Why Virgin Galactic Stock Crashed Today

By Rich Smith – Dec 9, 2025 at 4:01PMKey PointsVirgin Galactic plans to sell cash, roll over its debt -- and issue a whole lot of warrants.The goal: to cut its debt load and stay out of bankruptcy.These 10 Stocks Could Mint the Next Wave of Millionaires ›NYSE: SPCEVirgin GalacticMarket Cap$288MToday's Changeangle-down(-16.26%) $0.74Current Price$3.81Price as of December 9, 2025 at 4:00 PM ETCan Virgin Galactic dilute its way to success?Virgin Galactic (SPCE 16.26%), the space IPO that promised to commercialize space tourism -- then abruptly halted operations in 2024 to develop a new spaceplane -- tumbled to Earth Tuesday, closing the day down 16.5%. And why? Virgin just announced a "capital realignment" to reduce its debt to manageable levels. Image source: Getty Images. Virgin's grand plan Virgin Galactic is not in a good place right now. The company's spending $460 million annually in cash burn to develop a new spaceplane. But with no current plane to give rocketship rides to the hundreds of customers on its waitlist, revenue has slumped below $2 million in the last 12 months. Virgin's cash is vanishing fast. The company had less than $394 million in cash at last report, against long-term debt of $478 million. To rectify this, Virgin announced today it will:Advertisement Sell $46 million worth of new stock (that's about 12.1 million shares at the current share price), with attached warrants to buy stock. Place $203 million worth of "first lien notes" due 2028 and paying 9.8% interest. And sweeten the deal on the debt placement by awarding lenders even more warrants to purchase stock "at an exercise price of 155% of the purchase price of the Shares." ExpandNYSE: SPCEVirgin GalacticToday's Change(-16.26%) $-0.74Current Price$3.81Key Data PointsMarket Cap$0BDay's Range$3.60 - $4.0252wk Range$2.18 - $6.82Volume16MAvg Vol4MGross Margin-540764.60%Dividend YieldN/A Is Virgin Galactic stock a sell? Virgin Galactic will then use the cash from the above activities to pay off "approximately $355 million in aggregate principal amount of its Existing Convertible Notes," to reduce its total debt load to about $152 million. That's good news as far as it goes. What worries me is that it's not 100% clear precisely how much stock dilution will result from this "capital realignment," and especially from the multiple warrants being issued. Until that becomes clear, Virgin Galactic stock remains a sell.About the AuthorRich Smith is a contributing Motley Fool defense and stock market analyst covering publicly traded and emerging companies in defense, space, aerospace, and other sectors. Prior to The Motley Fool, Rich practiced international corporate law for Clifford Chance in Russia, and for the Russian-Ukrainian Legal Group in Moscow, Kyiv, and Washington, D.C. He holds a bachelor’s degree in international relations from the College of William & Mary, a law degree from the University of Baltimore, and a language certification from the International Institute of Russian Language & Culture in Tver, Russian Federation. The Globe and Mail once featured him as “one of the best stock pickers since 2009.”TMFDittyX@RichSmithFoolRead NextFeb 9, 2025 •By Rich SmithWill Virgin Galactic Abandon the Space Tourism Business?Nov 18, 2024 •By Rich SmithShocking News (But No, Not Really): Virgin Galactic Needs More MoneySep 22, 2024 •By Rich SmithSpaceX Just Stole the Space Tourism Market From Virgin Galactic and Blue OriginAug 25, 2024 •By Rich SmithVirgin Galactic Charges $900,000 Per Ticket -- but Is That Enough?Jun 21, 2024 •By Travis HoiumVirgin Galactic's Free Fall ContinuesJun 19, 2024 •By Travis HoiumThe Argument for Buying Virgin Galactic Now