Why Virgin Galactic Stock Is Down This Week

What happened?Stocks of Virgin Galactic Holdings (NYSE.SPCE) were down 22% this week from Friday. They were at midday on Thursday. Although the stock rose after receiving a major regulatory approval, some Wall Street analysts believe that it was too fast.What are you waiting for?Virgin Galactic shares are prone to turbulence. This week is no exception. Although the company has an ambitious plan for launching tourists into space, it has fallen behind schedule and is currently operating without any revenue.After the Federal Aviation Administration (FAA), granted the company a license to fly passenger space, shares rose nearly 40%. Although this is a significant milestone, Virgin Galactic still needs to pass a few tests before it can begin scheduled service. And competition from Blue Origin (Jeff Bezos) is fast approaching.Wall Street analysts focused this week on the risks. Bank of America Securities downgraded the stock twice to buy from underperform. They believe that the 40% jump in shares has made the stock more attractive than it was. Alembic Global analyst Peter Skibitski downgraded Virgin Galactic from overweight to neutral, stating that the stock's valuation is "now stretched beyond excess levels."What now?The unusual case in which investors bought the rumors and bought the news last week seems to have been one of these rare cases. On evidence that the testing was going as planned and regulatory approval would follow, the stock doubled in price between mid-May to mid-June. The same sentiment that drove Friday's huge rise appears to have fueled Friday's massive jump.Even with the weekly declines, it was still a very good run for the stock.Investors need to be aware that volatility is not likely to stop anytime soon. This stock is driven by sentiment and not fundamentals. Therefore, sentiment can fluctuate, especially when there is a $10 billion market cap.This is a risky venture with high potential rewards for long-term investors. While it is possible to buy this stock and ride out the volatility, it is best to keep it as a small portion of a well-diversified portfolio.