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Why Virgin Galactic Slipped Another 5% Ahead of Earnings

By Rich Smith – Oct 28, 2020 at 12:29PM

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For seven days and counting, investors have waited for a test flight that has not arrived.

What happened

There's still a week to go before space tourism company Virgin Galactic (SPCE 6.13%) reports its Q3 2020 earnings -- and its stock continues to fall ahead of the news.

Granted, pretty much all stocks are falling today. The broad S&P 500 is down 2.5% in noonday trading, while the tech-focused Nasdaq is off 2.8%. But Virgin Galactic, which is also down 2.8%, may have problems all its own.

Cartoon character sliding down a red arrow

Image source: Getty Images.

So what

Until Virgin Galactic starts flying commercial passengers to space, you see, it cannot generate much revenue. And without revenue, it cannot earn profits.

Thus, next week's "earnings" news isn't actually expected to feature much in the way of earnings at all. (Most analysts actually predict a $0.26 per-share loss).  

Now what

Now, Virgin is continuing to plan test flights that will advance its technology to the point where it can begin sending tourists to space -- hopefully, as early as Q1 of next year. However, the window for resuming such test flights that opened on Oct. 22 is now nearly a week old. We haven't seen any Virgin spaceships racing for space, nor have we even heard the company set a definite target date for when it will attempt its next flight.

Maybe that date will be revealed on Nov. 5, when it reports earnings. But maybe it won't. In the meantime, all Virgin Galactic investors can do is wait ... and count their losses.

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.

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