Virgin Galactic is pulling back after being set to sell $500 million in stock after Branson’s successful flight

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Shares of Virgin Galactic tumbled Monday after the company filed to sell up to $500 million of common stock. It follows the successful test flight of the commercial spaceflight company with founder Sir Richard Branson.

Shares of Virgin Galactic — which trades under the SPCE index — fell 6% after the $500 million share sale announcement that came after the company successfully completed a full crew test flight into suborbital space on Sunday, a major milestone in the commercial space race and a step forward Towards the company’s target for commercial service in early 2022.

The shares were last trading at around $46.13, after rising 7% in pre-market trading. Inventory has doubled so far this year in anticipation of this advance toward commercial service.

“We view Branson’s achievement as a massive marketing coup for Virgin Galactic that would be impossible for the public to ignore,” Ken Herbert, equity analyst at Canaccord Geneity told clients. The company has a buy rating but a target price of $35 per share, which is below its current level.

The company’s VSS Unity spacecraft launched over New Mexico on Sunday, with two pilots driving the vehicle carrying the billionaire founder and three Virgin Galactic employees. VSS Unity fired its rocket engine and accelerated to more than three times the speed of sound to climb to the edge of space.

“We see this as important on the path toward commencing passenger flights, which we assume will happen in early 2022,” AB Bernstein analyst Douglas Harnd told clients. The company has been given a market performance rating by Virgin Galactic.

Virgin Galactic’s VSS Unity is designed to accommodate up to six passengers along with the two pilots. The company has about 600 reservations for tickets for future flights, selling for prices between $200,000 and $250,000 each. While passenger ticket sales have yet to be announced, Bernstein expects them to come in at a higher price tag between $400,000 and $500,000.

Virgin Galactic also announced its partnership with sweepstakes company Omaze to offer a two-seat chance on “one of Virgin Galactic’s first commercial spaceflights” early next year.

“The flight is symbolically important for building consumer confidence and demand for space tourism,” Harand said. “A successful test flight by Blue Origin including founder Jeff Bezos, scheduled for July 20, should generate more interest in the industry, which will benefit both companies.

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In 2004, Branson founded Virgin Galactic to carry private passengers into space. Branson wasn’t previously expected to fly in space on Sunday, but after fellow billionaire Jeff Bezos announced he would fly on his company’s first Blue Origin passenger flight on July 20, Virgin Galactic rearranged its schedule — with the goal of traveling Branson before nine Days of Bezos.

From the Sunday flight before Bezos or Elon Musk, Sunday’s flight means Branson is the first to co-found the billionaire space company to board his own spacecraft.

AB Bernstein said the success of the flight and subsequent ticket sales could be a short-term bullish catalyst for the stock but did not change their long-term outlook. The company noted that it will not be short-term for the stock, as it has seen significant volatility driven by individual investors reacting to the events.

–With reporting by Michael Sheetz and CNBC’s Michael Bloom.

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