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Why Virgin Galactic Stock Crashed Friday

By Rich Smith - Updated Mar 5, 2021 at 1:18PM

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George Whitesides is leaving the building.

What happened

Big changes are afoot at space tourism company Virgin Galactic (SPCE 4.32%) -- and it would appear they are not good news for the stock, which is down 15.1% in 11 a.m. EST trading Friday.

As reports today, company chairman Chamath Palihapitiya, the man responsible for engineering Virgin Galactic's IPO by special purpose acquisition company (SPAC) two years ago, has sold the last of the shares he personally owned in Virgin Galactic, selling off 6.2 million shares of Virgin stock over the course of this week.

Glowing red stock chart arrow trending down

Image source: Getty Images.

So what

Now it's important not to overstate the case here. Palihapitiya has not "dumped all of his shares," as some might interpret this statement. In fact, he still owns a whopping 15.8 million shares of Virgin Galactic stock -- 6.7% of all company stock outstanding -- indirectly owned jointly with investment partner Ian Osborne through SCH Sponsor Corp.  

But he's still sold an awful lot, and investors seem shaken by the news today.

Also disconcerting is the fact that all of a sudden, George Whitesides -- former chief of staff of NASA, former CEO of Virgin Galactic, and until recently at least, the company's chief space officer in charge of "developing the Company's future business opportunities, including point-to-point hypersonic travel and orbital space travel" -- has been removed from the company's webpage describing its key corporate officers.  

Now what

It's not clear precisely when Whitesides "left the building." However, Virgin Galactic has just confirmed to me that Whitesides has in fact "stepped down from his position as Chief Space Officer to pursue potential opportunities in public service," adding that "he will remain chairman of the Company’s Space Advisory Board."

If that makes investors a wee bit nervous today, I cannot say I blame them.

Editor's note: This article has been updated to incorporate new information received from Virgin Galactic representatives.

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