Richard Branson's Virgin Galactic drops 5% after it says it will sell $492 million of stock to protect Virgin's travel businesses
- Shares in Richard Branson's Virgin Galactic slipped 5% in morning trading Monday after the company said it would sell up to 25 million shares to raise money for the Virgin Group's struggling leisure businesses
- Virgin Galactic shares fell to $19.19 as of 11.45 a.m. ET.
- The company said it will use the proceeds to support "leisure, holiday and travel businesses that have been affected by the unprecedented impact of COVID-19."
- Last week Virgin Atlantic, the airline founded by Branson, said it would be cutting 3,150 jobs as it struggles to deal with lower demand for flights resulting from the coronavirus pandemic.
- Watch Virgin Galactic trade live at Markets Insider.
Shares in Richard Branson's Virgin Galactic slipped 5% in morning trading Monday after the company said it would sell up to 25 million shares to raise money for the Virgin Group's struggling leisure businesses, which have been hit hard by the coronavirus pandemic.
Virgin said in a statement on Monday that it "intends to use any proceeds to support its portfolio of global leisure, holiday and travel businesses that have been affected by the unprecedented impact of COVID-19."
Virgin Galactic shares are currently 5% down at $19.19 per share as of 11:45 a.m ET. Shares were down as much as 6% in pre-market trading earlier in the day.
25 million shares in Virgin Galactic at Monday's opening price would be worth $492 million.
"Sales of the shares of common stock are expected to be made from time to time by means of ordinary brokers' transactions on the NYSE or otherwise at market prices prevailing at the time of sale," the company said.
Last week Virgin Atlantic, the UK-based airline owned primarily by Branson's Virgin Group, announced it would cut 3,150 jobs, as well as close its London Gatwick base as the airline struggles amid plunging demand for air travel during the coronavirus pandemic.
The airline industry has come under intense pressure in recent weeks with a halt in travel due to every major economy being in lockdown.
Famed billionaire investor Warren Buffett recently revealed that his Berkshire Hathaway conglomerate sold its stakes in the "big four" airlines in April for a much lower price than it was purchased and branded the investment a "mistake."
Last month Branson offered to put up his private island as collateral to help fund Virgin Atlantic and prevent it from collapse.
"As with other Virgin assets, our team will raise as much money against the island as possible to save as many jobs as possible around the Group," Branson said.
Virgin Australia, the other airline in the Virgin Group, entered voluntary administration at the end of April.
Virgin Galactic's stock price has risen almost 100% in the last six months, as the chart below shows:
