What happened
Space tourism stock Virgin Galactic Holdings (SPCE +11.35%) cannot catch a break.
Virgin suffered a bit of a setback over the weekend when a planned test flight Saturday was abruptly aborted after a communications glitch prevented the engine on its VSS Unity spaceplane from igniting. Although the mission to space did not take place as planned, Unity was able to safely glide back to Spaceport America and land. Both pilots came home safe and sound. Nonetheless, the failed test flight sparked a sell-off in Virgin Galactic stock, and that continued today, with Virgin Galactic shares falling 5.9% through 12:15 p.m. EST.
Image source: Getty Images.
So what
At last report, Virgin Galactic stock was down roughly 22% from where it traded Friday, just prior to the test flight attempt. That tells you how much investors were counting on everything going 100% right Saturday -- about 22%-worth of market cap.
But if you ask me, I'm not sure the test flight abort was really such a big deal. Recall that this was just one of a series of three planned test flights that Virgin intends to conduct over the next one to four months, leading up to a hoped-for commercial space tourism launch in the first quarter of 2021 or later. The failure of just one of those three test flights to go off as planned might not actually delay the eventual date of commercial launch that much at all, given how much time still remains before the official commercial launch date.
Furthermore, when you consider how pandemic-related travel restrictions might crimp and restrict would-be Virgin customers from even reaching New Mexico to board their flights, it's entirely possible that commercial operations could be more than four months away.
Now what
Long story short, completing the test flight schedule is important, and a sine qua non to Virgin Galactic beginning commercial operations. However, I'm not convinced that completing all scheduled test flights is the most important "milestone" that must be passed before Virgin Galactic begins operating commercial flights on a regular basis -- and generating sustainable revenue and profits.
Just as in the "ordinary" airline industry, this will not happen until the pandemic ends and travel restrictions are lifted. And if I'm right about that, then having its test flight schedule delayed by a few days, or even weeks, simply isn't very important to Virgin Galactic's long-term prospects as a stock.
