Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Virgin Galactic Stock Fell Monday Morning

By Matthew Frankel, CFP® – Sep 13, 2021 at 11:46AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The space tourism company gave investors some not-so-great news.

What happened

The overall stock market was mixed on Monday morning, with both the Dow Jones Industrial Average and S&P 500 in positive territory and the Nasdaq composite slightly negative as of 10:30 a.m. EDT today. However, space tourism company Virgin Galactic (SPCE -1.15%) was a big underperformer, with shares down by about 3.2% after falling by more than 5% earlier in the session.

So what

Monday's move can be attributed to news that broke on Friday afternoon that the company's next test flight is being postponed until at least mid-October. The delay in the Unity 23 test flight is due to a potential manufacturing defect in a part needed for the flight control actuation system. It's unclear at this point if the defect actually affects anything the third-party supplier has built for Virgin, and what steps might be needed to fix it.

Earth as seen from space.

Image source: Getty Images.

This comes on the heels of a report a little over a week ago that indicated the FAA would temporarily halt Virgin Galactic's flights while it investigates details around the company's July test flight with founder Richard Branson on board. The company emphasized in its new announcement that the delay in the next flight is unrelated to the FAA inquiry.

Now what

The Unity 23 test flight had previously been anticipated to launch later this month or in early October at the latest. But with anything related to space flight, any type of potential defect is cause for delay.

Virgin Galactic remains a highly speculative stock at this point, but it's also important to note that today's news shouldn't have much of an effect on the long-term investment thesis. If you're a believer in Virgin Galactic over the long run, dips like this one that are unrelated to the potential of the business could be opportunities to add shares at a discount.

Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Virgin Galactic Stock Quote
Virgin Galactic
$5.14 (-1.15%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.