Virgin Galactic stock soared today on a slew of exciting news, closing up just shy of 7%. However, after the bell when the company reported earnings, the harsh realities of burning cash set in.
Today, the space travel venture announced a partnership with Rolls Royce to build a Mach 3 passenger jet. It represents a major step forward for the company that’s valued largely on the promise of supersonic travel rather than its space tourism business. Virgin Galactic also announced it is planning to launch its billionaire founder into space during Q1 of 2020, assuming the next two test flights are successful.
However, the costs of funding these lofty ambitions are beginning to weigh on shareholders. After reporting no revenue for the quarter, the company announced its plans to issue additional stock. The news of the ~$500 million offering, which would dilute current shareholders, erased today’s stock gains and then some in the after-hours market.