What happened

Virgin Galactic Holdings (SPCE -1.82%) shares were already under pressure due to missed deadlines and failed test launches. Now, the stock also has to deal with some high-profile sellers. Shares of Virgin Galactic lost 27.7% in April, according to data provided by S&P Global Market Intelligence, erasing what had been a spectacular start of the year for the space tourism stock.

So what

Virgin Galactic shares have always traded more on faith than on actual results, and that faith has been sorely tested of late. The company is pre-revenue but soared to a market capitalization of more than $12 billion earlier this year on investor excitement about its plan to soon launch tourists into space.

The VSS Unity spaceship with its mother ship.

Image source: Virgin Galactic.

How soon is a matter of uncertainty. Virgin Galactic had originally planned to launch founder Richard Branson into space in 2020, but a combination of pandemic-related complications and testing setbacks has pushed the target date into 2021, and potentially into 2022 if things don't pick up pace soon.

The stock fell 17.7% in March, in part due to the continued delays and in part because company chairman Chamath Palihapitiya sold a significant portion of his holdings. In April, it was Branson's turn to sell. The billionaire investor sold more than $150 million worth of the stock, though he remains a major shareholder.

If the Branson sale wasn't bad enough, Virgin Galactic was also hit when Cathie Wood's ARK Invest funds disclosed it had sold some of its shares.

Now what

At its peak in February, Virgin Galactic was up more than 150% for the year, but with the recent retreat it is now down 15% year to date. Since hitting public markets a little over a year ago, Virgin Galactic has always been a bit of a binary stock: It was destined to either do great things or fail spectacularly, with few likely outcomes in between and almost no way of knowing which way it was heading.

Absent fundamentals, these sorts of stocks are driven by emotion, and emotion has turned against Virgin Galactic. The next big catalyst could come this month as Virgin Galactic hopes to resume testing. If the flight goes off without a hitch, that could be the rocket fuel the stock needs to reverse course. But as the last few months have shown, investors should be prepared for all outcomes.