What happened

Space tourism pioneer Virgin Galactic Holdings' (SPCE -1.94%) stock shed another 4.8% of its market capitalization Wednesday afternoon, falling 5% to $29.25 per share as of 12:50 p.m. EDT -- and yet, the story at Virgin Galactic really hasn't changed much since the company unveiled its shiny new VSS Imagine spaceplane last week.

So what

Virgin Galactic now has two fully built spaceplanes in its inventory. It's still midway through test-flying the first one. It still hopes to resume test flights in May. And there's still at least a theoretical chance that it could begin flying paying passengers -- if not this year, then next.

While the interruption in the flight test schedule may frustrate short-term investors, long-term investors still have reason to hope that at some point, Virgin Galactic will develop a viable revenue-generating business flying tourists to the edge of space and then bringing them home again.

VSS Imagine seen from above.

Image source: Getty Images.

Now what

But if all this is true, and the long-term story for Virgin Galactic has not changed, then what is sparking today's decline?

Honestly, I think the answer to that question is also the "long-term story" -- and specifically, the threat SpaceX poses to it. While Virgin's test-flight program in New Mexico remains stalled, you see, right next door in Texas, Virgin Galactic rival SpaceX continues test-flying Starships at a frenetic pace. To date, SpaceX hasn't succeeded in landing a Starship intact (and keeping it that way).

But the longer it keeps testing and tweaking its design, the closer SpaceX is getting to success. And when that finally happens, SpaceX will have in its possession a spaceship capable of flying 100 tourists at a time on days-long, or even weeks-long excursions through space -- while Virgin Galactic will have just a couple of six-seaters able to provide just a few minutes of weightless flight at a time.

That's the long-term threat to Virgin Galactic in a nutshell. And that's why I'm not optimistic about Virgin Galactic stock.