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Why are Virgin Galactic shares crashing after world-first space flight?

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Just over 24 hours since billionaire Richard Branson made history and took off into space and Virgin Galactic stock has plummeted from the sky

Shares in Virgin Galactic rose over 200 per cent in the two months ahead of Sunday’s world first flight.

The luck for the space tourism company continued with a stock climb of about 9 per cent in Monday’s pre-market trading.

However, shares took a steep fall around 17 per cent during the regular session on Monday.

The stock’s move feels odd given the success the company had on Sunday.

The landmark flight to the edge of space opened up a new frontier for commercial space travel in a race between billionaires that has investors eye’s peeled.

Part of the reason for the fall may have to do with Virgin Galactic’s plans to sell more stock.

Market Expert Christopher Uhl joined ticker news and says there are simply no more buyers willing to pay higher prices for Virgin Galactic stock, now that the huge event of heading to the skies has passed.

Market Expert Christopher Uhl

“I was once a kid with a dream”: Richard Branson blasts into space

Well he finally did it. 17 years after Richard Branson first launched Virgin Galactic, the thrill-seeking billionaire has taken to the skies and reached space.

In his boldest adventure yet, the 70 year old Richard Branson took off for the first stage of the flight.

On the ground, about 500 people watched on, including Richard Branson’s wife, children and grandchildren.

On board were his five crewmates from his Virgin Galactic space tourism company.

The space plane detached from the mother ship at an altitude of about 13km and fired its engine, reaching the edge of space about 88km up.

After a few minutes of weightlessness for the crew, the space plane is began its decent, set to end with a glide to a runway landing.

Richard Branson couldn’t contain his excitement, as he spoke on the journey back to earth.

He thanked his crew and remembered all those who had worked on the mammoth project.

After a decade of promises, the moment finally came for Richard Branson to unveil his spaceship for the people.

He said on board:: “To all you kids down there, I was once a kid with a dream. Now I’m up here, in a space ship!”

Customer spaceflight experience

As Branson took to space onboard Virgin Galactic, his official role for the journey will be “evaluating customer spaceflight experience”.

And that’s an important role – after all anyone who wants to rise Virgin Galactic will need to part with a quarter of a million dollars first, and that price is expected to rise.

Along with the two pilots, there is room for six passengers with a flight time of about an hour and a half.

The Virgin Galactic rocket ship detached from the mothership.
The Virgin Galactic rocket ship detached from the mothership.

The spaceship will just go over the 82 kilometres, which is where the US recognises someone as having been into space.

Then, passengers will get to experience about six minutes of weightlessness and seeing the curvature of the Earth and the darkness of space.

They will then descend, landing on a runway much like the old space shuttle or a normal passenger plane.

The new space race

Richard Branson’s adventure will pre-empt next week’s first flight for Blue Origin, as Jeff Bezos launches his space dreams.

Jeff and Blue Origin are promising a completely different experience for their customers.

Blue Origin’s New Shepard, which has no pilots and room for six passengers, reaches more than 100 kilometres high, which is the internationally recognised boundary of space

Passengers on Blue Origin will get about three minutes to float around and feel like they are in space.

Might be half the time, but the price is 50,000 dollars cheaper than flying on Virgin Galactic.

But either way, the expensive thrill ride marks the beginning of earth’s commercial passenger trips into space.

Virgin Galactic doesn’t expect to start flying customers before next year.

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Money

Boeing CEO to depart with lucrative exit package despite chaos

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Boeing CEO Dave Calhoun is set to step down from his position at the end of the year, walking away with a substantial payout despite challenges faced during his tenure.

Here are the key points:

  • Massive Payout: Despite Boeing’s stock price plummeting by 43% since Calhoun took over as CEO in 2020, he is poised to receive a $24 million payment upon his departure.

  • Additional Compensation: Calhoun holds options that could potentially earn him an additional $45.5 million if his successor manages to boost Boeing’s share price by 37%.

  • Comparative Compensation: Calhoun’s compensation during his tenure exceeds that of CEOs in similar industries, despite Boeing’s stock underperforming in comparison.

Boeing CEO Dave Calhoun’s impending departure at the end of the year has sparked controversy as he stands to walk away with a substantial payout, despite the company’s tumultuous journey under his leadership.

READ MORE: Boeing CEO to step down

Despite inheriting a company reeling from the aftermath of two deadly 737 Max crashes, Calhoun’s tenure has been marred by further setbacks, including the recent Alaska Airlines door blowout incident that further tarnished Boeing’s reputation.

Boeing offers CEO $5.3 million incentive to stay through recovery …

With Boeing’s stock price plummeting by 43% during Calhoun’s time at the helm, questions arise about the correlation between executive compensation and company performance, especially in the face of such significant challenges.

‘Raised eyebrows’

Calhoun’s lucrative exit package, valued at $24 million, has raised eyebrows among shareholders and industry observers alike.

Additionally, the potential for Calhoun to earn an additional $45.5 million based on the future performance of Boeing’s shares has intensified scrutiny over executive compensation practices.

This sizable payout contrasts starkly with Boeing’s stock performance, which has significantly underperformed compared to both industry peers and broader market indices, highlighting the dissonance between executive rewards and shareholder value creation.

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Money

It’s been a record year for CEO compensation

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In 2023, Broadcom’s CEO Hock Tan was granted a stock award worth $161 million, propelling him into the realm of highest-paid CEOs.

However, as the company’s share price surged, the value of Tan’s award skyrocketed to approximately $1.3 billion, outpacing even the shareholders’ annual returns.

Tan’s compensation reflects a broader trend among top executives in the tech sector, where awards of restricted stock and stock options surged in value alongside company share prices.

Notably, CEOs like Charles Robbins of Cisco Systems and Shantanu Narayen of Adobe also saw substantial increases in their compensation, doubling in some cases.

The disclosure of such equity growth in executive compensation is a new requirement by the Securities and Exchange Commission (SEC), providing shareholders with insights into the changing value of executives’ awards throughout the year.

CEO pay is on the rise.

New heights

Overall, CEO pay at major S&P 500 companies reached new heights in 2023, rebounding from slower growth in the previous year. The median pay for these CEOs rose to $15.6 million, up from $14.1 million in 2022, reflecting a surge in equity awards.

Broadcom clarified that Tan’s stock award is designed to span five years, with no plans for additional equity grants or cash bonuses during that period.

Tan’s compensation, which amounts to approximately $33 million annually over five years, is contingent upon his continued tenure and specific share price targets.

While the initial valuation of Tan’s restricted shares stood at $160.5 million, the surge in Broadcom’s share price prompted the company to reassess the likelihood of meeting vesting conditions.

This reassessment suggests that Tan may not receive all the shares initially granted.

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Money

Market forecast: weather whirlwinds influencing investments

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Prime conditions for commodity investments arise from global weather shifts, geological tensions, and rising interest rates.

With global weather patterns causing disruptions in traditional supply chains, coupled with geopolitical tensions over natural resource access, and the anticipation of higher interest rates impacting financial markets, the conditions for commodity investments have reached exceptional levels.

Amidst this backdrop, Farrer Capital has emerged as a standout player, leveraging its unique ‘blue ocean’ approach to capitalize on price dislocations and scarce competition in the market.

Mark Wyld from MW Wealth joins the show to share his insights on the inclement weather impacting the market.

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