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Longtime Virgin Galactic executive George Whitesides resigned on Friday from his position as chief space officer amid a rapid decline in the company’s stock price and a massive sell-off of shares by Virgin Galactic Chairman Chamath Palihapitiya.
Whitesides served as company CEO from 2010 until last summer, when he stepped aside for former Disney executive Michael Colglazier to take the reins. At the time, Whitesides stayed on as chief space officer, a new position created by the company.
In a statement sent to the Journal, Virgin Galactic said Whitesides is leaving “to explore opportunities in public service,” but that he will continue to serve as chair of a newly formed, four-member Space Advisory Board, which will provide advice to the company as it prepares for commercial operations.
Virgin Galactic did not specify what opportunities the former executive may pursue, and Whitesides didn’t respond to direct Journal inquiries by phone and text message.
His departure, however, is particularly noteworthy. Whitesides played a key role in leading the company for over a decade through early research and development efforts to create the technology needed to take paying passengers to space, and to build a business model that could turn Virgin Galactic into the world’s first space tourism venture operating out of Spaceport America in southern New Mexico.
He helped steer Virgin Galactic through one of its most difficult moments in 2014, when the company’s first spaceship broke up in mid-flight, killing one pilot and injuring another.
His resignation comes on the heels of other major executive-level changes recently announced by Virgin Galactic. That includes the resignation of longtime Chief Operating Officer Enrico Palermo – who worked with the company since its launch in 2004 – and of Chief Financial Officer Jon Campagna.
The company appointed Doug Ahrens, a former CEO of semiconductor company Mellanox, to replace Campagna on March 1. And it hired two aerospace industry veterans, Swami Iyer and Stephen Justice, as president of aerospace systems and vice president of engineering, respectively.
Those new executives will lead Virgin Galactic’s transition from its previous status as largely a research-and-development company into an advanced manufacturing firm to scale-up production of passenger rockets, creating a fleet of spaceships in preparation for launch of commercial operations next year, according to the company.
Whitesides’ departure also coincides with news on Friday that Virgin Galactic Chairman Palihapitiya sold off his entire personal stake in the company this week. That amounted to 6.2 million shares, valued at about $213 million at an average price of $34.32 per share, according to a Bloomberg report based on a Securities Exchange Commission regulatory filing.
Palihapitiya still indirectly owns 15.8 million shares in Virgin Galactic through investment firm Social Capital Hedosophia, amounting to about a 6.5% stake in the company. Virgin Galactic went public in 2019 on the NYSE through a merger with Hedosophia, a special purpose acquisition company formed by Palihapitiya and his partner, Ian Osborne.
Palihapitiya, a former Facebook executive and billionaire investor, had already sold 3.8 million shares from his personal stake in Virgin Galactic in December, worth about $100 million at that time.
Palihapitiya will re-channel the cash from his divestment into another venture yet to be announced, the chairman said in a statement sent to the Journal by Virgin Galactic.
“I continue to be a significant investor in Virgin Galactic through Social Capital Hedosophia Holdings and I remain as dedicated as ever to Virgin Galactic’s team, mission and prospects,” Palihapitiya said.
But the chairman’s actions could accelerate a crash in Virgin Galactic’s stock price that began after the company announced in February that it would postpone until May its next effort to reach space in test flights from Spaceport America.
That announcement set the company’s launch of space tourism operations back by at least six months, with full commercial operations unlikely to begin until 2022.
The company’s stock price closed at $27.29 a share Friday afternoon. That’s down from a record high of $62.80 in February, before the company announced postponement of its next spaceship test flight.
The company failed in its first attempt on Dec. 12 to shoot its VSS Unity passenger rocket to suborbit after electromagnetic interference caused the spaceship’s onboard computer to reboot, triggering a safety mechanism that immediately shut down the rocket motor and forced the ship’s two pilots to abort the mission and glide back to Earth.
The company, which reached space two times before from the Mojave Air and Space Port in California, is now making technical adjustments to correct the problems encountered in December before launching again.
But when the company went public in fall 2019, it projected commercial spaceflights would begin in summer 2020. And now, with more delays in commercial operations, competitors like SpaceX and others could start attracting investors away from Virgin Galactic, said Rich Smith, a writer for the investor advisory service The Motley Fool who follows the company.
SpaceX, the Elon Musk company that’s already shipping humans and cargo to the International Space Station on its Falcon 9 rockets, is building a next-generation Starship that it says will be ready to ship people to orbit and beyond by 2023.
In contrast, Virgin Galactic, which billionaire investor Sir Richard Branson founded in 2004, is aiming at a niche market where people pay $250,000 each to fly to the edge of space to float for a few minutes in microgravity, Smith said.
“Things are moving so quickly in the emerging commercial space industry,” Smith said. “Branson was a pioneer a few years ago, but already the Virgin Galactic model seems somewhat obsolete to me.”