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DailyBubble News

Why Virgin Galactic Stock Just Dropped an Unlucky 7%

Surprisingly, Virgin Galactic has once again become a penny stock. Following the announcement of its first-quarter earnings, the stock is down 7.1% as of 11:05 a.m. ET on Wednesday. This comes after a 10% increase on Monday due to progress on its new Delta-class spaceplane project.

While revenue exceeded expectations at $2 million and losses were better than feared at $0.25 per share, the company’s guidance for the second quarter fell short. Sales are expected to be around $3.5 million, and cash burn is projected to be between $110 million and $120 million.

With only about $867 million in cash and securities against $660 million in debt, Virgin Galactic faces a tight financial situation. If cash burn continues at the current rate, the company could run out of money in two years. This poses a significant risk, especially if there are delays in the development of the new spaceplane.

Investors are beginning to realize the precarious position Virgin Galactic is in, with the stock now being viewed as a potential sell. The company must focus on managing its cash flow effectively to ensure its long-term viability in the competitive space tourism industry.

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