[ad_1]
These are the stocks posting the largest moves in premarket trading.
[ad_2]
Tag: Virgin Galactic Holdings Inc
-
Virgin Galactic to cut staff to focus on lower-cost Delta spacecraft
[ad_1]
Commercial space-flight operator Virgin Galactic Holdings Inc. on Tuesday said it would cut staff in an effort to focus on developing its new class of Delta spacecraft that are expected to cost less and bring more profit.
Management, in an email to employees, did not offer specific figures on the cuts, while citing a shaky investing environment as part of the reason for them. The message said the company would offer more details during its third-quarter earnings call on Wednesday.
Virgin Galactic
SPCE,
+2.96% ,
when reached on Tuesday, declined to offer additional information. Executives over the summer said they expected commercial service for Delta ships to begin in 2026, after testing in 2025.Shares were little changed after hours on Tuesday. The stock has fallen 50.4% so far this year.
The cuts follow a handful of space flights this year from Virgin Galactic, which was founded by billionaire Richard Branson. But Chief Executive Michael Colglazier, in the email, said that following successes from the spaceship Unity and its carrier mothership, Eve, the company needed to “reduce our reliance on unpredictable capital markets.”
“To profitably scale our business, we must first invest upfront capital to create a fleet of ships based on a standardized production model — the Delta Class ships,” Colglazier said in the email.
He added that “uncertainty has grown in the capital markets,” with higher interest rates pressuring borrowing and “geopolitical unrest” making for a more cautious environment. He said the Delta spacecraft played a key role in expanding flight service and profitability, and that it was crucial to focus on bringing them into service.
“Interest rates remain high, which adds pressure to companies who are investing today for profits that will come in the future,” he said. “Geopolitical unrest continues to expand, and the combination of these factors makes near-term access to capital much less favorable.”
“The Delta ships are powerful economic engines,” he continued. “To bring them into service, we need to extend our strong financial position and reduce our reliance on unpredictable capital markets. We will accomplish this, but it requires us to redirect our resources toward the Delta ships while streamlining and reducing our work outside of the Delta program.”
He said employees would be notified of their job status between Tuesday and Thursday. Employees will be working from home for the rest of the week, Colglazier said, adding that on-site work locations would be unavailable through that time.
“Delta ships have been designed to have a relatively low unit-production cost and have a material improvement flight cadence relative to our initial ship, VSS Unity,” Colglazier said on Virgin Galactic’s earnings call in August.
“The Delta development process has yielded some excellent enhancements to the ship’s architecture, particularly with regard to manufacturability and maintainability,” he said. “And we are tracking well against our primary ship-performance criteria.”
[ad_2]
-
JPMorgan moved $1.1 million from Jeffrey Epstein to ‘women or girls’ after terminating client relationship, USVI alleges
[ad_1]
Jeffrey Epstein attends Launch of RADAR MAGAZINE at Hotel QT on May 18, 2005.
Patrick McMullan | Getty Images
JPMorgan Chase handled more than $1.1 million in payments from Jeffrey Epstein to “girls or women” after the giant bank says it fired the sex offender as a client, a lawyer for the U.S. Virgin Islands told a judge Monday.
Many of the girls or women had Eastern European surnames, the attorney, Linda Singer, wrote to Manhattan federal Judge Jed Rakoff.
And more than $320,000 of the payments were made to “numerous individuals for whom JPMorgan had no previously identified payments,” Singer wrote in the letter.
The letter accuses JPMorgan of failing to disclose the payments until after the end of discovery, the period during which the bank and the Virgin Islands exchanged evidence as part of an ongoing lawsuit.
Singer asked Rakoff to impose monetary sanctions on JPMorgan for not turning over the information when the Virgin Islands said it should have been disclosed, and to order the bank to turn over “all financial records for any newly disclosed girls or women to whom Epstein made payments.”
The Virgin Islands in its suit alleges that JPMorgan facilitated and financially benefited from sex trafficking by Epstein of young women during the years when he was a client.
Epstein maintained a residence on a private island in the American territory where he sexually abused scores of women, and during that time kept tens of millions of dollars on deposit at JPMorgan.
JPMorgan says it cut ties to Epstein in 2013. But Monday’s court filing challenges the bank’s timeline.
The bank, which denies any wrongdoing related to Epstein, had no immediate comment on the letter.
Singer wrote that documents recently turned over by JPMorgan contained information that had been previously sought by the Virgin Islands during the discovery period.
That information was assembled internally by the bank in October 2019, more than three months after Epstein was arrested on federal child sex trafficking charges. Epstein killed himself in jail in August 2019.
“There is no legitimate reason for JPMorgan failing to identify payments to girls or women the bank itself identified as being related to Epstein — and potential evidence of Epstein’s sex trafficking venture — years before receiving the USVI’s discovery requests,” the attorney wrote.
The letter says that a spreadsheet prepared by JPMorgan listing the dates and beneficiaries of more than 9,000 transactions payable to Epstein-related persons between 2005 and 2019 “had a combined value of over $2.4 billion.”
“Many of the entries reflected accounts and payments, numbering in the thousands and totaling in the hundreds of millions of dollars in value, of which USVI had no prior knowledge or information from JPMorgan’s responses and productions during the fact discovery period,” Singer wrote.
The letter says that JPMorgan has argued the information was not disclosed earlier “because it was not in a custodial production and/or did not relate to individuals specifically identified by the USVI as related to Epstein.”
But Singer noted, “The USVI has repeatedly made clear that its discovery requests are not limited to individuals it specifically identified as being related to Epstein.”
“The USVI specifically identified the individuals it knew were related to Epstein to make its discovery requests clearer — not relieve JPMorgan of its duty to produce known relevant documents,” the lawyer wrote.
Singer told Rakoff that it remains unclear whether JPMorgan has now disclosed all of the payments from Epstein to girls and women.
The lawyer asked the judge to order JPMorgan to produce, within five days, all documents and information concerning its 2019 review of its business with Epstein, and “all financial records for any newly disclosed girls or women to whom Epstein made payments.”
[ad_2]
-
U.S. Virgin Islands seeks at least $190 million from JPMorgan Chase in Jeffrey Epstein case
[ad_1]
The government of the U.S. Virgin Islands in a court filing Friday estimated that it will seek damages of at least $190 million from JPMorgan Chase in a lawsuit accusing the big bank of facilitating sex trafficking by its former long-time customer Jeffrey Epstein.
The Virgin Islands also said it wants an order requiring JPMorgan to take a series of steps to protect young women and girls from other predators in the future.
“These sets of recommendations aim to address the same core problem: JPMorgan’s knowledge of
and failure to report Epstein’s trafficking because it lacked the economic incentive and motivation
to place compliance with the law and prevention of trafficking ahead of its own profits,” the filing in U.S. District Court in Manhattan says.The American territory also said it will seek further compensatory damages specifically for victims of Epstein beyond the nearly $300 million JPMorgan agreed to pay victims last month to settle a lawsuit by one of his accusers. The filing did not give an amount for those additional damages from the bank, which has staunchly denied any wrongdoing.
The new filing came in response to a request last week by Judge Jed Rakoff that the territory detail the damages it seeks in the case as it heads toward a scheduled Oct. 23 trial.
The Virgin Islands’ suit accuses JPMorgan of benefiting from Epstein’s trafficking of young women to be abused by him and others during the 15 years he was a client of the bank, which is the largest in the United States.
The complaint alleges JPMorgan allowed Epstein to keep many millions of dollars in accounts at the bank, which he used to fund his trafficking of women, despite multiple red flags about him raised by bank employees over the years.
“We are pursuing this enforcement action because JPMorgan Chase’s institutional failure enabled Jeffrey Epstein’s sex trafficking, and JPMorgan Chase must make significant changes to detect, report and stop human trafficking,” said U.S. Virgin Islands Attorney General Ariel Smith in a statement Friday.
“Financial penalties, as well as conduct changes, are important to make sure that JPMorgan Chase knows the cost of putting its own profits ahead of public safety,” said Smith.
She said that if the Virgin Islands wins its suit, it will uses the monetary damages it receives “to support efforts to strengthen, inform, and expand local law enforcement and enhance the Virgin Islands’ services for victims of human trafficking and other victims of crime.”
A JPMorgan spokeswoman, when asked for comment about the filing, indicated for what appears to be the first time that the bank’s attorneys have discussed a possible settlement of the lawsuit with lawyers for the Virgin Islands, which would avoid a trial.
“This document does not reflect the nature of settlement conversations,” said the spokeswoman, Patricia Wexler. ” As for the USVI’s misdirected damages theories, they are not well founded and are being challenged by JPM in court.”
It is common in civil litigation for cases to be settled without trial.
The filing says the Virgin Islands wants at least $150 million in civil penalties alone. The filing also says that it wants JPMorgan to disgorge at least another $40 million in fees that Epstein generated for the bank, and that JPMorgan received from “many ultra-high net worth clients” he referred to the bank.
Those people, the filing said, included Google co-founder Sergey Brin, Microsoft founder Bill Gates, Lex Wexner, the founder of Limited Brands, and the billionaire Glenn Dubin.
A spokesperson for Gates contacted CNBC after this article first was published, and in an email, “Mr. Gates was never a client of JP Morgan.”
In addition to the monetary damages, the Virgin Islands also is asking JPMorgan be compelled “to implement new policies, including separating its business and compliance functions and designating an independent compliance consultant, to prevent human trafficking,” according to a press release by Smith’s office.
JPMorgan in its own court filings has accused the Virgin Islands itself of being “complicit in the crimes of Jeffrey Epstein.”
The bank alleges Epstein gave high-ranking officials there money, advice and favors in exchange for looking the other way when he trafficked young women to be abused there.
Epstein had a residence on a private island in the territory, where accusers say he and other people sexually abused them.
Last month in the same court where the Virgin Islands is suing the bank JPMorgan agreed, without admitting wrongdoing, to pay $290 million to victims of Epstein to settle a suit by one of his accusers.
In May, Deutsche Bank agreed to pay Epstein victims $75 million to settle a separate lawsuit by an accuser who accused that back of abetting his sex trafficking of her and others. Deutsche Bank took on Epstein as a customer after JPMorgan severed ties with him in 2013, years after bank employees first voiced concerns about him.
Deutsche Bank previously agreed to pay New York state’s Department of Financial Services a $150 million penalty for failure to detect or prevent millions of dollars of suspicious transactions related to Epstein, which included “payments to Russian models and to numerous women with Eastern European surnames,” the filing Friday by the Virgin Islands noted.
Epstein, who had been a friend to former Presidents Donald Trump and Bill Clinton, as well as Prince Andrew of Great Britain, pleaded guilty in 2008 to a Florida state charge of soliciting sex from an underage girl. He served 13 months in jail, but spent much of that time on work release each day.
Epstein, then 66, killed himself in a federal jail in New York in August 2019, a month after he was arrested on federal child sex trafficking charges.
[ad_2]
-
Tech IPO drought reaches 18 months despite Nasdaq’s sharp rebound in first half of 2023
[ad_1]
Karl-Josef Hildenbrand | AFP | Getty Images
Car-sharing service Turo filed its IPO prospectus in January 2022. A month earlier, Reddit said it submitted a draft registration for a public offering. Instacart’s confidential paperwork was filed in May of last year.
None of them have hit the market yet.
Despite a bloated pipeline of companies waiting to go public and a rebound in tech stocks that pushed the Nasdaq up 30% in the first half of 2023, the IPO drought continues. There hasn’t been a notable venture-backed tech initial public offering in the U.S. since December 2021, when software vendor HashiCorp debuted on the Nasdaq.
Across all industries, only 10 companies raised $100 million or more in U.S. initial share sales in the first six months of the year, according to FactSet. During the same stretch in 2021, there were 517 such transactions, highlighted by billion-dollar-plus IPOs from companies including dating site Bumble, online lender Affirm, and software developers UiPath and SentinelOne.
As the second half of 2023 gets underway, investors and bankers aren’t expecting much champagne popping for the rest of the year.
Many once high-flying companies are still hanging onto their old valuations, failing to reconcile with a new reality after a brutal 2022. Additionally, muted economic growth has led businesses and consumers to cut costs and delay software purchases, which is making it particularly difficult for companies to comfortably forecast the next couple of quarters. Wall Street likes predictability.
So if you’re waiting on a splashy debut from design software maker Canva, ticket site StubHub or data management company Databricks, be patient.
“There’s a disconnect between valuations in 2021 and valuations today, and that’s a hard pill to swallow,” said Lise Buyer, founder of IPO consultancy Class V Group in Portola Valley, California. “There will be incremental activity after a period of absolute radio silence but it isn’t like companies are racing to get out the door.”
The public markets tell an uneven story. This year’s rally has brought the Nasdaq to within 15% of its record from late 2021, while an index of cloud stocks is still off by roughly 50%.
Some signs of optimism popped up this month as Mediterranean restaurant chain Cava went public on the New York Stock Exchange. The stock more than doubled on its first day of trading, indicating high demand from retail investors. Buyer noted that institutions were also enthused about the deal.
Last Friday, Israeli beauty and tech company Oddity, which runs the Il Makiage and Spoiled Child brands, filed to go public on the Nasdaq.
That all comes after a big month for secondary offerings. According to data from Goldman Sachs, May was the busiest month for public stock sales since November 2021, driven by a jump in follow-on deals.
Apple, Nvidia outperform
While investors are craving new names, they’re much more discerning when it comes to technology than they were at the tail end of the decade-long bull market.
Mega-cap stocks Apple and Nvidia have seen outsized gains this year and are back to trading near all-time highs, boosting the Nasdaq because of their hefty weightings in the index. But the advances are not evenly spread across the industry.
In particular, investors who bet on less mature businesses are still hurting. The companies that held the seven-biggest tech IPOs in the U.S. in 2021 have lost at least 40% of their value since their debut. Coinbase, which went public through a direct listing, is down more than 80%.
That year’s IPO class featured high-growth businesses with even higher cash burn, an equation that worked fine until recession concerns and rising interest rates pushed investors into assets better positioned to withstand an economic slowdown and increased capital costs.
Employees of Coinbase Global Inc, the biggest U.S. cryptocurrency exchange, watch as their listing is displayed on the Nasdaq MarketSite jumbotron at Times Square in New York, April 14, 2021.
Shannon Stapleton | Reuters
Bankers and investors tell CNBC that optimism is picking up, but ongoing economic concerns and the valuation overhang from the pre-2022 era set the stage for a quiet second half for tech IPOs.
One added challenge is that fixed income alternatives are back. Following a lengthy stretch of near-zero interest rates, the Federal Reserve this year lifted its target rate to between 5% and 5.25%. Parking money in short-term Treasurys, certificates of deposit and high-yield savings offerings can now generate annual returns of 5% or more.
“Interest rates are not only about the cost of financing, but also getting investors to trade out of 5% risk-free returns,” said Jake Dollarhide, CEO of Longbow Asset Management. “You can make 15%-20% in the stock market but lose 15%-20%.”
Dollarhide, whose firm has invested in milestone tech offerings like Google and Facebook, says IPOs are important. They offer more opportunities for money managers, and they generate profits for the tech ecosystem that help fund the next generation of innovative companies.
But he understands why there’s skepticism about the window reopening. Perhaps the biggest recent bust in tech investing followed the boom in special purpose acquisition companies (SPACs), which brought scores of less mature companies to the public market through reverse mergers.
Names like Opendoor, Clover Health, 23andMe and Desktop Metal have lost more than 80% of their value since hitting the market via SPAC.
“It seems the foul odor of failure from the 2021 SPAC craze has spoiled the appetite from investors seeking IPOs,” Dollarhide said. “I think that’s done some harm to the traditional IPO market.”
Private markets have felt the impact. Venture funding slowed dramatically last year from record levels and has stayed relatively suppressed, outside of the red-hot area of artificial intelligence. Companies have been forced to cut staff and close offices in order to preserve cash and right-size their business
Pre-IPO companies like Stripe, Canva and Klarna have taken huge hits to their valuations, either through internal measures or markdowns from outside investors.
The waiting game
Few have been hit as hard as Instacart, which has repeatedly slashed its valuation, from a peak of $39 billion to as low as $10 billion in late 2022. Last year, the company confidentially registered for an IPO, but still hasn’t filed publicly and doesn’t have immediate plans to do so.
Similarly, Reddit said in December 2021 that it had confidentially submitted a draft registration statement to go public. That was before the online ad market took a dive, with Facebook suffering through three straight quarters of declining revenue and Google’s ad sales also slipping.
Now Reddit is in the midst of a business model shift, moving its focus beyond ads and toward generating revenue from third-party developers for the use of its data. But that change sparked a protest this month across a wide swath of Reddit’s most popular communities, leaving the company with plenty to sort through before it can sell itself to the public.
A Reddit spokesperson declined to comment.
Turo was so close to an IPO that it went beyond a confidential filing and published its full S-1 registration statement in January 2022. When stocks sold off, the offering was indefinitely delayed. To avoid withdrawing its filing, the company has to continue updating its quarterly results.
Like Instacart, Turo operates in the sharing economy, a dark spot for investors last year. Airbnb, Uber and DoorDash have all bounced back in 2023, but they’ve also instituted significant job cuts. Turo has gone in the opposite direction, more than doubling its full-time head count to 868 at the end of March from 429 at the time of its original IPO filing in 2021, according to its latest filing. The company reportedly laid off about 30% of its staff in 2020, during the Covid pandemic.
Turo and Instacart could still go public by year-end if market conditions continue to improve, according to sources familiar with the companies who asked not to be named because they weren’t authorized to speak publicly on the matter.
Byron Deeter, a cloud software investor at Bessemer Venture Partners, doesn’t expect any notable activity this year, and says the next crop of companies to debut will most likely wait until after showing their first-quarter results in 2024.
“The companies that were on file or were considering going out a little over a year ago, they’ve pulled, stopped updating, and overwhelmingly have no plans to refile this calendar year,” said Deeter, whose investments include Twilio and HashiCorp. “We’re 10 months from the real activity picking up,” Deeter said, adding that uncertainty around next year’s presidential election could lead to further delays.
In the absence of IPOs, startups have to consider the fate of their employees, many of whom have a large amount of their net worth tied up in their company’s equity, and have been waiting years for a chance to sell some of it.
Stripe addressed the issue in March, announcing that investors would buy $6.5 billion worth of employee shares. The move lowered the payment company’s valuation to about $50 billion from a high of $95 billion. Deeter said many late-stage companies are looking at similar transactions, which typically involve allowing employees to sell around 20% of their vested stock.
He said his inbox fills up daily with brokers trying to “schlep little blocks of shares” from employees at late-stage startups.
“The Stripe problem is real and the general liquidity problem is real,” Deeter said. “Employees are agitating for some path to liquidity. With the public market still pretty closed, they’re asking for alternatives.”
G Squared is one of the venture firms active in buying up employee equity. Larry Aschebrook, the firm’s founder, said about 60% of G Squared’s capital goes to secondary purchases, helping companies provide some level of liquidity to staffers.
Aschebrook said in an interview that transactions started to pick up in the second quarter of last year and continued to increase to the point where “now it’s overwhelming.” Companies and their employees have gotten more realistic about the market reset, so significant chunks of equity can now be purchased for 50% to 70% below valuations from 2021 financing rounds, he said.
Because of nondisclosure agreements, Aschebrook said he couldn’t name any private company shares he’s purchased of late, but he said his firm previously bought pre-IPO secondary stock in Pinterest, Coursera, Spotify and Airbnb.
“Right now there’s a significant need for that release of pressure,” Aschebrook said. “We’re assisting companies with elongating their private lifecycle and solving problems presented by staying private longer.”
WATCH: The private market index is trading up for the first time in two years
[ad_2]
-
CNBC Daily Open: Don’t bet against the U.S. economy
[ad_1]
[ad_2]Shoppers during the grand opening of a Costco Wholesale store in Kyle, Texas, on Thursday, March 30, 2023.
Jordan Vonderhaar | Bloomberg | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Larger in reality
The U.S. economy grew an annualized 2% from January to March, according to the Commerce Department’s third and final estimate of first-quarter gross domestic product. That’s a big jump from the initial estimate of 1.3% and higher than the 1.4% Dow Jones consensus — consumer spending and exports were stronger than previously thought.Boosted by banks
U.S. stocks rose Thursday, buoyed by gains in the banking sector as investors celebrated positive results in the Federal Reserve’s annual stress test for banks. Asia-Pacific markets traded mixed Friday. Japan’s Nikkei 225 slipped around 0.6% as Tokyo’s inflation reading for June came in at 3.1% year on year. However, South Korea’s Kospi added 0.5% on the news that the country’s industrial production in May rose 3.2% month over month — economists expected production to decline.China’s businesses falter
China’s factory activity in June shrank for a third consecutive month, according to data from the National Bureau of Statistics. Non-manufacturing activity — which includes sectors like finance, health care and real estate — grew, but at its slowest pace this year. China’s monetary stimulus “just isn’t working,” according to China Beige Book, a U.S.-based research company.Successful spaceflight, but shares sink
Virgin Galactic successfully completed its first commercial spaceflight yesterday. Named Galactic 01, the flight took off in New Mexico and carried three paying passengers, all of whom are members of the Italian Air Force. Despite the smooth mission, Virgin Galactic shares sank more than 10% yesterday and a further 1.9% in extended training.[PRO] IPOs come to life
The initial public offering market’s stirring to life again. Three big IPOs — Savers Value Village, Kodiak Gas Services and Fidelis Insurance — were priced Wednesday and started trading yesterday. CNBC Pro’s Bob Pisani breaks down their performance, picks a winner and explains what this means for the general IPO market.The bottom line
Don’t fight the Fed, goes the saying in markets. Traders might want to add a new maxim: Don’t bet against the U.S. economy.
Despite endless warning of an inevitable recession, the U.S. economy defiantly expanded 2% in the first quarter of this year. It was pushed up by a rebound in exports, which rose 7.8% after falling 3.7% in the fourth quarter of 2022.
More significantly, consumer spending jumped 4.2%, the fastest quarterly pace since the second quarter of 2021 — back when households were still flush with cash from stimulus checks. I previously argued that the U.S. economy might just avoid a recession thanks to the strength of consumers — and it seems this latest data point corroborates that theory.
There are other signs the economy still refuses to buckle. Initial jobless claims for the week ended June 24 fell to 239,000, according to a report from the Labor Department. That figure’s 26,000 lower than the previous week and well below economists’ estimates, implying an unexpected improvement in the job market.
Meanwhile, stock markets rose after a banner day for big banks. The S&P 500 advanced 0.45%, the Dow Jones Industrial Average added 0.8%, but the Nasdaq Composite closed flat. All three indexes are on track to end the first half of the year at incredible numbers. So far, the S&P has gained 14.5%, the Dow’s up 2.9% and the Nasdaq has popped nearly 30% and is heading for its best first half since 1983.
Can markets sustain that incredible momentum? The personal consumption expenditures price index, coming out later today, will provide some clues. It’s the inflation gauge the Fed watches mostly closely, so if the PCE surprises with a hotter-than-expected reading, consecutive rate hikes might be on the way.
Still, given the resilience of the markets and the economy in the face of 10 consecutive hikes, perhaps they could continue surprising us as we head into the second half of 2023.
Source link -
CNBC Daily Open: The U.S. economy refuses to buckle
[ad_1]
[ad_2]Shoppers are seen at Whole Foods Market on October 14, 2022, in Atlanta, Georgia.
Elijah Nouvelage | Afp | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Larger in reality
The U.S. economy grew an annualized 2% from January to March, according to the Commerce Department’s third and final estimate of first-quarter gross domestic product. That’s a big jump from the initial estimate of 1.3% and higher than the 1.4% Dow Jones consensus — consumer spending and exports were stronger than previously thought.Boosted by banks
U.S. stocks rose Thursday, buoyed by gains in the banking sector as investors celebrated positive results in the Federal Reserve’s annual stress test for banks. European markets closed mixed. H&M jumped 18% after reporting better-than-expected second-quarter profits. Separately, Spain’s inflation in June fell to 1.9% year on year.Krona in a corner
Sweden’s currency dropped to a record low of 0.0846 krona to 1 euro after the country’s central bank raised interest rates by 25 basis points to 3.75%. Higher interest rates usually causes a currency to appreciate because it’d give more returns — so the drop implies traders are concerned about the state of the Swedish economy.Successful spaceflight, but shares sink
Virgin Galactic successfully completed its first commercial spaceflight yesterday. Named Galactic 01, the flight took off in New Mexico and carried three paying passengers, all of whom are members of the Italian Air Force. Despite the smooth mission, Virgin Galactic shares sank more than 10% yesterday and a further 0.7% in extended training.[PRO] IPOs come to life
The initial public offering market’s stirring to life again. Three big IPOs — Savers Value Village, Kodiak Gas Services and Fidelis Insurance — were priced Wednesday and started trading yesterday. CNBC Pro’s Bob Pisani breaks down their performance, picks a winner and explains what this means for the general IPO market.The bottom line
Don’t fight the Fed, goes the saying in markets. Traders might want to add a new maxim: Don’t bet against the U.S. economy.
Despite endless warning of an inevitable recession, the U.S. economy defiantly expanded 2% in the first quarter of this year. It was pushed up by a rebound in exports, which rose 7.8% after falling 3.7% in the fourth quarter of 2022.
More significantly, consumer spending jumped 4.2%, the fastest quarterly pace since the second quarter of 2021 — back when households were still flush with cash from stimulus checks. I previously argued that the U.S. economy might just avoid a recession thanks to the strength of consumers — and it seems this latest data point corroborates that theory.
There are other signs the economy still refuses to buckle. Initial jobless claims for the week ended June 24 fell to 239,000, according to a report from the Labor Department. That figure’s 26,000 lower than the previous week and well below economists’ estimates, implying an unexpected improvement in the job market.
Meanwhile, stock markets rose after a banner day for big banks. The S&P 500 advanced 0.45%, the Dow Jones Industrial Average added 0.8%, but the Nasdaq Composite closed flat. All three indexes are on track to end the first half of the year at incredible numbers. So far, the S&P has gained 14.5%, the Dow’s up 2.9% and the Nasdaq has popped nearly 30% and is heading for its best first half since 1983.
Can markets sustain that incredible momentum? The personal consumption expenditures price index, coming out later today, will provide some clues. It’s the inflation gauge the Fed watches mostly closely, so if the PCE surprises with a hotter-than-expected reading, consecutive rate hikes might be on the way.
Still, given the resilience of the markets and the economy in the face of 10 consecutive hikes, perhaps they could continue surprising us as we head into the second half of 2023.
Source link -
Virgin Galactic raises $300 million, seeks another $400 million to expand spacecraft fleet
[ad_1]
Carrier aircraft VMS Eve releases spacecraft VSS Unity before firing its rocket engine during the Unity 25 spaceflight on May 25, 2023.
Virgin Galactic
Virgin Galactic has successfully raised $300 million via an “at the market” offering of common stock, the company disclosed in a securities filing on Thursday.
Now, the space tourism company aims to raise an additional $400 million through a subsequent stock offering, as Virgin Galactic looks to fund the development and expansion of its spacecraft fleet.
Shares of Virgin Galactic have rallied since the company announced plans to launch its first commercial spaceflight by the end of this month.
The company opened the first fundraise on Aug. 4, saying at the time that the funds “would be used for general corporate purposes, including working capital, general and administrative matters, development of its spaceship fleet, and other infrastructure to scale its commercial operations.”
Virgin Galactic had cash and securities totaling $874 million at the end of the first quarter, it reported in May.
The company has a single carrier aircraft, VMS Eve, and one spacecraft, VSS Unity, which it’s said can conduct flights as frequently as once a month.
But Virgin Galactic’s growth hinges on its ability to expand its fleet with the Delta-class vehicles it is developing, and the common stock offerings are a way to stop gap its cash burn until those spacecraft are flying.
[ad_2]
-
Virgin Galactic shares rocket higher on plans for first commercial flight this month
[ad_1]
Shares of Virgin Galactic Holdings on Thursday made a scorching run higher after the space-travel company said it plans to begin offering commercial flights into space near the end of this month, a significant breakthrough for the nearly 20-year-old company founded by Richard Branson.
Shares rocketed 44% after hours on the news.
“We’re opening…
[ad_2]
-
Virgin Orbit was a promising company that could never find a working business model
[ad_1]
Virgin Orbit started as a program of Richard Branson’s Virgin Galactic in 2012, before being spun off into a separate company five years later.
In the private space race, Virgin Orbit contended its method of launching its rockets — known as “air launch” — was more flexible than traditional launch pads used by competitors like Rocket Lab, Astra and SpaceX.
The company employed a modified Boeing 747 jet that it called “Cosmic Girl” to carry its LauncherOne rocket to about 35,000 feet of altitude before dropping it.
From there, the rocket would fire its engines and fly off into space.
“By launching from an aircraft, Virgin could take off from almost any airport around the world and turn these airports into space ports,” said Caleb Henry, director of research at Quilty Analytics.
Henry noted that the Virgin Orbit’s last launch was from the United Kingdom, and that the company was in discussions to launch in Japan and Brazil.
“They were offering to different countries the ability to, in a sense, have a sovereign launch capability, because the rocket would take off from their home soil,” Henry said.
But Virgin Orbit was dogged by delays. The company originally hoped to launch its debut mission in 2018, but didn’t get off the ground until May of 2020. The demonstration mission failed shortly after the rocket was released. In total, the company launched six missions, four of which were successful and two of which failed, including the last one in January.
Virgin Orbit’s biggest deal was a 39-launch contract signed with satellite maker OneWeb in 2015. OneWeb ultimately pulled out of the deal without conducting a single launch.
“A challenge for the company, and for any launch company, is having an anchor customer, somebody who you can depend on to routinely buy a decent number of launches,” Henry said. “Virgin Orbit did not have an anchor customer.”
In late March, Virgin Orbit said it was laying off the majority of its workforce and ceasing operations “for the foreseeable future” after failing to secure a funding lifeline. Days later, the company filed for bankruptcy.
Watch the video to find out more about what led to Virgin Orbit’s collapse.
[ad_2]
-
Here’s what went wrong with Virgin Orbit
[ad_1]
Virgin Orbit crew poses at the opening bell ceremony as a 70 foot model rocket with satellites is placed in front of the NASDAQ in Times Square of New York City, United States on January 7, 2022.
Tayfun Coskun | Anadolu Agency | Getty Images
Not too long ago, Virgin Orbit was in rarified air among U.S. rocket builders, and executives were in New York celebrating its public stock debut.
The scene was true to the marketing pizazz that has helped Sir Richard Branson build his Virgin empire of companies, showcasing with a rocket model in the middle of Times Square.
The deal, facilitated by a so-called blank check company, gave Virgin Orbit a valuation of nearly $4 billion. But that moment in December 2021 – when the craze surrounding public offerings centered on special purpose acquisition companies, or SPACs, was dying out – previewed the pain to come.
Now, Virgin Orbit is on the brink of bankruptcy. The company on Thursday halted operations and laid off nearly all of its staff. Its stock was trading around 20 cents Friday, leaving it with a market value of about $74 million.
When Virgin Orbit closed its SPAC deal, it raised less than half of the nearly $500 million expected due to high shareholder redemptions, shortening its runway. With the broader markets turning against riskier yet-unprofitable assets like many new space stocks, Virgin Orbit shares began a steady slide, further limiting its ability to raise substantial outside investment.
Branson, Virgin Orbit’s largest stakeholder, was unwilling to fund the company further, as CNBC previously reported. Instead, he began hedging against his 75% equity stake through a series of debt rounds. That debt gives the flashy British billionaire first priority of Virgin Orbit assets in the event of the now-impending bankruptcy.
While Virgin Orbit touted a flexible and alternative approach to launch small satellites, the company was unable to reach the rate of launches necessary to generate the revenue it sorely needed.
Virgin Orbit’s technical staff acquitted themselves well over the company’s brief existence, but were ultimately undone in by its leaders’ financial mismanagement. It’s a story too often told in the history of the space industry: Exciting, or even innovative, technologies do not necessarily equal great businesses.
It became one of a few U.S. rocket companies to successfully reach orbit with a privately developed launch vehicle. It launched six missions since 2020 — with four successes and two failures — through an ambitious and technically difficult process known as “air launch,” with a system that uses a modified 747 jet to drop a rocket mid-flight and send small satellites into space.
But Virgin Orbit had dug a nearly $1 billion hole, flying missions just twice a year while its payroll expenses climbed. The company’s leadership was aware of the deteriorating situation and lack of progress, and even considered changes last summer to make the business more lean. But no clear or dramatic plan came to fruition – leading to Thursday’s fall.
This story collects insights from CNBC’s discussions with company insiders and industry investors over the past several weeks, as well as from regulatory disclosures, to explain where things went wrong for Virgin Orbit. Those people asked to remain anonymous in order to discuss internal or competitive matters.
A Virgin Orbit spokesperson declined to comment for this story.
Lacking execution
The company’s 747 jet “Cosmic Girl” releases a LauncherOne rocket in mid-air for the first time during a drop test in July 2019.
Greg Robinson / Virgin Orbit
Virgin Orbit was spun-off from Branson’s space tourism company, Virgin Galactic, in 2017, after a team within the latter sister company saw potential in using an aircraft as a platform to launch satellites. While “air launching” satellites was not a novel idea to Virgin Orbit, the company aimed to surpass the air-launched Pegasus rocket – developed by Orbital Sciences, which is now owned by Northrop Grumman –for a fraction of the cost per mission.
Headquartered in Long Beach, California, Virgin Orbit flew most of its missions out of the Mojave Air and Space Port. The exception to that was its most recent launch, which took off from Spaceport Cornwall in the United Kingdom. Virgin Orbit had been working with other governments to provide launches by flying out of airports around the world, signing agreements with Japan, Brazil, Australia and the island of Guam.
The advertised flexibility and potential of Virgin Orbit’s approach attracted quite a bit of attention from leaders in the U.S. national security community. Following meetings with top Pentagon brass in 2019, Branson proclaimed that Virgin Orbit is “about the only company in the world that could replace [satellites] in 24 hours” during a military conflict.
At the time, the Air Force’s acquisition lead, Will Roper, said he was “very excited about small launch” after meeting with Branson. He said the U.S. military had “huge money to invest” in buying rocket launches.
The company had hoped to launch its debut mission as early as 2018, but that goal kept moving every six months or so. Eventually, Virgin Orbit launched its first mission in May 2020, which failed shortly after the rocket was released from the jet. It got to orbit successfully for the first time in January 2021.
Given the company’s burn rate near $50 million a quarter, Virgin Orbit was targeting profitability once it got beyond a launch rate, or cadence, of a dozen missions per year. When it went public, Virgin Orbit CEO Dan Hart told CNBC that the company was aiming to launch seven rockets in 2022, to build on that momentum.
At the same time, Virgin Orbit was already in a deep financial hole – with a total deficit of $821 million at the end of 2021, due to steady losses since its inception. While Virgin Orbit had aimed to launch seven missions last year, that number was steadily guided down quarter after quarter, closing out 2022 with just two completed lunches – the same as the year before.
Some people within the company who had been critical of Virgin Orbit’s execution pointed to several executives’ backgrounds at Boeing, which has had its share of space-related snags over the years.
Virgin Orbit CEO Dan Hart had spent 34 years at Boeing, where he was previously the vice president of its government space systems. COO Tony Gingiss joined Virgin Orbit from satellite broadband company OneWeb, but before that had spent 14 years in Boeing’s satellite division. And Chief Strategy Officer Jim Simpson had also spent more than eight years in Boeing’s satellite division before joining Virgin Orbit.
As one person emphasized, the company launched the same amount of rockets in a year with a staff of 500 as it did with a workforce of over 750 people. Others complained of a lack of cross-department coordination, with projects and spending done in silo of each other – leading to a disconnect in schedules.
Two people mentioned wastefulness in ordering materials. For example: The company would buy enough expensive items with limited shelf-life to build a dozen or more rockets, but then only build two, meaning it would have to throw away millions of dollars’ worth of raw materials away.
When Virgin Orbit announced an employee furlough March 15, people familiar with the situation said the company had about half a dozen rockets in various states of production in its Long Beach factory.
As the lack of a financial lifeline made the situation increasingly more desperate, multiple Virgin Orbit employees voiced frustration with how Hart communicated the company’s position – and even more so with the lack of clarity after the furlough.
The day of the initial pause in operations, people described company leadership running around frantically while many employees stood around waiting for word on what was happening. One person emphasized the tumultuous and sudden furlough happened because executives tried to keep the company alive as long as possible. Several employees expressed disappointment with Hart holding the March 15 all-hands meeting virtually, speaking from his office rather than face-to-face, and not taking any questions after announcing the pause in operations.
That frustration continued after the pause, with employees confused by the lack of specifics about which investors were speaking to Virgin Orbit leadership. Thursday’s update that a deal fell through came as little surprise to a workforce that was largely in limbo. Many were already hunting for new jobs.
Deal efforts fall apart
The rocket for the company’s second demonstration mission undergoing final assembly at its factory in Long Beach, California.
Virgin Orbit
A pivot in Virgin Orbit’s strategy became apparent and necessary shortly after it went public.
Virgin Orbit aimed to raise $483 million through its SPAC process, but significant redemptions meant it raised less than half of that, bringing in $228 million in gross proceeds. The funds it did raise came from the minority of SPAC shareholders who stuck around, as well as private investments from Virgin Group, the Emirati sovereign wealth fund Mubadala, Boeing, and AE Industrial Partners.
Unlike its sister company Virgin Galactic, which built its cash reserves to more than $1 billion through stock and debt sales after going public in October 2019, Virgin Orbit did not build its cash coffers. And that meant leadership should have buckled down and made changes to run the company in a more lean way, one person emphasized, to rebuild momentum.
And then Virgin Orbit’s apparent strength in the national security sector began to falter. Despite half of its missions flying Space Force satellites, the company lost out to competitor Firefly Aerospace for a launch contract under the “Tactically Responsive Space” program. Awarded in October, the mission seemed right up Virgin Orbit’s alley, especially since the prior mission under that Space Force program flew on the similarly air-launched Pegasus rocket.
As the financial situation worsened, a few bankers who spoke to CNBC wondered why the search for a deal was dragging on. According to one banker, Virgin Orbit could raise anywhere from $10 million to $15 million quickly to stop-gap the situation while it found a larger buyer. Another investor estimated that Virgin Orbit had about $270 million in net tangible assets, further sweetening the potential for a wholesale deal even despite its plunging market value.
A white knight seemed to appear last week in the form of Matthew Brown, who discussed making an 11th-hour deal with Virgin Orbit, to reportedly inject as much as $200 million into the company. However, within days, the talks fell apart. The company continued to discussions with another, unnamed investor this past week.
But in the words of Hart on Thursday, Virgin Orbit was “not been able to secure the funding to provide a clear path for this company.”
And while the 675 employees laid off Thursday likely have strong job prospects, Virgin Orbit seems now destined for bankruptcy.
[ad_2]
-
Tesla is a ‘soft landing’ stock, says Goldman Sachs. Here are its picks for a gentle economic landing and stocks for a recession.
[ad_1]
Pour one out for the beleaguered economists, who for once got an important indicator, the consumer price index, right on the nose, after CPI fell 0.1% in December, while core prices rose 0.3%.
“The 2021 surge in durable goods demand normalized, and the resulting collapse in durable goods price inflation was stunningly fast,” says Paul Donovan, chief economist of UBS Global Wealth Management.
“The commodity wave of inflation is fading, and that leaves the profit margin expansion in focus,” he adds. What a good time for earnings season to be upon us, and what do you know, it is, kicking off with the banking sector on Friday before broadening out next week.
Strategists at Goldman Sachs have a new note out, saying that the market is pricing in a soft landing even though the trend of earnings revisions points to a hard landing.
They’re not that optimistic — even in the soft-landing scenario, the team led by David Kostin say the S&P 500
SPX,
+0.40%
will end the year right around current levels, at 4,000. But they identify 46 stocks that could benefit — profitable, cyclical companies that are trading at price-to-earnings valuations below their 10-year median, among other factors.One name jumps out: Tesla
TSLA,
-0.94% ,
which trades at 22 times forward earnings versus the 10-year median of 117 times. But the other 45 names are less flashy, ranging from Capital One
COF,
+1.81%
and Carlyle Group
CG,
+0.54% ,
to a host of industrials including 3M
MMM,
+0.12% ,
Parker-Hannifan
PH,
+0.73%
and Otis Worldwide
OTIS,
+0.42% .
As a whole, these typically $10 billion companies are trading at 12 times earnings, versus 17 times usually.In the hard landing scenario, S&P 500 profit margins would shrink by 125 basis points, to 10.9% — about in line with the median peak-to-trough decline during the eight recessions since 1970, which has been 132 basis points. Consensus expectations are for a 26 basis-point margin decline.
The Goldman team also have a 36 stock screen for a hard landing — profitable companies in defensive industries with a positive dividend yield. They’re typically food, beverage and tobacco companies as well as software and services companies — including Costco Wholesale
COST,
+0.58% ,
Kroger
KR,
-0.99% ,
Altria
MO,
+0.48% ,
Tyson Foods
TSN,
+0.23% ,
Microsoft
MSFT,
+0.30% ,
MasterCard
MA,
-1.13%
and Visa
V,
-0.25% .
As a whole, these $37 billion companies are trading at 22 times earnings vs. a historical 24 times.The market
After a 2.3% advance for the S&P 500
SPX,
+0.40%
over the last three sessions, U.S. stock futures
ES00,
+0.39% NQ00,
+0.58%
declined on Friday.The yield on the Japanese 10-year bond
TMBMKJP-10Y,
0.511%
exceeded 0.5%, the Bank of Japan’s yield cap, ahead of next week’s rate decision , prompting a second day of aggressive bond purchases from the central bank.For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.
The buzz
Fourth-quarter earnings were rolling out from Bank of America
BAC,
+2.20% ,
JPMorgan Chase
JPM,
+2.52% ,
Citigroup
C,
+1.69%
and Wells Fargo
WFC,
+3.25% ,
and outside of banks, Delta Air Lines
DAL,
-3.54% ,
BlackRock
BLK,
+0.00%
and UnitedHealth
UNH,
-1.23% .JPMorgan shares slumped after forecast-beating earnings, though investment bank revenue came in light of estimates. Delta shares also declined after topping earnings estimates.
Tesla
TSLA,
-0.94%
cut prices of Model 3 and Model Y vehicles in the U.S. and elsewhere by up to 20%. The electric vehicle maker stock dropped 6%.Virgin Galactic
SPCE,
+12.34%
surged after saying it’s on track to launch space-tourism flights in the second quarter.Apple
AAPL,
+1.01%
says CEO Tim Cook requested, and received, a pay cut after investor criticism.The University of Michigan’s consumer-sentiment index is due at 10 a.m. Eastern, and Minneapolis Fed President Neel Kashkari and Philadelphia Fed President Patrick Harker are due to speak.
Tyler Winklevoss said charges by the Securities and Exchange Commission brought about Gemini Trust for allegedly offering unregistered securities were “super lame” as it seeks to unfreeze $900 million in investor assets.
Best of the web
There’s a bull market in swearing on corporate earnings calls.
The West is now preparing to send tanks to Ukraine in what could be another escalation of its conflict with Russia, which on Friday claimed victory in the eastern town of Soledar.
A look back at photos of Lisa Marie Presley, who died at age 54.
Top tickers
Here were the most active stock-market tickers as of 6 a.m. Eastern.
Ticker Security name BBBY,
-30.15% Bed Bath & Beyond TSLA,
-0.94% Tesla GME,
-0.68% GameStop AMC,
+0.80% AMC Entertainment MULN,
-8.59% Mullen Automotive NIO,
-0.08% Nio APE,
-2.56% AMC Entertainment preferreds AAPL,
+1.01% Apple SPCE,
+12.34% Virgin Galactic AMZN,
+2.99% Amazon.com Random reads
Like a scene out of “Stranger Things” — there’s uproar after new restrictions on the Hasbro
HAS,
+0.21%
game Dungeons & Dragons.Starting next month, Starbucks
SBUX,
+1.30%
rewards will be less generous for most items, though iced coffee will be easier to get.Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton.
[ad_2]
-
World’s 1st space tourist signs up for flight around moon
[ad_1]
CAPE CANAVERAL, Fla. — The world’s first space tourist wants to go back — only this time, he’s signed up for a spin around the moon aboard Elon Musk’s Starship.
For Dennis Tito, 82, it’s a chance to relive the joy of his trip to the International Space Station, now that he’s retired with time on his hands. He isn’t interested in hopping on a 10-minute flight to the edge of space or repeating what he did 21 years ago. “Been there, done that.”
His weeklong moonshot — its date to be determined and years in the future — will bring him within 125 miles (200 kilometers) of the lunar far side. He’ll have company: his wife, Akiko, and 10 others willing to shell out big bucks for the ride.
Tito won’t say how much he’s paying; his Russian station flight cost $20 million.
The couple recognize there’s a lot of testing and development still ahead for Starship, a shiny, bullet-shaped behemoth that’s yet to even attempt to reach space.
“We have to keep healthy for as many years as it’s going to take for SpaceX to complete this vehicle,” Tito said in an interview this week with The Associated Press. “I might be sitting in a rocking chair, not doing any good exercise, if it wasn’t for this mission.”
Tito is actually the second billionaire to make a Starship reservation for a flight around the moon. Japanese fashion tycoon Yusaku Maezawa announced in 2018 he was buying an entire flight so he could take eight or so others with him, preferably artists. The two men both flew to the space station, from Kazakhstan atop Russian rockets, 20 years apart.
Tito kicked off space tourism in 2001, becoming the first person to pay his own way to space and antagonizing NASA in the process. The U.S. space agency didn’t want a sightseer hanging around while the station was being built. But the Russian Space Agency needed the cash and, with the help of U.S.-based Space Adventures, launched a string of wealthy clients to the station through the 2000s and, just a year ago, Maezawa.
Well-heeled customers are sampling briefer tastes of space with Jeff Bezos’ Blue Origin rocket company. Richard Branson’s Virgin Galactic expects to take paying passengers next year.
Starship has yet to launch atop a Super Heavy booster from the southern tip of Texas, near the Mexican border. At 394 feet (120 meters) and 17 million pounds (7.7 million kilograms) of liftoff thrust, it’s the biggest and most powerful rocket ever built. NASA already has contracted for a Starship to land its astronauts on the moon in 2025 or so, in the first lunar touchdown since Apollo.
Tito said the couple’s contract with SpaceX, signed in August 2021, includes an option for a flight within five years from now. Tito would be 87 by then and he wanted an out in case his health falters.
“But if I stayed in good health, I’d wait 10 years,” he said.
Tito’s wife, 57, said she needed no persuading. The Los Angeles residents are both pilots and understand the risks. They share Musk’s vision of a spacefaring future and believe a married couple flying together to the moon will inspire others to do the same.
Tito, who sold his investment company Wilshire Associates almost two years ago, said he doesn’t feel guilty splurging on spaceflight versus spending the money here on Earth.
“We’re retired and now it’s time to reap the rewards of all the hard work,” he said.
Tito expects he’ll also shatter preconceived notions about age, much as John Glenn’s space shuttle flight did in 1998. The first American to orbit the Earth still holds the record as the oldest person in orbit.
“He was only 77. He was just a young man,” Tito said. “I might end up being 10 years older than him,”
———
The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Department of Science Education. The AP is solely responsible for all content.
[ad_2]
