What happened

Shares of Virgin Galactic Holdings (SPCE -8.21%) fell 13% at the open Tuesday after the space tourism company released its second-quarter report Monday and announced a new share offering. Virgin is a pre-revenue company that trades more on hope than it does fundamentals, and this one-two punch for shareholders served as a reminder of the risks associated with this type of investment.

So what

Virgin Galactic reported after the market closed Monday, and said it lost $0.30 per share in the quarter, $0.04 per share worse than the analysts' consensus expectation. The company had no revenue, but did record an increase in paid enrollments for its "One Small Step" program, a sales initiative that encourages potential space tourists to book future journeys.

Interior shot of Virgin Unity capsule.

Image source: Virgin Galactic.

Virgin Galactic is also delaying the start of its commercial flights until 2021, meaning it will miss its previously stated goal of flying founder Richard Branson into space this year.

"During the period, our operations were impacted by the COVID-19 pandemic, despite our efforts to minimize disruption," Chief Space Officer George Whitesides said in a statement.

In addition, Virgin Galactic said it had filed to sell 20.49 million shares of common stock for gross proceeds of $460 million in a move to boost its working capital.

Now what

Virgin Galactic has soaked up a lot of the investor enthusiasm surrounding space and space tourism in part because many of the other upstarts in the business are not publicly traded. There's great potential here for Virgin Galactic to be a growth stock, but also a lot of risk. The second-quarter results and the looming stock sale are reminders of how hard the challenges are in this industry, and that there's no certainty of success.

But space is also exciting, and given the sector's massive potential, it's OK for investors to make Virgin Galactic shares a small part of their well-diversified portfolios. Just understand that when you buy into a company for the vision rather than the fundamentals, there's a risk the fundamentals will never catch up.