By Al Root

Space stocks have been all the rage lately, ahead of SpaceX's massive initial public offering. Virgin Galactic, however, isn't keeping up.

Shares of the space tourism pioneer dived 34% in early trading on Tuesday to $5, while the S&P 500 was down 0.1%.

Setting off the decline was the company's announcement that it plans to pay back millions in debt by issuing stock. Redeeming the roughly $10 million in first-lien notes due in 2027 at current stock prices means issuing some two million shares, or about 2% of total shares outstanding. That represents significant dilution for shareholders.

Virgin Galactic is acting opportunistically. Coming into Tuesday trading, shares were on a seven-day winning streak. Even with Tuesday's drop, shares were still up about 60% year to date.

Most space stocks have been on fire lately, thanks mainly to the SpaceX IPO, which will raise record amounts of money and could value Elon Musk's rocket company at $2 trillion. SpaceX has shown investors what's possible in space. The company's Starlink broadband product is profitable and growing. Next, SpaceX plans to put artificial-intelligence data centers into orbit.

The IPO has been a boon to perceptions of the space economy.

But it still hasn't been an easy ride for Virgin Galactic investors. Shares are still down more than 99% from their all-time high. The company did a 1-for-20 reverse stock split in 2024.

Space tourism just hasn't developed as quickly as the company or its early investors had expected.

The company still expects to start commercial space tourism operations in the fourth quarter of 2026.

Write to Al Root at allen.root@dowjones.com

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June 02, 2026 11:50 ET (15:50 GMT)

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