On the first trading day after the Christmas break, shares of space company Virgin Galactic (NYSE:SPCE) dropped 7.7% as of 3:15 p.m. EST on Monday.
There was no obvious news to explain why investors decided to sell off Virgin Galactic stock today. The company sent its fans a Christmas Eve note assuring them that it is hard at work figuring out why its rocket didn't fire in the last flight test and optimistic that it will figure out the problem, and that it's continuing work to get its second spaceplane built in time to begin commercial operations.
That being said, the latest news on the coronavirus front is not great for Virgin Galactic. According to data from the New Mexico Department of Health, new COVID-19 infections spiked in the days leading up to Christmas, racing up to 1,927 cases recorded on Dec. 24, more than twice the level recorded on Dec. 21.
New cases in the state have subsided since, falling into the mid-hundreds the past few days. Still, the holiday spike has the potential to delay transitioning Sierra County, New Mexico -- where Virgin's Spaceport America is located -- from a coronavirus status of "red" to "yellow." And that would keep in place state restrictions on nonessential personnel working at Virgin Galactic for another couple of weeks at least.
The longer the county remains at the red level of coronavirus seriousness, the more difficult it will be for Virgin Galactic to complete its program of test flights and begin revenue-generating commercial operations. And that could be the reason Virgin Galactic stock is down today.