What happened

Shares of space tourism company Virgin Galactic (SPCE -14.59%) declined 3.5% through 12:15 p.m. EDT Thursday, the stock's third "down" day this week (it's had only one "up"). Today in particular, though, I don't blame Virgin Galactic for its stock sinking.

I blame Blue Origin.

Simple red arrow declining stock chart on a white checked background

Image source: Getty Images.

So what

In case you haven't heard already, Virgin Galactic rival Blue Origin announced yesterday that it will begin running paid tourism flights to the edge of space and back on July 20, 2021. It sounds like the first flight will carry only one paying passenger, with the ticket sold at auction and the proceeds donated to Blue Origin's educational foundation. But Blue said it will fly at least a couple times more later this year, commercially, and presumably with full flights of passengers paying an estimated $200,000 or more per ticket (says Reuters).

Granted, Virgin Galactic has promised to resume flight testing this month and says it only needs to get two more test flights done before it will be ready to fly passengers -- first of all, company founder Sir Richard Branson himself, and then paying customers. In theory, there's still time for Virgin Galactic to begin commercial operations before Blue Origin does, and even if that doesn't happen, there's no rule that says only one company can enter the space tourism business.

Still and all, Blue's announcement means there's a very real risk now that Virgin Galactic, which came up with the idea of space tourism first, might not be the first to implement it, and that would certainly be a PR blow to the company.

Now what

Even worse, analysts who follow the company have opined that it currently looks like Virgin Galactic might not begin commercial operations until next year. By that time, Blue Origin could have as many as three successful commercial flights already under its belt (if all goes well) and an established record of safety that Virgin Galactic will have to compete with. Moreover, Blue Origin is floating plans to rapidly expand its business, adding more flights and more launch locations, including outside the United States. Adding to investor worries, SpaceX, too, has announced plans to enter the space tourism market.

By the time Virgin Galactic does get to space, it may find it's already getting crowded up there.