Please ensure Javascript is enabled for purposes of website accessibility

Why Virgin Galactic Stock Is Continuing to Tumble Today

By Rich Smith – Aug 5, 2020 at 2:58PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A big Q2 loss is just the beginning of this stock's problems.

What happened

Shares of Virgin Galactic (SPCE 0.20%) are in a tailspin. After topping $24 a share ahead of earnings on Monday, the stock has fallen 18% since earnings came out, and as of 2:20 p.m. EDT, Virgin Galactic shares are down another 4% today.

So what

Why are investors shunning Virgin this week? Let me count the ways.

There's the fact that the company lost $0.30 per share last quarter, and the fact that it had no revenues whatsoever. There's the big 20.5 million-share stock issuance Virgin announced to raise cash to fund its continuing losses -- and the very strong likelihood that those losses will continue through at least the first quarter of 2021 (when company founder Sir Richard Branson says he will finally take his first flight aboard Virgin's VSS Unity spaceplane).

Boy in jetpack stares  at the sky.

Image source: Getty Images.

Now what

Because commercial flights aren't set to begin until the British billionaire has taken Unity for a spin himself, that means probably no revenue will be coming in until later next year.

Result: Investors who've been banking on Virgin Galactic's promises to begin commercial operations this year and turn profitable in 2021 are feeling they've been burned. While Virgin still could become profitable as it promised, it's now clear that that's going to take a bit longer than expected.

Today, it seems at least some investors are losing patience. Not everyone's willing to wait around forever to see Virgin take off.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Virgin Galactic Holdings Inc. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Virgin Galactic Holdings, Inc. Stock Quote
Virgin Galactic Holdings, Inc.
SPCE
$4.89 (0.20%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.