Virgin Galactic sinks 17% after the space tourism company announces plan to raise up to $500 million in debt

• Virgin Galactic shares fell 17% on Thursday after the company outlined plans to fundraise through debt. 
• The stock was pressured by dilution concerns as the space tourism company’s bonds can be converted to equity.
• Virgin Galactic is aiming to launch commercial services this year. 

Virgin Galactic shares tumbled Thursday after the space tourism company outlined plans to raise up to $500 million in debt, driving the stock price down even further early in the 2022 trading year. 

The company plans private offerings of $425 million in convertible senior notes that will mature in 2027, and an additional $75 million in notes is expected to be granted to the buyers, it said in a statement. 

Stock in the company fell as much as 17% to $10.22, hurt by fears of dilution as the notes can be converted to shares. The stock traded around its lowest since March 2020 and was moving toward a loss of 24% so far this year. 

“The Company intends to use the net proceeds from the offering to fund working capital, general and administrative matters and capital expenditures to accelerate the development of its spacecraft fleet in order to facilitate high-volume commercial service,” Virgin Galactic said. 

Investors are awaiting the company’s launch of commercial service in 2022, with its VSS Unity spacecraft expected to fly once per month starting later this year. Its next-generation spacecraft, the VSS Imagine, is slated to begin test flights in early 2023. 

Virgin Galactic’s founder Richard Branson was aboard one of the company’s rocket-powered planes that reached the edge of space in July.