What happened

Virgin Galactic Holdings (SPCE 3.15%) is finally airborne, but investors got a fresh reminder of the hurdles that still remain before the space tourism company is profitable. The net result was disappointment, with shares of Virgin Galactic losing 41.1% of their value in August, according to data provided by S&P Global Market Intelligence.

So what

Virgin Galactic achieved a major milestone in August when it completed its first private astronaut flight and gave the green light for another commercial mission in September. The flight occurred years later than what the company originally planned but provided a strong proof of concept after a series of engineering- and pandemic-related delays.

A monthly launch cadence will help grow revenue, but Virgin Galactic is still a long way from achieving profitability. A week before the successful commercial flight, the company reported a wider-than-expected quarterly loss on just $2 million in revenue.

Virgin Galactic forecast $1 million in revenue for the current quarter, well short of the $3.71 million consensus estimate. And the company continues to consume cash, estimating free cash burn of $120 million and $130 million in Q3 and Q4, respectively.

For all of its progress, Virgin Galactic is still a start-up with massive expenses up ahead as it builds out its fleet.

Now what

The bull case for Virgin Galactic is the same as it has been for years. The company has a solid reservation book of people willing to pay upwards of $450,000 to briefly travel into space. Should Virgin Galactic get up to speed and begin to work through that reservation list, and assuming those interested parties are converted into paying customers, there is a real opportunity to ramp revenue from here.

Alas, that won't happen overnight. Virgin Galactic is pinning its hopes on its next-generation Delta class spaceship, which should be able to generate about $3 million per flight and launch weekly. But that spacecraft will not be ready for commercial use until 2026, according to management, and Virgin Galactic has a history of missing its self-imposed deadlines.

For now, Virgin Galactic remains a highly speculative, highly risky stock still valued by the market at nearly $1 billion even after the August swoon. Investors who are interested in buying and hoping for the best should limit this stock to a small part of a well-diversified portfolio, and keep in mind that even in the best of circumstances, Virgin Galactic is likely still years away from blastoff.