Space tourism venture Virgin Galactic is making a bold change at the top, just as the company is getting ready to fly its first customers after more than a decade of developing and testing its spacecraft.
Virgin Galactic's chief executive Michael Colglazier reports to work for the first time on Monday, as the company announced last week that George Whitesides would be shifting roles after nearly 10 years as CEO. Colglazier joins the company at a critical time, as Virgin Galactic is about to conduct the final test spaceflights it needs to pass key remaining development milestones.
But Colglazier's introduction, as well as hints from Virgin Galactic's leadership that it is "months" away from beginning commercial service, has effectively been given a round of applause by the company's stock. As of Friday's close at $24.05, shares of Virgin Galactic have jumped nearly 30% since the company made the CEO change announcement.
"I'd attribute most of the stock move over the last few days to the message that the company is sending with the CEO transition, most importantly that it has mitigated most of the technology risk and is shifting its attention from development to monetization," Vertical Research Partners analyst Darryl Genovesi told CNBC.
Genovesi added that Whitesides' move to chief space advisor, where he'll focus on the company's future businesses, shows that nascent opportunities like helping people fly to the space station or point-to-point hypersonic travel "are real enough to have a C-level executive running them." Virgin Galactic chairman Chamath Palihapitiya further indicated on a conference call with investors that the company is a few weeks away from making "some really important announcements from us" about its long-term bets.
On a call with Virgin Galactic shareholders and analysts on Wednesday, Colglazier expressed confidence and excitement about his career change — and the strong marketability of his new company.
"Taking on the role of CEO of Virgin Galactic at this point in the company's growth trajectory is perfectly suited to my background and experience," he told investors. "I made one observation early on in this process, that was that Disney and Virgin share a common commitment to world-class service, incredible innovation, and delivering unique, unforgettable experiences."
Additionally, asked if he would fly on a Virgin Galactic spaceflight himself, Colglazier told CNBC in an email that he "absolutely" would.
"Experiencing space has been a childhood dream of mine!" Colglazier added.
The challenge ahead for Colglazier is as steep as the path Virgin Galactic's rocket takes during a flight.
The company has a backlog of about 600 customer reservations on its books, with the majority of tickets sold for between $200,000 and $250,000 per person. The company also has over 400 deposits of $1,000 each since taking its first step in February toward reopening ticket sales.
Even with its host of existing reservations, Palihapitiya's bar for Colglazier's success is to make Virgin Galactic "into a multi-billion dollar, high-margin, high-profit business" — all while doing so safely, in the harsh and risky environment of space.
Despite the height of the hurdle, Palihapitiya noted to investors that "it was shocking" how many prospective CEOs raised their hands and wanted to lead Virgin Galactic. But he backed Colglazier for the job, saying "he blew our socks off" during interviews.
"He talked about sort of a 'blue sky' process that he's run multiple times inside of Disney and some of the Disney secret sauce about how they start with this customer-centric point of view. And in it, you don't just look at that one individual person but all the people around it," Palihapitiya said.
Colglazier's hiring likely isn't the end of Virgin Galactic's leadership growth either. Palihapitiya expects that the new CEO will recruit additional talent, "as we really put the foot on the gas on commercial ops."
An Indiana native, Colglazier graduated from Stanford University in 1989 and was employed at Disney as an analyst and project manager in the corporate strategy while he worked towards his master's degree from Harvard Graduate School of Business Administration.
After three years, he spent a summer working for Bain and Company, a top management consulting firm headquartered in Boston, before returning to the House of Mouse in 1994.
Over the next 26 years, Colglazier held executive roles within Disney's largest segment -- parks, experiences and consumer products.
In the last decade he has been the vice president of Animal Kingdom, president of The Disneyland Resort and the president and managing director of Disney Parks International, helming the operations and development of Disneyland Paris, Hong Kong Disneyland, Shanghai Disney Resort and Tokyo Disney Resort.
Under his leadership, the Disneyland Resort in Anaheim, California experienced record growth, driven by his execution of the 60th Anniversary Diamond Celebration and his introduction of the Marvel franchise into the park. Colglazier was also responsible for leading the effort behind the $2 billion Star Wars: Galaxy's Edge land that was opened to the public in 2019.
In an internal company memo, Disney Parks chairman Josh D'Amaro showed his appreciation for Colglazier's time with the entertainment giant.
"Bob Chapek and I want to thank Michael for his incredible 30 years of service and dedication to the Company. He has been an invaluable asset to our business and will be greatly missed," D'Amaro said in the memo.
During his introduction as Virgin Galactic's incoming CEO, an analyst joked that Colglazier was taking on a new type of Space Mountain. He took it in stride.
"You may not have known, Space Mountain is actually my favorite attraction," Colglazier quipped.
More seriously, Colglazier spoke to the risks that Virgin Galactic faces in flying its customers to the edge of space.
"I've had a long career working in an industry that is all about safety and delivering customer experiences in a safe way. Obviously, aerospace is different than theme park technology, and so that's why I will be diving deep and looking to the expertise that George and the engineers that we have to bring me up to speed there," Colglazier said.
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