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Virgin Galactic shares tumble nearly 20% after launch delay announcement

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Yahoo Finance's Julie Hyman and Brian Sozzi discuss Virgin Galactic and the stock performance following the company's launch delay.

Video Transcript

JULIE HYMAN: Another delay for the company, that's what's going on. And the stock is going down. It is delaying the start of commercial flights into next year and further into next year. It rescheduled a test flight.

Now, I kind of have lost track, honestly, about how many delays that we've gotten from this company. But it had told analysts in August that it was targeting the first private astronaut flight for late third quarter next year. And that was already a delay, I believe. So they tested certain materials that are used to modify joints and found that they were not up to snuff. So that is the latest setback here. And what a setback for the shares again, Brian.

BRIAN SOZZI: Yeah, definitely losing altitude here, Julie. Two takeaways from this one. First, what in the world did Sir Richard Branson take up into space? Clearly, that may have not been the safest aircraft to be taking one of the world's richest people up into space.

Secondarily, coming out the most recent quarter, Virgin Galactic ended the quarter about $551 million in cash. As they continue to delay just taking in cash into their business, I'm really starting to wonder, when is their next capital raise? They're burning about 120 million a quarter. At some point soon, they're going to have to actually start making money. And if not, they're going to need more cash. And that could come at the expense of shareholders. And I think that is part of the reason why you're seeing the stock down here.

JULIE HYMAN: I mean, listen, we were just talking about first mover advantage when it comes to ETFs. That applies in a lot of different areas. And the space tourism race is not immune to that. There was an analyst out this morning, Truist Securities' Michael Ciarmoli, who said this flight delay means Virgin Galactic has lost momentum in that race. He says it might be immaterial to the longer-term value.

But in the short term, if you've got the cash to spend to take this trip, I mean, presumably, you're not bargain hunting between these various space tourism companies. And so delays like this, if you're willing to pony up that cash to go to space, you're not necessarily going to want to spend it on this.

BRIAN SOZZI: Hero of the week here, Julie. It is Prince William, who came out this week and really questioned these billionaires going to space and the pollution that they are emitting with, really, just these spectacles of going up in space and getting all the coverage here. So Prince William, shout out to you, my man. I think you nailed it.

JULIE HYMAN: But it's cool, Brian.

BRIAN SOZZI: But it's polluting the planet. And it is not ESG-friendly, Julie. Come on, come on.

JULIE HYMAN: Oof! Usually, we're on-- we've flipped roles here today.