Shares of space tourism company Virgin Galactic (NYSE: SPCE) started off the week on a down note Monday, falling 5.5% through 10:20 a.m. EDT on the first trading day after Friday’s announcement that the company will postpone its earnings report by about a week.
On Friday after close of trading for the day, Virgin Galactic announced that instead of reporting Q1 2021 earnings tomorrow (May 4), as it had intended, it will report on Monday, May 10, after close of trading.
Now, this delay is both bad news and potentially good news for investors.
Bad news first: Based on its reading of “the recent statement issued by the Securities and Exchange Commission (the “SEC”) on April 12, 2021 relating to the accounting treatment of warrants issued by special purpose acquisition companies,” Virgin has decided to “restate its consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2020.”
The good news is that accounting for the warrants appears to be the only problem with Virgin’s financials, and it must be a very easy problem to fix if Virgin only needs six days to do it.
Virgin Galactic did warn that as a result of its restatement, “it will recognize incremental non-operating, non-cash expense for each of the fiscal years ended December 31, 2020 and December 31, 2019” — but the added expense will not significantly change the numbers it has already reported. Virgin Galactic was unprofitable and had less than half a million dollars in annual revenue before the restatement — and will remain unprofitable and have less than half a million dollars in revenue after the restatement, too.
Also unchanged: The company still plans to launch a new test flight of its SpaceShipTwo spaceplane this month — and when you get right down to it, that’s the news that investors are really waiting for.