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Shares of Virgin Galactic (NYSE: SPCE) fell as much as 37.6% this week after the company completed a 1-for-20 reverse stock split this past weekend. But that didn't help the stock gain its footing and shares ended the week down 30.4%, according to data provided by S&P Global Market Intelligence.

A reverse stock split can't save Virgin Galactic

The reverse stock split kept Virgin Galactic in compliance with the $1 minimum share price for the New York Stock Exchange. But it was hoped the move would also bring more investors in who may be interested in a stock trading closer to $10 than $0.50.

That wasn't the case, despite no real news from Virgin Galactic itself. The company is in a pretty quiet period while it's building the Delta class spacecraft and completing both ground and flight testing. But commercial operations aren't expected to start until at least mid-2026, so the company needs to lower its cash burn dramatically and save as much cost as possible.

Any turnaround is a long way off

Investors won't know much about Virgin Galactic's upside until the company hits testing milestones and begins commercial operations. But with the long time horizon, it's easy to see why investors are selling shares now and moving on from the stock.

What's compelling is the financial potential with management projecting a flight nearly every day and up to $3.6 million in revenue for each flight with 75% contribution margins. If those commercial operations get off the ground the company has a lot of upside, but right now that upside is too far away for most traders to pay attention to, which is why the enterprise value of Virgin Galactic ($600 million) has fallen below the cash on hand ($867 million at the end of Q1).

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Travis Hoium has positions in Virgin Galactic. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.