What happened

Shares of space-tourism company Virgin Galactic (NYSE:SPCE) were down 20.3% in August, according to data provided by S&P Global Market Intelligence. It was an eventful first half of the month. The company reported zero revenue for the second quarter of 2020, delayed its first flight, and raised cash via a public offering of its common stock.

None of these things were good for Virgin Galactic's stock price. And the stock is now down almost 60% from 52-week highs as investor enthusiasm for this futuristic business has worn off.

SPCE Chart

SPCE data by YCharts

So what

Virgin Galactic had hoped to send founder Sir Richard Branson on the maiden space-tourism voyage in 2020, but the coronavirus threw a monkey wrench in the timeline. It's working with a limited crew to keep everyone healthy, which slowed progress. Two test flights are now scheduled for the fall, with hopes Branson can take the first flight in the first quarter of 2021. 

Virgin Galactic has deposits from around 600 people for future flights, but it turns out no one was eager to book a spaceflight during the pandemic. As a result, the company recorded zero revenue in Q2. However, building a space-tourism company from the ground up costs money. To secure funds, the company offered shares in a public offering.

The 23.6 million share offering grossed Virgin Galactic around $460 million, which will do more than just keep the lights on. The company remains debt free and has a lot of cash on hand, but an offering like this dilutes existing shareholder value. To explain it simply, when there are more pieces of a whole, each piece represents a smaller percentage of the business and is, therefore, worth less.

A frustrated man lays his head on a table with a down, red stock chart behind him.

Image source: Getty Images.

Now what

These developments explain why Virgin Galactic stock was down in August. But this is all part of investing in a company that has yet to develop its flagship service. Until it's fully operational, there's no telling which way the stock will trade month to month. The first step for this growth stock is to get spaceships flying. Branson's upcoming Q1 flight remains the most important thing for investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.