Virgin Galactic Holdings, Inc. (SPCE) Stock Declining in Aftermarket, Here’s Why

Virgin Galactic Holdings, Inc. (SPCE), an integrated aerospace company, has declined 14.17% in aftermarket trading session. Consequently, SPCE stock was trading at $20.65 when last checked. The decline has come after the company rescheduled Unity 23 test flight. On Thursday, SPCE closed the day at $24.06 after increasing 0.50% during regular trading hours.

Why SPCE declined?

SPCE announced in the late hours of Thursday that it would begin its planned enhancement program for its VMS Eve and VSS Unity. Besides, the company would conduct its unity 23 test flight after the ongoing work gets completed. The enhancement program is meant to bring improvements in the vehicular performance and flight rate capability for VMS Eve and VSS Unity. In the preparation for the work, the company performed routine tests and carried out analyses to bring changes in its material properties database. The data predicted how the material was able to perform under certain load and environmental conditions. The data was used to inform the design and manufacturing enhancement that could in turn support increased flight frequency. Recent laboratory-based tests suggested that there occurred a possible reduction in the strength margins of some materials which are used to modify the specific joint. In turn, that requires continued physical inspection.

Q2 2021 financial highlights

On 5th August, SPCE reported the financial results for the second quarter of the fiscal year 2021 which ended on 30th June 2021. The company had cash and cash equivalents of $551.62 million on 30th June. The total assets in possession of the company were $684.01 million while total liabilities were $238.79 million. The company generated revenue of $571,000 during the quarter. The cost of revenue for the three months remained at $63,000 while the gross profit for the quarter was $508,000. The selling, general and administrative expenses for the period were $38.50 million against $26.04 million for the same period of 2020. The research and development expenses for the period were $35.90 million against $37.00 million for the same period of 2020. The operating loss for the three months was $73.89 million against $63.05 million for the same period of 2020. The net loss bore by the company for the period was $94.04 million (or $0.39 per basic and diluted share) against $71.97 million (or $0.34 per basic and diluted share) for the same period of 2020.

What’s next for SPCE?

Statistics reveal that SPCE stock has declined by more than 20% over the previous quarter. In the long run, however, SPCE has shown stability. Analysts believe that the stock is expected to post a decent performance in near future, based on the developments associated with it.