Virgin Galactic shares drop after company delays this weekend's spaceflight test
- Virgin Galactic now-delayed test is a redo of an attempt that was aborted during a planned launch in December.
- The company said it needed "more time for technical checks."
Virgin Galactic shares dropped 8% on Friday after the company delayed its spaceflight test that had been scheduled for this weekend.
"We have been progressing through our pre-flight preparations and, during that process, we have decided to allow more time for technical checks," the space tourism company said in a statement. "We are working to identify the next flight opportunity."
Virgin Galactic's stock has soared more than 450% since the company went public in October 2019, with its market valuation now topping $12 billion despite a lack of significant revenue and steady quarterly losses. The stock closed at $54.53 a share on Friday.
The bull case for Virgin Galactic investors is contingent on the company making progress in completing its development program and beginning commercial flights. This has led to updates and delays having a pronounced effect on the stock's daily swings.
The stock jumped 13% the day before, after the Federal Aviation Administration indicated the spaceflight test was on track to launch as early as Saturday. The company had confirmed Thursday that it was "making good progress through our flight preparations," but added that the attempt was still pending technical readiness.
A technical check may happen for a variety of reasons, including inspecting hardware and verifying software. This means a delay could range anywhere from days to weeks depending on the issue.
The now-delayed spaceflight test is a redo of the attempt that was aborted during a planned launch in December. Virgin Galactic spent two months analyzing the cause of the abort and carrying out ground testing, with the test flight set to check "the remedial work that has been completed."
While only two pilots will be on board, the flight is expected to be the first of three as the company seeks to finish developing its spacecraft system.
Earlier this week, UBS lowered its rating on the stock to neutral, citing Virgin's gains to start the year. UBS said in a note to clients that "we're mindful of valuation that appears full," even though upcoming test flights create an appealing "catalyst chain."
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