Shares of Virgin Galactic Holdings, Inc. (NYSE: SPCE) experienced a significant drop of 13.55% during after-hours trading on Thursday. This decline comes as the initial excitement surrounding the stock earlier in the week starts to fade. Interestingly, SPCE shares have been steadily declining for the past two days.
Positive News for Virgin Galactic
The current trading trend reflects a reversal of the surge in shares witnessed on Tuesday. Last week, the company made an important announcement regarding the opening of a new flight window scheduled from June 27 to June 30, 2023. Notably, this particular flight will involve three members of the Italian Air Force and the National Research Council of Italy, who will be conducting microgravity research.
This upcoming flight marks a significant milestone for Virgin Galactic as it represents their first-ever commercial flight. The company hopes that these flights will generate a substantial revenue stream, estimated to be between $2 million to $3 million per flight. Given the numerous delays that Virgin Galactic has faced over the years, the fact that they are finally able to commence flights with paying customers is considered positive news. However, it should be noted that the timing of the flight has been known for several months.
Small News, Big Impact
It’s important to recognize that Virgin Galactic’s stock is known for its volatility and has a relatively low market capitalization. As a result, even the smallest news can cause significant fluctuations in share prices. When announcements like the new flight window are made, share prices may initially rise but often return to lower levels in the following weeks.
One of the main challenges for the company lies in the fact that the upcoming flight, while significant, will contribute relatively little to its overall revenue. This is in contrast to the substantial cash burn expected in the second quarter of 2023, projected to be between $130 million to $140 million. Achieving positive free cash flow remains a distant goal for Virgin Galactic, and investors should not anticipate an immediate rebound in the stock price.
Edward Cooke is a financial analyst, freelance writer, and editor. He has six years of experience in financial journalism. He has an in-depth understanding of equities markets, tracking major indices and providing real-time analysis on stock price movements, corporate earnings, and market sentiment.
