What happened
Shares of space tourism company Virgin Galactic (SPCE 3.15%) fell as much as 10.5% in trading on Thursday as the hype of trading early in the week fades. At 3 p.m. ET, shares were only down 5.2% but have now been trading steadily lower for two days.
So what
Today's trading trend is really an unwinding of the pop in shares on Tuesday. Late last week, the company announced it will open a new flight window from June 27 to June 30, 2023. This flight will include three members of the Italian Air Force and the National Research Council of Italy, who are conducting microgravity research.
This is the first commercial flight for Virgin Galactic and will kick off flights that could generate $2 million to $3 million per flight. Years of delays have plagued the company, so simply getting off the ground with paying customers is welcome news, even though the timing of the flight has been known for months.
Now what
Virgin Galactic is a volatile stock with a low market cap, so even the smallest news can cause a big move in the share price. When something like a new flight window is announced, shares can bounce, but often fall back to earth over the next few weeks.
The challenge for the company is that this flight will be a relatively small revenue generator compared to the $130 million to $140 million in cash that management expects to burn in just the second quarter of 2023. There's a long road ahead to get to free cash flow positive, and investors shouldn't expect a bounce in the stock to stick quite yet.
