Why Virgin Galactic Shares fell 6% today

Why Virgin Galactic Shares fell 6% today

What happened

Shares of space company Virgin Galactic (NYSE: SPCE) trading fell as much as 6% on Friday as investors dig up some big sales within this week. The fall did not last long and at 12:10 pm EDT shares were down just 1.4% on the day.

so what

Last weekend, Virgin Galactic had to cancel an air test after a communications call prevented the Unity VSS engine from igniting. This was followed by chairman Chamath Palihapitiya selling 3.8 million shares to fund other initiatives next year.

Virgin Galactic planes flying over Phoenix.

Image source: Virgin Galactic.

Yesterday, Virgin Galactic submitted a shelf record for all sections under the control of Richard Branson, Chamath Palihapitiya, Ian Osborne, and Boeing (NYSE: BA), who both control the board and have nearly half of Virgin Galactic. In total, the listing 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 run is that insiders aren’t in for as long. To become a truly immersive space company, Virgin Galactic will take a decade or more to mature, and we are still early in that process. Thus, there are concerns of attackers who control the board of directors who sell, or who may sell shares. I do not see this as a good sign, although until Branson, Boeing, and Palihapitiya start selling more shares I will not abandon a bullish position on this stock.