Virgin Galactic Had More Redemptions Than You Think

Virgin Galactic

Virgin Galactic Had More Redemptions Than You Think

Oct 29, 2019 INTEL by Kristi Marvin

Early this morning, Social Capital Hedosophia Acquisition Corp., now Virgin Galactic (SPCE), filed an 8-K, post-closing of their combination.  It’s was a big filing with no less than 16 exhibits included, but if you scrolled to the bottom of the 8-K, there is a link to the unaudited pro forma financial information. And if you then read through that document, you would FINALLY find the results of the shareholder vote.  And shockingly, there were 12,106,110 shareholders that redeemed this past Wednesday. That means ~$125 million was removed from Trust. And if we include the number of redemptions from their extension vote, that totals 15,877,288 shares.

Given that post-closing of the Virgin Galactic deal, the share price zoomed into the $12.00 range, there are probably more than a few redeemers kicking themselves right now. Weak hands indeed. Although, it’s still strange that the long-only crowd opted to only “get involved” post vote and buy near $11.00 or $12.00 when they could have bought a little below trust value (~$10.39) just a few days prior.

So the higher than expected number of redemptions is probably the result of a combination of SPAC investors hanging around too long waiting to see if the share price would go higher and long-only investors waiting for the combination to close.  SPAC investors WANTED to sell above trust, but the long-only crowd wasn’t there right before the vote.  At that point, remaining SPAC investors got stuck and had to redeem.

Regardless, I doubt the IPOA and Virgin Galactic teams are sweating it with a share price in the $11.00 range. This was still a hugely successful deal.  You can find the redemption results HERE (with a little bit of scrolling).

SIDE NOTE: We’re back on “So-Called” Watch.  If you recall, I’ve mentioned before the tendency for financial journalists to reference SPACS as “a so-called blank check company”.  It’s not “so-called”. It is called.  However, there must be some sort of rule or template out there that when a SPAC is referenced, you MUST use this term.  And while you would think that with a high profile deal like Virgin Galactic, people would finally “get” what a SPACs is, nope.  To wit: yesterday’s article on Bloomberg .  And if you’re so inclined, you can go HEREHEREHERE and HERE to see this “so-called” phrase used repeatedly.