What happened

Shares of Virgin Galactic Holdings (SPCE -14.25%) mounted a brief rally Thursday morning, up as much as 5% in early trading, before falling in the afternoon. The stock, off 20% for the week and down 70% since the beginning of February, is still struggling to find a bottom.

So what

Virgin Galactic hasn't had a lot of good news to share in recent months. The once high-flying stock has seen the debut of its space tourism business delayed, and we found out earlier this week that the company's next test flight, which it had hoped to complete this month, could be delayed due to new complications.

Interior of Virgin Galactic spaceship cabin.

The interior of Virgin Galactic's spaceship. Image source: Virgin Galactic.

Meanwhile, new competitive threats are on the horizon. Privately held Blue Origin has started to take deposits for its space tourism service, and NASA this week announced a deal with Axiom Space to clear the way for the first private astronaut mission to the International Space Station.

The net result is that investors who were once bullish on Virgin Galactic's prospects are beginning to have second thoughts. In a market where highly valued growth companies are increasingly under more scrutiny, Virgin Galactic shares have been placed under continued pressure.

Now what

All hope is not lost. Virgin Galactic still has a long list of customers willing to pay $250,000 each to experience zero gravity, and could see its financials turn around quickly assuming it can complete its testing and begin service. The difference between January and now is that it is no longer a foregone conclusion that the company will complete its testing.

Given that this is currently a zero-revenue company valued by the market at $3.75 billion, there is arguably a lot of future growth priced in even after the declines. Until Virgin Galactic can provide an update with some good news, it might be tough to stop the downward momentum.