Virgin Galactic (SPCE) SPAC Case on Misleading

E.D. New York

Court

1:21-cv-03070

Case number

07/10/2019

Class period Start

08/04/2022

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:
 for accounting purposes, SCH's warrants were required to be treated as liabilities rather than equities; 
Virgin Galactic had deficient disclosure controls and procedures and internal control over financial reporting; 
as a result, the Company improperly accounted for SCH warrants that were outstanding at the time of the Business Combination;
as a result, the Company's public statements were materially false and misleading at all relevant times.

Case Status

Attorney Investigation

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

08/05/2022

Filing date

05/28/2021

Judge

Hon. Allyne R. Ross

Virgin Galactic (SPCE) SPAC Case on Misleading

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