Shares of space tourism stock Virgin Galactic Holdings (SPCE 4.48%), which shot up nearly 18% by the closing bell Monday, are dropping back down today. As of 11:50 a.m. EST, shares are down a little more than 2%, after being down more than 6% earlier in the day.
Good news on the coronavirus front, combined with a company tweet reiterating plans to run a spaceplane test flight perhaps as early as this Friday "pending good weather conditions and technical readiness," helped to lift the stock yesterday. Today, bad coronavirus news may be tempering those expectations.
Responding to New Mexico's latest coronavirus mitigation measures, known as the "tiered Red to Green" system, Virgin Galactic announced on Dec. 1 that it has a flight window opening on Dec. 11, and that in accordance with New Mexico's directives, it will conduct this flight using essential personnel only and "in accordance with company and state COVID-19 protocols."
In demonstration that the state is on board with this plan, Virgin Galactic quoted New Mexico Gov. Michelle Grisham calling the company's plan an "exciting announcement."
And nothing may have changed about that. Virgin Galactic's Friday flight could go off without a hitch. That being said, there's also a chance it will not, if the state decides to change its mind in light of changing coronavirus risk.
Yesterday, New Mexico reported a near-50% uptick in new coronavirus cases reported since Sunday -- 1,872 new cases. If this turns out to be the start of a new trend of rising infection numbers, there's still the possibility the state may require Friday's launch to be canceled or may permit the test flight to go ahead but require future test flights to be postponed.
I view this as a small risk, but it could be the reason bulls are pulling in their horns on Virgin Galactic stock today.