Space travel company Virgin Galactic (NYSE:SPCE) is trimming its workforce to divert funds to its ambitious Delta Class spaceship project. CEO Michael Colglazier broke the news in a memo to employees yesterday. Colglazier noted that the company was finding it difficult to raise capital in the unfavorable geopolitical landscape and high-interest rate environment. As a result, the company made the difficult choice of downsizing its workforce to reduce expenses. SPCE stock fell 1.1% in extended trade on the news on November 7.
The Richard Branson-founded company made a strategic decision to divert funds to the production of Delta Class spaceships since it has promised to start its commercial service by 2026. Consequently, the company will streamline its operations and trim jobs that are not related to this project.
The company will inform each employee of his/her status over the phone by November 9. Plus, all employees are to continue working from home for the full current week, the memo added. The news comes just a day ahead of Virgin Galactic’s third-quarter Fiscal 2023 results scheduled for November 8, after the market closes. The company said further details regarding the layoffs will be given during the results.
Is Virgin Galactic Stock a Good Buy?
With two unanimous sell ratings, Virgin Galactic stock has a Moderate Sell consensus rating. The average Virgin Galactic price forecast of $1 implies 42.5% downside potential from current levels. Year-to-date, SPCE stock has lost 50.1%.
