- Virgin Orbit will cease operations, say media reports
- 85% of workforce axed after failure to find fresh funding
- Shares plunge nearly 50%
Shares in Virgin Orbit (VORB:NASDAQ) plunged nearly 50% in after-hours trading in New York to $0.34 after the company said it will be laying off 85% of its workforce after failing to secure much-needed new investment.
According to media reports, Virgin Orbit will cease operations for the foreseeable future.
The layoffs will see approximately 675 employees axed with redundancy costs expected to hit around $15 million, according to a filing with the SEC (US Securities and Exchange Commission).
Virgin Orbit was founded in 2017 by UK serial entrepreneur Sir Richard Branson as a spin-off from his space tourism business Virgin Galatic (SPCE:NYSE). It developed a mid-air satellites launch system that uses Boeing 747 planes instead of traditional launchpads.
The stock had traded at more than $10 less than 18 months ago.
HIGH-RISK FUNDING COLLAPSE
AJ Bell investment director Russ Mould said: ‘In more bullish markets the promise of developing a commercial satellite launch business might have been enough to excite but not in these more sober times.
‘Attention may now turn to its more established space tourism sister business Virgin Galactic which has lost more than 60% of its value over the last year.
‘The collapse of Silicon Valley Bank means the funding environment for technology start-ups is less favourable than it was, and it may fall to wealthy entrepreneurs like Elon Musk and Richard Branson to keep the dream of a large-scale space industry alive.’
JANUARY LAUNCH FAILURE
Virgin Orbit’s shares fell by over 20% in January this year as its mission to launch a rocket into orbit from UK soil ended in failure after suffering an ‘anomaly’ during the flight.
After taking off from Cornwall, the Virgin Orbit plane flew to 35,000 feet over the Atlantic Ocean where it jettisoned the rocket containing nine small satellites towards space.
In a series of tweets, Virgin Orbit said: ‘We appear to have an anomaly that has prevented us from reaching orbit. We are evaluating the information.’
SKY-HIGH CASHBURN
Virgin Orbit issued a statement which said: ‘Out of five LauncherOne missions carrying payloads for private companies and governmental agencies, this is the first to fall short of delivering its payloads to their precise target orbit.’
‘While we are very proud of the many things that we have successfully achieved as part of this mission, we are mindful that we failed to provide our customers with the launch service they deserve,’ said CEO Dan Hart.
According to the Financial Times, Virgin Orbit has been in talks with at least one financial investor but the funding negotiations came to nought. Virgin Orbit insiders told the newspaper at the time that the company was ‘burning through some $50 million a quarter’ of cash.
