Shares of Sir Richard Branson’s space company Virgin Galactic tanked as much as 20 percent after it discovered potential issues with its spacecraft and announced the delay of its commercial tourism service to the end of next year.
A recent routine test “flagged a possible reduction in the strength margins of certain materials used to modify specific joints,” the company said Thursday evening, adding further inspection is necessary. The company will begin working on its VSS Unity spacecraft and VMS Eve carrier aircraft this month.
It will then conduct one more test flight with the Italian Air Force, before starting commercial flights, which is now not expected until the fourth quarter of 2022.
Virgin Galactic stock turned sharply lower on the announcement, falling by as much as 20 percent in premarket trading.
The stock was last seen exchanging hands in premarket trading at $20.05 per share, down almost 17 percent from its Thursday closing price.
After rallying to a high of $62.80 per share, the stock has given up its gains for the year and is now up just over 1 percent since Jan. 1.
“The re-sequencing of our enhancement period and the Unity 23 flight underscores our safety-first procedures, provides the most efficient path to commercial service, and is the right approach for our business and our customers,” Virgin Galactic CEO Michael Colglazier said in a statement.
The refurbishment period was expected to begin last month, but the Federal Aviation Administration grounded all of Virgin Galactic’s flights for most of the month after an investigation by the New Yorker uncovered a mishap that occurred on the company’s July flight that carried its founder Branson to space.
The FAA cleared the company to resume its flights at the end of last month after it completed its investigation.
Branson announced in August he sold another roughly $300 million worth of his shares in the space tourism company, after selling nearly half a billion dollars worth of shares in the company in May of last year as the pandemic hammered his other ventures, which include a cruise line, airline and hotels.
Branson then sold an additional $150 million worth of Virgin Galactic stock in April of this year.
Virgin Galactic chairman Chamath Palihapitiya sold his entire personal stake in the company for about $213 million in March.