Why Virgin Galactic’s Stock Is Down Again Today

what happened

last Friday, Virgin Galactic Holdings (NYSE:SPCE) Stocks reacted surprisingly strongly to news that regulators had finally allowed the company to fly passengers into space. The market has rethought that reaction in the days since. The stock dropped more than 10% on Tuesday afternoon after Monday’s slump.

so what?

Virgin Galactic’s announcement Friday that the Federal Aviation Administration (FAA) has approved the company for passenger space flights is certainly good news. But it’s still somewhat surprising that the company’s stock jumped 30% on the announcement. Ultimately, even if nothing happened, the FAA was approved and expects Virgin Galactic to return on schedule after its defeat. Several losses were the big reason the stock surged 40% in May.

Image Source: Virgin Galactic

Since then, the market seems to have revisited the level of enthusiasm. On Monday, Alembic Global analyst Peter Skibitski downgraded Virgin Galactic to neutral from overweight. By saying that the valuation “Now expanding to an excessive level.”

And analytics firm Paragon Intel has released a report on the huge costs the company still has. and continued skepticism about the fully addressable market for six-digit space travel flights.

what now

It is worth noting that although Virgin Galactic shares fell on Monday and Tuesday. The stock is still up nearly 20% since July 24. The stock has been volatile since Virgin Galactic went public through a merger with a special purpose acquisition company. and turbulence is unlikely to occur. to alleviate in a timely manner

on the other side The FAA’s decision means Virgin Galactic is one step closer to its goal of transporting customers to space. and at least one layer of uncertainty surrounding The stock has been removed. On the other hand, the company remains a company with a market capitalization of more than $11 billion. even with little or no income Unproven business model and increased competition from Jeff Bezos’ Blue Origin.

It’s too early to know what’s going on. What will happen to Virgin Galactic and the stock movement reflects that uncertainty? Even if you believe in the potential The best way is to limit these types of stocks to small portions. of investment portfolios with good diversification