What happened

The third time was the charm for SpaceX last night. After back-to-back landing attempts with the company's prototype SN8 and SN9 Starship rockets ended in fireballs on the Southwest Texas plain last month, yesterday at 6:20 p.m. EST, SpaceX's SN10 Starship finally "stuck the landing."

And Virgin Galactic (SPCE 7.45%) stock is down 3.3% (as of 11:30 a.m. EST) today because of it.

Glowing red stock chart arrow trending down

Image source: Getty Images.

So what

What does the one thing have to do with the other? Well, think of it this way. Right now, Virgin Galactic's business model is predicated upon the idea that it can sell trips to the edge of space, a few minutes of weightlessness, and then a return to Earth -- probably all in the space of less than an hour -- for $250,000 a pop, carrying six customers per flight.

Give credit where credit is due: This is an amazing promise Virgin Galactic is making, and it's a once-in-a-lifetime and a first-time-in-history offer to bring space tourism to the (well-heeled) masses.

But here's the thing: SpaceX just proved it can fly an entirely reusable spaceship to altitude, and land it back on Earth safely. While there are many, many kinks still to be worked out (SN10 actually blew up on its landing pad, apparently for no good reason, some time after its successful landing), once SpaceX gets everything working right, it should be able to fly tourists not just up to the edge of space, but actually into orbit -- or to the moon -- 100 passengers at a time.

Now what

This story gets even better for space fans, but even worse for Virgin Galactic investors. SpaceX has made it clear that it intends to get Starship certified to carry human passengers by 2023. Elon Musk has further advised that he expects the operating cost, per flight, of Starship to be about $2 million.    

Put a $2 million operating cost, a 100-passenger capacity, and a 2023 timeline together, and what do you get? Potentially, SpaceX could be offering space tourism tickets for as little as $20,000 apiece just two or three years from now -- and Virgin Galactic could have some serious competition on its hands.