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SPCE.US
id: 804

Virgin Galactic (SPCE) SPAC Case on Misleading

E.D. New York
Court
1:21-cv-03070
Case number
10 Jul 2019
Class period Start
04 Aug 2022
Class period End
  • Virgin Galactic pushed back commercial flights and admitted that the ships, as built, are different enough from the drawings
  • $SPCE declined from its peak by over 85%, wiping out $13 billion in shareholder equity.
  • Investors suspect Virgin and certain Accountables of concealing that the Company did not have accurate engineering drawings.
On August 4, 2022, Virgin Galactic pushed back commercial flights to the H1 2023.

Colglazier admitted when asked about the cause of the delay that supply chain issues, which he had blamed on the Q1 2022 call, were “not really the driver.” Instead, Colglazier blamed the fact that “the ships, as built, are different enough from the drawings that we had, that we need to go back and conform those drawings to the as-builts.”
  • In an August 5, 2022 report, a Canaccord Genuity analyst explained that in additional conversations, Virgin Galactic “indicated that the engineering team noticed slightly different angle measurements on the actual pylon to which the spaceship is attached than what was reflected on the original engineering drawings, which required some changes to upgraded components considering that the wing on Eve is very thin.
  • The analyst also reduced his price target from $8 to $7.
  • On this news, $SPCE fell by 17.5%, damaging investors.
Going back to October 2019, the Company and its Leaders marketed the reverse merger with Social Capital Hedosophia Holdings Corp. (SPAC) that would take Virgin Galactic public as the chance to buy shares in the world’s first commercial spaceline. They claimed they had built and successfully tested a system that was ready to take passengers to space, pointing to Virgin Galactic’s supposedly successful spaceflight in February 2019, and creating the impression that Virgin Galactic was on the cusp of commercial spaceflight.

Taking all representations and facts into account, shareholders have reasons to suspect Virgin Galactic and its certain executives of concealing from investors that the Company did not have accurate engineering drawings of Unity or Eve. Furthermore, the investor complaint alleges that they made materially false and misleading statements regarding the Company's business, operations, and compliance policies, specifically, made false and/or misleading statements and/or failed to disclose that:
  1. for accounting purposes, SCH's warrants were required to be treated as liabilities rather than equities;
  2. Virgin Galactic had deficient disclosure controls and procedures and internal control over financial reporting;
  3. as a result, the Company improperly accounted for SCH warrants that were outstanding at the time of the Business Combination;
  4. as a result, the Company's public statements were materially false and misleading at all relevant times.
Alleged Offence
Misleading Statements
Financial Misrepresentation
Failure to Disclose
Omissions
Suspected Party
Directors
Management
Investment Bank
Service Provider
Security Type
Stocks
Trade Direction
Long
Shock Event Date
05 August 2022
Filing date
28 May 2021
Judge
Hon. Allyne R. Ross
Collecting participants…

Virgin Galactic Holdings Inc

Virgin Galactic Holdings, Inc. focuses on the development, manufacture, and operation of spaceships and related technologies for conducting commercial human spaceflight and flying commercial resear...

    Ticker
    SPCE.US
    ISIN
    US92766K1060
    CIK
    1706946
    Sector
    Industrials
    Industry
    Aerospace & Defense
    Country
    USA
    Address
    1700 Flight Way, Tustin, CA, United States, 92782