Shares of space tourism company Virgin Galactic (NYSE:SPCE) fell out of the sky this morning after getting their wings clipped by a column in The Wall Street Journal (WSJ) on Monday. Pointing out that the stock's share price "is up 66% to date," the newspaper warned that "maintaining the buzz will be a struggle" for a company that has yet to generate any appreciable revenue.
Investors seem unnerved by the Journal's warning, and Virgin Galactic stock fell more than 7% in early trading (though the stock has trimmed its decline to just 2.3% through 3:15 p.m. EDT).
This is music to short sellers' ears. As the Journal points out, investors betting against Virgin Galactic stock are "circling" and betting that Virgin's stream of "positive headlines" won't be able to keep its stock price up forever.
Already, Virgin has had to delay the start of commercial space tourism operations into at least the first quarter of 2021. The company's other business line, developing aircraft for hypersonic commercial air travel, "remains an ultra-long shot for which there isn't even a tentative time horizon," warns the newspaper.
None of this is news to investors who have been following Virgin's story since the beginning. It does, however, appear to have unnerved traders who've glommed onto the stock as a momentum play. I wouldn't be surprised, though, after the shock of today's WSJ pronouncement passes, to see investors jump right back into Virgin Galactic stock after the selling stops.