The space tourism pioneers stock price may have risen too far, too fast.

What happened

Shares of Virgin Galactic Holdings (NYSE:SPCE) plunged on Wednesday, following a cautionary note from a prominent analyst. As of 12:25 p.m. EDT, the space travel companys stock price was down more than 13%.

So what

Morgan Stanley analyst Kristine Liwag cut her rating on Virgin Galactics stock from equal weight to underweight. With few near-term catalysts to maintain investors excitement, Liwag sees Virgin Galactics share price falling to $25 -- or roughly 20% below the stocks closing price on Tuesday. 


Image source: Getty Images.

Now what

Virgin Galactic made history when it successfully completed the first space tourism flight on July 11. Welcome to the dawn of a new space age, billionaire founder Richard Branson said after safely returning from the trip. 

Yet Virgin Galactics stock price is down about 45% since that time. The historic space flight seems to have marked a near-term top for its shares.

Investors appear to have shifted their focus to the rather steep $450,000 ticket price that Virgin Galactic intends to charge for its space flights -- and the likely impact that will have on demand.

Several analysts have also warned about the stocks lofty valuation in recent weeks. And after Liwag highlighted this risk in her report today, many stockholders apparently decided to sell their shares.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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