Please ensure Javascript is enabled for purposes of website accessibility

Why Virgin Galactic Stock Is Giving Back Its Gains Today

By Rich Smith - Updated Apr 5, 2021 at 1:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors cheered the arrival of VSS Imagine. So why are they such glum chums today?

What happened

Stock of Virgin Galactic Holdings (SPCE -1.38%), the pioneering space tourism company founded by Sir Richard Branson, had a good week last week. After unveiling its shiny new VSS Imagine spaceplane on Tuesday, Virgin stock enjoyed a three-day run of ever-increasing stock prices.

Less than a week later, however, Virgin shares are coming back down to Earth -- down 6.3% as of 12:30 p.m. EDT Monday.

VSS Imagine seen head on in a hangar.

Image source: Virgin Galactic.

So what

What's sparking today's decline? Honestly, I think it boils down to this:

Yes, VSS Imagine is a beautiful spaceplane. It's silver. It's shiny. It's got a new "modular" design (which may make servicing the plane easier, lowering operating costs and permitting a faster cadence of flight). Yes, this might help Virgin Galactic reach its goal of eventually flying 400 flights' worth of paying passengers annually (which at $250,000 per ticket, would mean roughly $600 million in annual revenue).

But first, Virgin Galactic needs to make its first flight with paying passengers. And that remains a problem.

Now what

Since its surprise announcement back in February that it was postponing its next space test flight until May 2021, Virgin Galactic's stock has flown beneath a cloud of suspicion that it might not complete its flight test schedule as soon as it had planned -- and certainly not as soon as it had intimated earlier this year. Lately, even fans of Virgin stock have been worrying aloud that it could be early 2022 before the company is able to begin generating revenue from selling tickets to space tourists.

With the wave of last week's excitement now passed, I suspect investors are today remembering this sobering fact.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Virgin Galactic Holdings, Inc. Stock Quote
Virgin Galactic Holdings, Inc.
$6.45 (-1.38%) $0.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.