Virgin Galactic tumbles after earnings results

Yahoo Finance’s Emily McCormick joins Kristin Myers to discuss the outlook for Virgin Galactic after the company reported a wider-than-expected second-quarter loss.

Video Transcript

KRISTIN MYERS: We just talked about some blowout earnings when it came to the video-gamer maker Take-Two. That stock is up over 4 and 1/2%. But, sadly, not the same news for Virgin Galactic. They actually had some wider losses than expected for the second quarter.

So we are joined now for more on that by Emily McCormick. Hey, Emily.

EMILY MCCORMICK: Hi, Kristin. And as you mentioned, we did see wider-than-expected net losses for Virgin Galactic as well as zero revenue. And, of course, that company not yet kicking off its flights and actually announcing that its key test flight with founder Richard Branson actually getting pushed back to the first quarter of 2021.

And this isn't the first time that we've seen Virgin Galactic actually have to push back some of these key benchmarks and milestones in actually beginning these space flights. But, of course, that's something that's definitely weighing on investor sentiment, and we do see shares of Virgin Galactic off over 12% now in intraday trading.

Now, taking a look at those second-quarter results, we had net losses widening to $63 million. That was up from $60 million in net losses during the first quarter of 2020.

Now at the same time and a bright spot here, the company did say it has seen only minimal request for refunds amongst 600 customers who purchased tickets to fly on those forthcoming suborbital trips. The company also has collected 700 refundable deposits from people who would eventually be purchasing a ticket, and it's been taking additional deposits from about a dozen customers for its planned orbital spaceflight services.

Now, taking a look at how the pandemic has impacted Virgin Galactic, actually having an impact here again when it comes to those test flights. They really just blamed the delay on the pandemic since that's [? half ?] the number of employees who could work at the same time at company locations in California and New Mexico.

The current schedule is to have a test flight of an engine-powered test in New Mexico starting in this fall, and thereafter there will be a second flight with four mission specialists along as passengers. So something to watch here in the quarters to come for Virgin Galactic. Again, even a company with zero revenue at the moment for its fiscal second quarter still up 80% for the year to date. Kristin.

KRISTIN MYERS: All right. Thanks so much, Emily.