Copyright © 2020 Albuquerque Journal
Virgin Galactic Holdings Inc. saw a marked drop in its stock price Monday, the first day of trading following the company’s aborted spaceflight Saturday from Spaceport America in southern New Mexico.
Company shares, which trade on the New York Stock Exchange under the ticker “SPCE,” closed at $26.47 per share Monday, down more than 17% from $32.04 a share Friday.
The decline follows a failed attempt to send the VSS Unity to space from New Mexico Saturday morning, when Virgin Galactic’s mothership carried the rocket to above 40,000 feet. The Unity broke away from the carrier plane as planned and the pilots on board fired up the motor to fly to space, but the engine shut down, forcing the pilots to glide back to Earth.
Company CEO Michael Golglazier said Saturday an onboard computer that monitors the propulsion system lost connection, forcing the engine to shut down as a safety precaution.
It’s now unclear when test flights will start again.
Saturday’s flight was to be the first of three, followed by a second flight with four crew members on board, and a final one with company founder Sir Richard Branson before launching commercial spaceflights for paying passengers.
“We remain focused on the test flight program we have previously announced, beginning with a repeat of this test flight,” Colglazier said Saturday. “… We look forward to sharing information on our next flight window in the near future.”
The start of test flights boosted Virgin Galactic stock from about $17 in October to $32 Friday. Investors might be overreacting to Saturday’s events, said Rich Smith, a writer for the investor advisory service The Motley Fool.
“I’m not surprised that investors sold off Virgin Galactic stock today,” Smith said in an email to the Journal Monday. “I am a bit surprised at the enthusiasm with which they sold it off, however. A 17% decline in response to a test flight in which only one thing went wrong, no one was injured, and the system basically worked as it was designed to work, seems a bit drastic.”
Test flights will likely continue fairly soon. In the meantime, investors seem overly sensitive to the press.
“Because (Virgin Galactic) has no earnings yet, and essentially no revenues, it trades not on the value of its business today, but on ‘news flow’ and ‘headline risk,'” Smith said. “If the headlines are good, the stock goes up. If the headlines are bad, it goes down.”