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Why Virgin Galactic Stock Dropped 8.1% Today

By Travis Hoium - Updated May 25, 2021 at 2:14PM

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Volatility continues for the space tourism company.

What happened 

Shares of space tourism company Virgin Galactic (SPCE -0.35%) dropped as much as 8.1% in trading on Tuesday following a day when shares jumped 27.6%. At 1:30 p.m. EDT today, shares were down 6.2%. 

So what

Yesterday's pop was driven by Virgin Galactic's successful space flight over the weekend following months of delays. There's no news out today, so this growth stock is simply giving back some of the gains from yesterday. 

Virgin Galactic spacecraft gliding back to earth.

Virgin Galactic's spacecraft returning to Earth. Image source: Virgin Galactic.

As essentially a pre-revenue company, Virgin Galactic is extremely speculative, and investors are grasping at any piece of news to determine where the company is going. Delays this spring caused the stock to drop, and then the latest successful space flight caused shares to rise. Don't be surprised if there are a lot of ups and downs for the company as it moves closer to commercial space flights with paying customers later this year. 

Now what

If you're a Virgin Galactic investor, like me, this is some of the volatility we can expect. As flights progress, the stock will likely be extremely volatile. But what's crucial will be how much revenue and profit the company can earn once it reaches maturity. That process will take years, and until then investors are in for a bumpy ride. 

Travis Hoium owns shares of Virgin Galactic Holdings Inc. The Motley Fool owns shares of and recommends Virgin Galactic Holdings Inc. The Motley Fool has a disclosure policy.

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