Shares of space tourism company Virgin Galactic (SPCE -5.47%) are up a strong 13% since reporting earnings last Thursday. This must mean that the company's results were great, right?

Well, no. As my fellow Fool Lou Whiteman pointed out at the time, Virgin Galactic actually fell quite a bit short of even Wall Street's rather low expectations for Q3. Analysts had forecast that Virgin would lose $0.26 per share. It actually lost $0.34 per share -- and reported zero revenue for its second straight quarter.

But if "earnings" aren't the reason that Virgin Galactic stock is rising after earnings, then what is? Let's dig into the report and see if we can find out. 

VSS Unity flying free over New Mexico during June 25 glide test flight.

Image source: Virgin Galactic.

First launch

"Space tourism" company Virgin Galactic famously hasn't yet begun sending tourists to space, or recording ticket revenue for doing so. (Some refer to it as a "pre-revenue" company for this reason.) Accordingly, most of Virgin Galactic's Q3 earnings report was devoted to a discussion of how soon it might get its business under way, and actually start earning something.

Progress is being made in this regard. Over the past few months, for example, Virgin Galactic has flown multiple test flights of its carrier aircraft, known variously as "WhiteKnightTwo" or "VMS Eve," which will be used to carry the "SpaceShipTwo" (or "VSS Unity") spaceplane to altitude before releasing it to rocket into space.

As for the spaceplane itself, two test flights are scheduled to take place before VSS Unity is ready to carry Virgin Galactic founder Sir Richard Branson to space next year. Virgin Galactic confirmed that it plans to run the first test flight later this month, "between November 19-23."

Finally, while Virgin Galactic did not say so itself, one investment banker that follows the company closely, Cowen & Co., predicted both that this first flight by Branson will in fact take place in the first half of next year, and that commercial operations will begin shortly thereafter, in H2 2021. Cowen then proceeded to predict that Virgin Galactic will slowly ramp up the tempo of its tourism flights (a second SpaceShipTwo model is almost ready for service to support this), and regular flights can be anticipated by about H2 2022. 

What it means for earnings

Cowen further estimated that Virgin Galactic, which has collected less than $250,000 in revenue so far this year, will collect $12.4 million in revenue next year. Incidentally, this is a pretty conservative forecast for an analyst that has an "outperform" rating on Virgin Galactic. According to a poll conducted by S&P Global Market Intelligence, most analysts forecast nearly twice as much revenue for Virgin in 2021 -- $23.7 million.

In this vein, it's worth noting that Virgin Galactic said last week that it "will reopen ticket sales following Richard Branson's flight in 2021." By the time that happens, Virgin should have received FAA approval to begin commercial operations, and will have a better idea of how often it can reasonably expect to be able to run tourist flights -- which should help it to know how many tickets it can sell in a given year.

In the meantime, Virgin Galactic has $742 million in cash and equivalents to fund its operations as it first completes its test flight program and then ramps up its flight schedule. At a current cash-burn rate of roughly $258 million per year, that gives the company almost three full years to reach a point at which it is bringing in enough revenue to pay for its expenses -- even without selling more tickets. But the more tickets it sells once ticket sales resume, the longer its cash will last.

Assuming all goes well, and Virgin is operating on a regular schedule by the end of 2022 (i.e. 25 months from now), the company should have time, and cash, to spare.