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Why Virgin Galactic Stock Tanked in October

By Lou Whiteman – Nov 1, 2021 at 6:10PM

Key Points

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Blue Origin is making headlines while Virgin Galactic is stuck in a holding pattern.

What happened

Virgin Galactic Holdings (SPCE -4.10%) hasn't given investors much to cheer about in the months since it successfully flew founder Richard Branson into orbit. October was particularly bad for shareholders as the stock ended the month off by 25.9%, according to data provided by S&P Global Market Intelligence.

So what

Technical delays and regulatory questions have plagued Virgin Galactic in the months since Branson's historic flight. But much of the October share price decline can be attributed to external factors -- among them, the success that a rival has had in stealing the spotlight.

Branson poses with other crewmembers in front of the Unity spacecraft.

Smiles have been hard to come by since Richard Branson's big flight. Image source: Virgin Galactic.

Last month, Jeff Bezos' Blue Origin successfully launched Star Trek star William Shatner into space aboard its New Shepard suborbital spaceship, grabbing a lot of attention in the process. Given the cost and complexity of space tourism, the number of potential customers will be limited. By launching Admiral Kirk into orbit, Blue Origin is likely to attract significant interest to its effort.

Virgin Galactic, meanwhile, appears to be heading in the opposite direction. Last month, it said it would not launch another powered flight until 2022's third quarter and won't start commercial service until near the end of 2022 at the earliest. That potentially gives Blue Origin a lot of time to capitalize on the attention Shatner attracted and book additional business.

Now what

Virgin Galactic shares nearly doubled in the first half of 2021, only to give it all back and more so far in the second half. The stock is now down 17% year to date, and there isn't much reason for optimism on the horizon.

Investors from the beginning were likely aware that space is full of risk, and the concept of space tourism is very much unproven. Virgin Galactic could still end up a success, but it is now apparent that a happy ending is at best a long way off. Add in that companies like Blue Origin are breathing down Virgin Galactic's neck and it is no surprise that its shares remain under pressure right now.

Lou Whiteman 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.

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