling, or potentially selling, shares is a concern. I don't see this as a good sign, although until Branson, Boeing, and Palihapitiya begin to sell more shares I won't be abandoning a bullish position on this stock. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Virgin Galactic Holdings, Inc. Stock Quote
Virgin Galactic Holdings, Inc.
$15.69 (-3.45%) $0.56
The Boeing Company Stock Quote
The Boeing Company
$195.25 (-1.64%) $-3.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.