Virgin Galactic's stock fell in trading on Monday after the space tourism company cut short its latest spaceflight test mid-launch on Saturday due to an engine ignition issue.
"The flight did not reach space as we had been planning. After being released from its mothership, the spaceship's onboard computer that monitors the rocket motor lost connection. As designed, this triggered a fail-safe scenario that intentionally halted ignition of the rocket motor. Following this occurrence, our pilots flew back to Spaceport America and landed gracefully as usual," Virgin Galactic CEO Michael Colglazier said in a statement.
The company expects to repeat the spaceflight attempt from its operating base at Spaceport America in New Mexico. Colglazier said that Virgin Galactic is evaluating the data from the test and did not indicate when it expects to be ready to launch again, with the company saying it has several rocket engines "ready" onsite and will "check the vehicle and be back to flight soon."
Shares of Virgin Galactic fell 17.4% in trading to close at $26.47. The drop marked the third worst day of trading since Virgin Galactic's stock debuted in October 2019.
"Although this weekend's powered test flight was not a success, the silver lining is that [Virgin Galactic] was able to prove that its built in fail-safe scenarios worked properly enabling [SpaceShipTwo] to glide safely back to Earth without jeopardizing the safety of anyone on board. The successful triggering of fail-safe scenario should help quell some investor concerns over the risk of a catastrophic event as [Virgin Galactic] begins commercial operations," Credit Suisse analyst Robert Spingarn wrote in a note to investors on Monday.
Credit Suisse has an outperform rating on the stock with a $26 price target.
Saturday's flight was the first of three remaining spaceflight tests the company plans to conduct to complete development of its spacecraft system, the third of which will carry founder Sir Richard Branson. The impact of the aborted test on Virgin Galactic's schedule is yet to be determined, with the Branson flight previously planned for first quarter of 2021.
"Many investors we have spoken with just want to see a string of successful test flights and do not seem to be putting too much emphasis on the exact timing of Branson's launch," Morgan Stanley analyst Adam Jonas wrote in a note. "The underlying narrative and opportunity offered by the stock is unchanged in our opinion."
Morgan Stanley has an overweight rating on the stock with a $24 price target.
Additionally, Virgin Galactic's spaceflight attempt on Saturday was the company's first in nearly 22 months, with its previous spaceflight in February 2019 from the Mojave Air and Space Port in California. In the interim the company moved its operations to Spaceport America, from its manufacturing and development facilities in Mojave.
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— CNBC's Michael Bloom contributed to this report.
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