What happened

The stock of space tourism company Virgin Galactic Holdings (SPCE -2.56%) has been flying high recently. Shares shot up almost 40% last Friday after a positive business development. But the stock is giving some of that back today, trading down about 7.5% as of 10:30 a.m. EDT.

So what

Today, Bank of America Securities issued a downgrade on Virgin Galactic stock, knocking it down two notches from a buy rating to underperform (sell), as reported by CNBC. The firm cited the fact that it believes the good news reported last week is now fully priced into the stock. Last week, the Federal Aviation Administration (FAA) gave the company a license for passenger space flights after its latest successful test flight in May.

Virgin Galactic's VSS Imagine against a dusk sky.

Virgin Galactic's VSS Imagine. Image source: Virgin Galactic.

Now what

The test flight reached a speed of Mach 3 and an altitude of 55.5 miles. Prior to the FAA approval, only crew members were allowed on flights. Virgin Galactic still plans another three test flights, but the license allowing customers on board is the first time the FAA has approved a space company to fly paying passengers. 

But trading in the stock had been active prior to the recent news. Since the start of May, the 30-day average daily volume has grown by more than 300%. Some activity has been linked to retail traders who follow Reddit's WallStreetBets. Bank of America seems to feel that this activity has now brought the price beyond its fair valuation, and some shareholders are booking profits today.