Stockholder Alleges Virgin Galactic Lied About Flight Tests

A Virgin Galactic shareholder takes the company’s executives to task, saying they have a penchant for covering up major flaws found in the company’s tests Unit Spaceplanes have hurt investors’ chances of a big win in the commercial space race.

In a new one legal action Filed in the Delaware District Court on Monday, shareholder Yousef Abughazaleh alleges that the space company, its executives and its billionaire founder Richard Branson lied about how good and safe its spaceplanes were in order to boost the company’s stock price and cash executives in more than $1.3 billion of common stock. The lawsuit was filed on behalf of Virgin Galactic Holdings Incorporated.

In the lawsuit, Abughazaleh alleges that Virgin Galactic, along with its executives, caused the company to “misrepresent and conceal significant mishaps and setbacks during test flights.” The defendants “hid this information to get into the public markets” and “sold hundreds of millions of dollars worth of Virgin Galactic stock before” the company’s shortcomings were exposed. Eventually, word spread, causing the company’s “stock price.” [to] decrease significantly,” the lawsuit states.

The entire 52-page lawsuit reads like a lengthy history of all of Virgin Galactic’s alleged failures since 2007 rocket engine explosion which killed three workers, to the failed SpaceShipTwo test flight in 2014, which killed a pilot and injured a co-pilot (although the National Transportation Safety Board blamed pilot error for this tragedy). However, the lawsuit itself is subject to the company’s 2019 and 2021 years Unit suborbital spaceplane flights and whether the company has hidden multiple system failures from the public.

Last November a federal judge opened the door for shareholders to follow the company for statements made in 2019 and 2021 about how it is making “great progress” on its commercial space program. The company initially claimed that its SpaceShipTwo VSS was launched in February 2019 Unit was a Success. In the same year reporter Nicholas Schmidle wrote that one of the suborbital spacecraft’s stabilizers had malfunctioned Unit‘s then test pilot and former VP of Safety for the company.

In 2021, Branson announced his success 50 mile flight aboard his Virgin Galactic Unit rocket plane This should further the company’s goal of creating a luxurious experience for suborbital travelers. Shortly after the flight, Schmidle published a scathing article in The New Yorker, urging the Federal Aviation Administration to step in and investigate this start that experiences big problem The took the flight outside of its assigned airspace.

Branson was called out for his magnificent nature, such as when reports featured him faked the advertising bike tour allegedly he took the botched flight 2021 with him. Finally, the FAA allows SpaceShipTwo flights resume, but only after Virgin Galactic has implemented the required corrective actions. However, the company’s stock price has been falling steadily since mid-2021, and Virgin Galactic has not conducted a suborbital launch since Branson flew into space. By the end of 2022, the company’s stock price had fallen more than 90% from its February 2021 peak. The company’s stock price is still well below those highs at the time of writing.

The shareholder is asking the courts to force executives to put millions of dollars in stock sales back into the company and otherwise do better at communicating the company’s mistakes.

“We believe the allegations are unfounded and we stand by the safety of our vehicles,” a Virgin Galactic spokesman said in an emailed statement to Gizmodo. “We will vigorously defend ourselves in the appropriate forum.”

Virgin Galactic has finally launched its spaceplane carrier, the VMS Eve, back in the air for a test flight on Wednesday. The return of the 2008 carrier ship did a little to help support the company’s struggling stock price, but it still wasn’t enough to overcome the many other struggles that Branson’s other space-focused companies have faced of late. Virgin Orbit, which focuses on satellite launches, has had experience liquidity problems since the end of last year. Last month, Virgin Orbit’s LauncherOne rocket, which was set to deploy multiple low-orbit satellites fell back to earth. The company A defective filter was to blame for the bad start.

Virgin Galactic is is expected to report fourth quarter and full year 2022 results February 28th.