Virgin Galactic shares tumble nearly 20% after launch delay announcement

Yahoo Finance's Brian Sozzi and Julie Hyman discuss the latest stock movement from Virgin Galactic.

Video transcript

- 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. 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's now-- it had told analysts in August that it was targeting 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?

- 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 and one of the world's richest people up into space.

Secondarily, coming out of 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.

- I mean, listen, we were just talking about first mover advantage when it comes to ETFs. That applies them a lot of different areas. In the space, tourism race is not immune to that. There was an analyst out this morning truist securities, Michael, ceremony 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 is you know, you're not necessarily going to want to spend it on this.

- Hero of the week here, Julie. It is Prince William who came out this week and really question these billionaires going to space and the pollution that they are emitting with these really dusty 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.

- But it's cool, Brian.

- But it's polluting the planet and it is not ESG friendly, Julie. Come on, come on.

- Usually, we're on-- we've flipped roles here today.