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Feb 27, 2020

Branson's wealth falls to Earth as Virgin Galactic sputters

Richard Branson, founder of Virgin Group Ltd., listens during an interview following Virgin Galactic Holdings Inc.'s initial public offering (IPO) on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Oct. 28, 2019.

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Wearing a black suit and harness, Richard Branson once leaped from the roof of a Las Vegas casino to launch one of his ventures.

His fortune headed in the same direction this week.

Richard Branson, founder of Virgin Group Ltd., listens during an interview following Virgin Galactic Holdings Inc.'s initial public offering (IPO) on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Oct. 28, 2019.

The value of the British billionaire’s stake in Virgin Galactic Holdings Inc. has fallen about US$1.1 billion since the company reported widening losses in the fourth quarter from a year earlier. The firm’s shares tumbled 24 per cent to close at US$21.97 in New York and have plunged 35 per cent since Tuesday.

The Las Cruces, New Mexico-based firm is planning to resume ticket sales for future space flights to show Wall Street that affluent customers are willing to pay for such adventures.

Read more: Virgin Galactic sinks after two of three analysts cut ratings

Space tourism is one of the latest bets from Branson, a serial creator of companies including everything from record labels to fizzy drinks to bridal gowns. The Virgin brand he founded as a mail-order retailer in 1970 is now linked to more than 60 businesses, including British bank Virgin Money UK Plc and airline Virgin Atlantic. This month, Virgin launched an adults-only cruise ship line that aims to attract younger passengers.

Branson, 69, isn’t the only billionaire betting on space. Elon Musk and Jeff Bezos both have ventures in the area, but Virgin Galactic was the first to become a public company following a merger with U.S. investment firm Social Capital Hedosophia four months ago.

The company has since become a highly speculative stock, more than doubling this year before Tuesday’s after-market results as hedge funds and other investors predict it will establish a new space-tourism industry.

Chief Executive Officer George Whitesides has said the company will begin customer flights this year, with Branson expected to be among those on the maiden voyage.

Branson owns about half of the business, which still makes up the bulk of his US$6.8 billion fortune even with Wednesday’s stock slump, according to the Bloomberg Billionaires Index.