What happened

Investors in space satellite communications company Viasat (VSAT 0.73%) are having a very bad day on Thursday, as news of a glitch in the company's newest satellite is pummeling the stock -- now down 28.1% at 1 p.m. ET. Yesterday evening, after the close of trading on the Nasdaq, Viasat revealed that its ViaSat-3 Americas satellite suffered an unexpected event during reflector deployment.  

So what

It wasn't immediately clear how serious this issue was, but Viasat's immediate segue from admitting the problem to explaining how it will mitigate its effects -- by "redeploying satellites from Viasat's extensive fleet to optimize global coverage, and/or reallocating a subsequent ViaSat-3 class satellite to provide additional Americas bandwidth" -- implies that the satellite may be entirely inoperable due to the defect.

While the company was quick to assure the public that there will be "no disruption to customers from this event, and no impact to coverage or capacity of the respective Viasat and Inmarsat constellations currently in service," it does appear that the company's investment in ViaSat-3 Americas -- reported to be worth $700 million -- may be a total loss.  

Now what

Or maybe it won't be. As SpaceIntelReport was quick to point out yesterday, ViaSat-3 was insured against failures such as this one, and that insurance could offset as much as $420 million of the cost to Viasat. If correct, this would limit the company's loss to $280 million.  

Yes, this is still a lot of money -- equal to approximately all of Viasat's earnings before interest, taxes, depreciation, and amortization (EBITDA) earned over the past 12 months. But even so, the fact that investors are reacting to the news by subtracting $1.5 billion from Viasat's market capitalization today suggests they may be overreacting just a wee bit to the news.

For long-term investors who have faith in Viasat's future, today's massive sell-off in the company's stock may actually present a chance to buy this space stock on the cheap.