Virgin Galactic shares are having their worst day ever. And that's after a 200% rally in seven days.

Shares of billionaire Richard Branson's private space company Virgin Galactic fell 40% in trading on Tuesday, June 2. This is the strongest fall of securities in one day for all time of their circulation on the stock exchange, according to MarketWatch. The previous record was set back in 2020.

The sharp decline followed an unusually powerful rally that saw quotes more than triple (by 204.5%) in just seven trading days - from Ma. 20 to close on June 1, Bloomberg and MarketWatch noted.

Tuesday's plunge was triggered by the company's notice, posted on the U.S. Securities and Exchange Commission's (SEC) website, that it plans to issue new common stock to partially repay bond debt - worth up to $30.5 million. Virgin Galactic thus decided to capitalize on the significant appreciation in its stock price, MarketWatch noted.

Current shareholders typically don't welcome the issuance of new shares: it dilutes their stakes because of the increased number of securities outstanding, MarketWatch explained. A $30.5 million common stock issue corresponds to about 6.5% of the company's current market capitalization of $467.7 million, he calculated.

But on the bright side, if Virgin can fully repay the debt with shares, the next payments won't come until March 31, 2028, MarketWatch added, citing the document.

Shares of Virgin Galactic were skyrocketing in price through Tuesday in parallel with the entire space industry after Elon Musk's private space company SpaceX filed for an IPO, MarketWatch and Bloomberg wrote. The catalyst was also the confirmation of plans to launch a new SpaceShip and the first test flight in two years, Bloomberg added.

Also contributing to the rally was that investor Rich Huang and his RichRich Capital disclosed their stakes in the company, according to MarketWatch. Huang owned 5.26% of Virgin as of Friday, Ma. 29, and Rich owned 4.62%.

At the same time, the company S3 Partners considers the reason for the rise in quotations of short-squeeze: investors, who bet on the fall of shares, had to buy back securities to close positions, Bloomberg writes. "Paper" (unrecorded) losses of shorts reached $64 mln this year, the agency added with reference to S3 Partners data.

Virgin Galactic plans to make money from space tourism. It has conducted seven commercial launches into Earth orbit, the last of which took place in June 2024. After that, the company decided to focus on developing the SpaceShip. The company intends to fly it for the first time in the fourth quarter of 2026. Virgin Galactic intends to conduct four launches in a month in January 2027, after which it intends to increase that number to eight per month by the second quarter of that year, Chief Financial Officer Douglas Ahrens said.