What happened

For a while there, it almost looked as if Virgin Galactic (NYSE:SPCE) had discovered the secret of antigravity, or perhaps perfected the perpetual motion machine — with that motion being “up.” Riding a wave of enthusiasm from an optimistic Morgan Stanley investor note, Virgin Galactic rocketed all the way from $7 a share to more than $35 — a fivefold increase in three short months.

And it did it all without generating a penny in reported profit — hardly more than a few pennies in revenue!

But then reality set in. Yesterday, Virgin Galactic stock suffered an 18% drop (before recovering a bit). Today, it suffered a similar 12.5% price collapse (before recovering again). As of noon EST, Virgin Galactic stock remains down 6.3%.

So what

And believe it or not, you can probably blame Morgan Stanley for this decline in share price, just as it would have been fair to credit it for the earlier, Earth-shattering rise.

In a note to investors yesterday, Morgan Stanley warned that even it had been shocked at the trading “volume and volatility” that its upgrade sparked three months ago, and suggested a “modest correction is overdue,” in a note covered by TheFly.com.

I think you can trace a direct line from those comments to Virgin Galactic’s sell-off yesterday, and to the one today.

Now what

And yet hope springs eternal. Drawing a silver lining around its ominous grey warning, Morgan Stanley proceeded to explain that the “modest correction” it predicted could be, “frankly, healthy” for shareholders.

I agree. Just as Virgin Galactic’s startling rise drew investors’ attention to the stock, the recent pullback in the shares may tempt new investors to buy, thinking the stock is now cheap. (It isn’t, by the way — but it sure looks cheaper than it did a couple of days ago.)

Long story short, scary as it feels right now, today’s pullback could be just a recoiling of the spring. Rightly or wrongly, don’t be surprised if Virgin Galactic jumps right back up and resumes running after the selling stops.