Virgin Galactic Holdings (SPCE) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We have incurred significant losses since inception, we expect to incur losses in the future and we may not be able to achieve or maintain profitability
2. 02The success of our business will be highly dependent on our ability to effectively market and sell spaceflights
3. 03The market for commercial spaceflight is still emerging and may not achieve the growth potential we expect or may grow more slowly than expected
4. 04Delays in the development of our Delta Class spaceships would adversely impact our business, financial condition and results of operations
5. 05Any inability to operate our spaceflight systems at our anticipated flight rate could adversely impact our business, financial condition and results of operations
6. 06Unsatisfactory safety performance of our spaceflight systems or security incidents at our facilities could have a material adverse effect on our business, financial condition and results of operation
7. 07We may not be able to convert our orders in backlog or inbound inquiries about flight reservations into revenue
8. 08We have not yet tested flights at our anticipated full passenger capacity of our Delta Class spaceships
9. 09Any delays in the development and manufacture of additional spaceflight systems, including our Delta Class spaceships and next-generation motherships, may adversely impact our business, financial condition and results of operations
10. 10If we are unable to adapt to and satisfy customer demands in a timely and cost-effective manner, our ability to grow our business may suffer
11. 11We may be unable to manage our future growth effectively
12. 12Our prospects and operations may be adversely affected by changes in consumer preferences and economic conditions that affect demand for our spaceflights
13. 13Adverse publicity stemming from any incident involving us or our competitors, or an incident involving a commercial airline or other air travel provider, could have a material adverse effect on our business, financial condition and results of operations
14. 14Due to the inherent risks associated with commercial spaceflight, there is the possibility that any accident or catastrophe could lead to the loss of human life or a medical emergency
15. 15We may require substantial additional funding to finance our operations, but adequate additional financing may not be available when we need it, on acceptable terms or at all
16. 16Certain future operational facilities may require significant expenditures, and the ongoing need to maintain existing operational facilities requires us to expend capital
17. 17Our spaceflight systems and related equipment may have shorter useful lives than we anticipate
18. 18Failure of third-party contractors and suppliers could adversely affect our business
19. 19We expect to face competition in the commercial spaceflight industry and other industries in which we may develop products
20. 20Our investments in developing new offerings and technologies and exploring the application of our existing proprietary technologies for other uses and those offerings, technologies or opportunities may never materialize
21. 21The “Virgin” brand is not under our control, and negative publicity related to the Virgin brand name could materially adversely affect our business
22. 22If we fail to adequately protect our proprietary intellectual property rights, our competitive position could be impaired and we may lose valuable assets, generate reduced revenue and incur costly litigation to protect our rights
23. 23We rely on licenses from third parties for intellectual property that is critical to our business, and we would lose the rights to use such intellectual property if those agreements were terminated or not renewed
24. 24Protecting and defending against intellectual property claims may have a material adverse effect on our business
25. 25We have government customers, which subjects us to risks including early termination, audits, investigations, sanctions and penalties
26. 26We plan to commercialize spaceflights outside the United States, and such expansion will expose us to a variety of risks associated with international operations that could materially and adversely affect our business
27. 27Failure to comply with a wide variety of extensive and evolving government laws and regulations could have a material adverse effect on our business
28. 28operational parameters which may adversely impact our business. Even when we believe we are in complete compliance with requirements, a regulatory agency may determine that we are not
29. 29Failures in our or our third-party providers’ information systems and technology infrastructure could damage our business, reputation and brand and substantially harm our business and results of operations
30. 30We are highly dependent on our senior management team and other highly skilled personnel, and if we are not successful in attracting or retaining highly qualified personnel, we may not be able to successfully implement our business strategy
31. 31We are subject to many hazards and operational risks that can disrupt our business, which could have a material adverse effect on our business, financial condition and results of operations
32. 32We may become involved in litigation that may materially adversely affect us
33. 33Natural disasters, unusual weather conditions, epidemic outbreaks, terrorist acts, military conflicts, macroeconomic conditions and political events could disrupt our business and flight schedule
34. 34Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide
35. 35The individual or cumulative effects of the factors discussed above could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful
36. 36We are subject to environmental regulation and may incur substantial costs
37. 37We may be adversely affected by global climate change or by legal, regulatory or market responses to such change
38. 38Failure to keep up with evolving trends and shareholder expectations relating to environmental, social and governance practices could adversely impact our reputation, share price and access to and cost of capital
39. 39We are exposed to changes to the global macroeconomic environment beyond our control, including inflation fluctuations
40. 40Changes to United States tariff and import/export regulations may have a negative effect on us

Risks Related to Our Ownership Structure

1. 41Virgin Investments Limited has significant ability to control the direction of our business, which may prevent potential investors and other stockholders from influencing significant decisions
2. 42Delaware law and our organizational documents contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
3. 43The provisions of our certificate of incorporation requiring exclusive forum in the Court of Chancery of the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers
4. 44Our certificate of incorporation expressly limits the liability of certain parties to us for breach of fiduciary duty and could also prevent us from benefiting from corporate opportunities that might otherwise have been available to us

Risks Related to Our Securities and Indebtedness

1. 45Our indebtedness could expose us to risks that could adversely affect our business, financial condition and results of operations
2. 46The conditional conversion feature of the 2027 Notes, if triggered, may adversely affect our financial condition and any conversion of the 2027 Notes will dilute the ownership interest of existing stockholder, and may otherwise depress the price of our common stock
3. 47The convertible note hedge may affect the value of the 2027 Notes and our common stock
4. 48transactions are expected generally to reduce the potential dilution upon any conversion of the 2027 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2027 Notes, subject to a cap
5. 49We are subject to counterparty risk with respect to the 2027 Note Hedge transactions
6. 50We do not intend to pay cash dividends for the foreseeable future
7. 51The trading price of our common stock may be volatile, and you may be unable to sell your shares above your purchase price
8. 52These market and industry factors may materially reduce the market price of our common stock regardless of our operating performance
9. 53Any acquisitions, partnerships or joint ventures that we enter into could disrupt our operations and have a material adverse effect on our business, financial condition and results of operations
10. 54Changes in tax laws or regulations may increase tax uncertainty and adversely affect results of our operations and our effective tax rate
11. 55Our ability to use our U.S. federal and state operating loss carryforwards and certain other tax attributes may be limited
12. 56The obligations associated with being a public company involve significant expenses, resources and management attention, which divert from our business operations
13. 57An active trading market for our common stock may not be maintained
14. 58We completed a 1-for-20 reverse stock split of our shares of common stock, which may have adverse effects on the trading of our common stock
15. 59Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline