Virgin Galactic (SPCE -1.85%) announced third-quarter earnings last week, and the news was not great.

On the one hand, the space tourism company confirmed that the "build phase" of its new fleet of Delta-class spaceplanes is "underway," it's shifting to design work on its new "mothership," and the company is on course to begin commercial flights in 2026 -- all good news. Yet, Virgin Galactic stock closed down for the week regardless.

The reason for that was the earnings themselves.

Virgin Galactic is still losing money

Virgin Galactic's Unity spaceplane flew its last batch of space tourists on the Galactic 07 flight this past June, and entered into retirement shortly thereafter. The company hasn't flown a single paying customer to space since, and won't be able to until it completes construction and testing of its new Delta-class spaceplanes, and the motherships to carry them.

Unsurprisingly, then, Virgin Galactic collected almost no revenue this past quarter (just $402,000). Granted, with no flights happening, Virgin's costs declined steeply (down 29%). Still, the company had to spend something for development efforts on the new space tourism fleet, and operating costs totaled $82.1 million.

On the bottom line, Virgin Galactic lost $72.7 million -- $2.66 per share -- despite growing its share count dramatically, and spreading its losses out among 49% more shares than it had a year ago.

Virgin Galactic also noted that its cash burn rate accelerated to $118 million in the quarter, which isn't great news. On the plus side, the company has $744 million in cash and equivalents. Assuming a constant burn rate, that would keep the company in business for another six quarters -- just long enough to bridge the gap between now and 2026, when Delta-class spaceplanes are supposed to start flying. On the minus side, though, management actually expects cash burn to keep rising, predicting it will burn somewhere between $115 million and $125 million this current fourth quarter.

If you can't sell rocket rides, sell stock

Long story short, even if everything goes right and Virgin Galactic's cash does last until 2026, it's going be tight and there's no room for error. And, of course, there's the old "space is hard" adage to consider. Everything is probably not going to go right for Virgin Galactic. Delays will crop up, test flights will encounter glitches, and a return to commercial spaceflight could very well get pushed back -- maybe only to later in 2026, but also maybe into 2027 or later.

How does Virgin Galactic plan to mitigate that risk? By selling more stock.

No sooner had it reported Q3 earnings than Virgin Galactic announced it will issue and sell another $300 million worth of stock "from time to time." The company says the money will be used to build both "an additional mothership" and a "third and fourth Delta" spaceplane (implying that management believes its current cash will suffice to build its first two Deltas, and its first new mothership as well), and to pay for "general corporate purposes."

Left unsaid was the fact that raising $300 million at Virgin's current $7 share price implies this will require issuing roughly 42 million new shares. That is (checks notes) a whopping 50% more shares than Virgin Galactic currently has outstanding, by the way. Therefore, this means Virgin Galactic will dilute its existing shareholders by a staggering 150%!

What's next for Virgin Galactic?

So should you buy or sell Virgin Galactic stock now?

I think by now I've made my thoughts on that question clear. (Hint: I say "sell".) I have to say that the company's latest news doesn't really change my thinking.

On the one hand, $300 million in new cash ensures Virgin Galactic should remain solvent throughout 2026 -- even if it misses its deadline for a return to spaceflight, but still launches before 2027. On the other hand, even if Virgin Galactic succeeds in getting back to business, investors will own much, much less of any future profits the company might earn, because of the dilution.

Considering that even in a best-case scenario, I don't see Virgin Galactic ever becoming more than marginally profitable to begin with, I really see no reason to own this stock.