What happened

Virgin Galactic Holdings (SPCE -5.12%) returned to space on Thursday, launching its first crewed flight since July 2021. But investors are more focused on the challenges that still lie ahead. Shares of Virgin Galactic traded down 15% on Friday, its second consecutive day of losses.

So what

It's been nearly two years since Virgin Galactic successfully launched founder Richard Branson into space, and the company has reported little other than setbacks and delays in the time since. But after a series of resets, it appears at long last that commercial service is right around the corner.

On Thursday, Virgin Galactic launched two pilots and four employees into space aboard the Unity 25 spacecraft. The mission specialists were on board in part to assess the customer experience, toward a plan for Virgin Galactic to launch its first commercial space flight in June.

That initial mission will be a scientific research flight chartered by the Italian Air Force. Civilians would follow soon after.

This is all seemingly good news for a stock that is down 94% from its all-time high. But you wouldn't know it from the share price reaction. The stock closed down 8% on Thursday, was largely unmoved as the rocket shot higher, and is off double digits on Friday.

For one, even if commercial service starts as scheduled, analysts don't expect Virgin Galactic to be free cash flow positive for a few years. The company burned through $139 million in the first quarter and has forecast negative free cash flow of at least $120 million per quarter for the rest of the year.

With just $833 million in cash and short-term investments on its balance sheet, it is possible Virgin Galactic will have to return to Wall Street for a secondary offering.

And there are plenty of things for the company to spend money on. Virgin Galactic will begin service with just one "mothership" in service, the massive aircraft that takes the company's spacecraft to 50,000 feet before it launches on its own. If anything goes wrong with that aircraft, the VMS Eve, the operational impact would be significant.

Now what

Despite the progress, there remains more questions than answers when it comes to Virgin Galactic. The allure of space tourism is real, but given the six-figure ticket price, demand is uncertain even if the company is able to iron out all the operational issues. And with cash burn an issue, Virgin Galactic has little wiggle room to bring prices down any time soon.

Space is exciting, and the potential for opening up new markets and capitalizing on new opportunities had space stocks rocketing higher in the last few years. But in the years since that euphoric rise, Virgin Galactic has become more of a cautionary tale to investors about what can go wrong than it is a shining success.

That could change if the company is able to prove itself in the years to come. But for now, investors seem to prefer to watch this moonshot play out from the audience.