What happened
After spiking more than 12% Thursday on news that the Federal Aviation Administration (FAA) has cleared it to resume flying, space tourism company Virgin Galactic (SPCE 1.57%) gave back about half of its gains Friday, closing down 5.8%.
And that makes a lot of sense.
Image source: Getty Images.
So what
After all, few people thought (I expect) that the FAA was going to put Virgin Galactic out of business because, on a single flight to space, it veered out of its approved flight trajectory for a couple of minutes' time. The agency's decision to clear Virgin Galactic to resume test flights, and eventually carry passengers to space, therefore, wasn't exactly a surprise, and the stock probably didn't deserve a 12% bump in market capitalization because of it.
It also makes sense that investors who received a windfall profit from yesterday's share price run-up would want to sell and lock in those gains quickly because the future for Virgin Galactic still contains quite a lot of unknowns.
Now what
Specifically, we know that Unity 23 -- the company's next scheduled flight -- is now back "on," but we don't know exactly when it will go off. (Unity 23 was supposed to fly in late-September, but that date has already passed Virgin Galactic by).
We know that Virgin Galactic is supposed to fly a Unity 24 test flight sometime in mid-2022 as well, but we don't know precisely when that will happen, either. Nor do we know when commercial space tourism operations will be able to begin (i.e., Unity 25, 26, etc.) after that final test flight is complete.
Finally, we don't know whether Virgin Galactic will be successful in pushing through a near-doubling in the price of its space tourism tickets, or how much money it will continue losing, as it flies customers who have already bought tickets for $250,000 or less, before the price increase comes into effect.
Long story short, there's a lot of uncertainty surrounding Virgin Galactic still, and until the company begins flying regularly, recording material levels of revenue, and (dare we hope?) reporting profits, investors should expect to see continued turbulence in this stock.
