This Space Stock Crashed 38% Today – Here’s Why Investors Are Wary

• The company announced plans to redeem up to $30.5 million of its first lien notes on June 10, of which $10 million has already been redeemed.
• Management said current market conditions provide an opportunity to execute the transaction.
• The stock gained more than 200% over a seven-day period on SpaceX IPO hype.

Shares of Virgin Galactic (SPCE) plunged 38% on Tuesday, suffering their steepest one-day decline on record as investors reacted sharply to the space tourism company’s plan to repay a significant portion of its debt through the issuance of common stock.

SPCE stock is on track to snap a seven-session streak that led to a 204% rally, as space stocks in general reacted positively to SpaceX’s impending IPO.

SPCE To Issue Shares To Repay Debt

Virgin Galactic is required to repay about $30.4 million on its first lien notes by Sept. 30, 2026. After redeeming $10 million of the debt in May, the company still has $20.4 million remaining to be repaid. It is also required to repay at least an additional $10.1 million by the end of 2027.

According to an SEC filing on Tuesday, the company announced plans to redeem up to $30.5 million of its first lien notes on June 10, 2026, by issuing shares of common stock to the noteholders. The company believes that the current market conditions provide an opportunity to execute the transaction.

Virgin Galactic said the redemption is part of its broader effort to manage cash and strengthen its balance sheet. If completed, it will cover all required principal payments on the first lien notes through the end of 2027.

SPCE’s Delta-Class Spacecraft Program Boosts Sentiment

Virgin Galactic recently announced that investor Rich Huang and RichRich Capital LLC had acquired a 5.26% stake in the company. The investment was viewed by investors as a vote of confidence in the space tourism company’s future.

Investor sentiment was further boosted by progress on the company's Delta-class spacecraft, which recently entered ground testing.

Retail Remains Bullish On SPCE

Despite the sharp selloff, retail sentiment on Stocktwits trended in the ‘extremely bullish’ zone over the past 24 hours, accompanied by ‘extremely high’ message volumes.

One user highlighted why the latest update wasn’t altogether bearish.

Another user expects the stock to climb to $10. The stock traded near $4.70 at the time of writing.

The stock has gained around 53% so far this year.

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