Virgin Galactic Dumped $500 Million in Stocks Before Bad News Dropped

The pilots of the suborbital plane which carried Richard Branson, Virgin Galactic founder, high into the upper atmosphere earlier in the summer had to make a split-second decision. They were alerted by a red beep to an error in their plan, but continued on at three times the speed of sound.
The flight didn't go according to plan, as revealed by a New Yorker article a few weeks later. Virgin Galactic probably knew of the situation at the time but did not immediately reveal it. The plane spent over a minute and 42 seconds in airspace not designated by the Federal Aviation Administration.

The FAA started its investigation on July 23, Only September 1 was the first day that the mishap became public.

The regulator was not impressed and announced that spaceplanes owned by the company were grounded indefinitely during its investigation.



The FAA stated that Virgin Galactic might not return the SpaceShipTwo vessel to flight until the FAA approves or determines that the issues related to this mishap do not impact public safety. Bloomberg obtained the FAA statement last week.

Virgin Galactic reported on July 12th, the day following Bransons flight that it had sold $500 million of common stock. Branson sold $300 million shares in mid August, just a few weeks before the flight disaster.

Bloomberg was told by a spokesperson for Virgin Group that Branson didn't know about the FAAs inquiry when he sold his shares.

Virgin Galactic also stated that passengers and crew were not in danger due to the change in trajectory. According to Bloomberg's statement, pilots were also following protocol.



Despite this, the large share sell-off shortly after the tragic flight wasn't exactly a sign of confidence. There are many questions: Who knew about the deviation and when? It is likely that the company knew it was not going to turn out well when the FAA began its investigation and decided to not speak publicly about the incident. It is not clear if the FAA investigation was involved in the sale.

It is a complicated mess of communications and will take some time to resolve. Virgin Galactic is currently in an awkward situation, being grounded by regulators before its next scheduled flight later this month or early Oct.

Future customers will, undoubtedly, want to know more about July 11. Rocketing to Mach 3's upper atmosphere comes with inherent risks.

READ MORE: Houston, Virgin Galactic has a communication problem [Bloomberg]



Further details: FAA Grounds Virgin Galactic indefinitely following reports of chaotic flight

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