Virgin Orbit started as a program of Richard Branson’s Virgin Galactic in 2012, before being spun off into a separate company five years later.
In the private space race, Virgin Orbit contended its method of launching its rockets — known as “air launch” — was more flexible than traditional launch pads used by competitors like Rocket Lab, Astra and SpaceX.
The company employed a modified Boeing 747 jet that it called “Cosmic Girl” to carry its LauncherOne rocket to about 35,000 feet of altitude before dropping it.
From there, the rocket would fire its engines and fly off into space.
“By launching from an aircraft, Virgin could take off from almost any airport around the world and turn these airports into space ports,” said Caleb Henry, director of research at Quilty Analytics.
Henry noted that the Virgin Orbit’s last launch was from the United Kingdom, and that the company was in discussions to launch in Japan and Brazil.
“They were offering to different countries the ability to, in a sense, have a sovereign launch capability, because the rocket would take off from their home soil,” Henry said.
But Virgin Orbit was dogged by delays. The company originally hoped to launch its debut mission in 2018, but didn’t get off the ground until May of 2020. The demonstration mission failed shortly after the rocket was released. In total, the company launched six missions, four of which were successful and two of which failed, including the last one in January.
Virgin Orbit’s biggest deal was a 39-launch contract signed with satellite maker OneWeb in 2015. OneWeb ultimately pulled out of the deal without conducting a single launch.
“A challenge for the company, and for any launch company, is having an anchor customer, somebody who you can depend on to routinely buy a decent number of launches,” Henry said. “Virgin Orbit did not have an anchor customer.”
In late March, Virgin Orbit said it was laying off the majority of its workforce and ceasing operations “for the foreseeable future” after failing to secure a funding lifeline. Days later, the company filed for bankruptcy.
Watch the video to find out more about what led to Virgin Orbit’s collapse.
Virgin Orbit officially filed for Chapter 11 bankruptcy on Tuesday after failing to secure proper funding following a rocket launch failure earlier this year.
Just weeks ago, the Richard Branson-founded company slashed a reported 90% of its staff and put itself on an “operational pause” until the satellite launch company could secure a strong enough investor to help pay back debt.
On Tuesday, the COO of the now-defunct company, Tony Gingiss,had some choice words about how the whole situation went down in an internal memo viewed by
Gingiss, who served as COO for 26 months, lamented to employees that they “deserved better than this” before delving into a slew of apologies including not being able to help Virgin Orbit “avoid this outcome” and the company’s “abrupt finale.”
“This chapter is now done, but our book is not finished,” he penned. “I know what a talented team you are as most of you were part of my Engineering and Operations team and the rest of you worked so closely with us, as our partners, to do the amazing things we have done. I know what good people you are and how big of an impact you have made and will continue to make.”
Gingissalso (somewhat subtly) called out higher leadership in his note, telling his former team that he was sorry about not being “able to convince our leader and board to take a different path to give us more time to figure things out.”
He concluded by telling employees they could reach out to him for any sort of support — both emotionally and physically as they search for new employment opportunities — and tried to keep spirits high despite the company folding.
“Go boldly onto your next adventure and bring that special you that you brought to Virgin Orbit,” he said. “While we did not succeed in the endeavor of making Virgin Orbit a force in the industry we must use this event to spread the ripple of our talents, dreams, creativity and energy into the industries and world to make them a better place. In this way, on some level, it will all be worth it.”
The last month has not been easy for Virgin Orbit employees who were first furloughed without pay (though they were able to trade in PTO days for immediate compensation) before ultimately losing their jobs.
The company was originally founded in 2017 before going public via a merger with NextGen Acquisition Corp. II.
In January 2023, Virgin Orbit’s mission suffered from a rocket launch failure that was chalked up to an “anomaly” which saw the company lose nine major satellites and subsequently saw shares plummet as much as 20% in premarket trading.
It was one of the final blows for the company that could not seem to secure stable financial backing for operations moving forward.
Virgin Orbit crew poses at the opening bell ceremony as a 70 foot model rocket with satellites is placed in front of the NASDAQ in Times Square of New York City, United States on January 7, 2022.
Tayfun Coskun | Anadolu Agency | Getty Images
Not too long ago, Virgin Orbit was in rarified air among U.S. rocket builders, and executives were in New York celebrating its public stock debut.
The scene was true to the marketing pizazz that has helped Sir Richard Branson build his Virgin empire of companies, showcasing with a rocket model in the middle of Times Square.
The deal, facilitated by a so-called blank check company, gave Virgin Orbit a valuation of nearly $4 billion. But that moment in December 2021 – when the craze surrounding public offerings centered on special purpose acquisition companies, or SPACs, was dying out – previewed the pain to come.
Now, Virgin Orbit is on the brink of bankruptcy. The company on Thursday halted operations and laid off nearly all of its staff. Its stock was trading around 20 cents Friday, leaving it with a market value of about $74 million.
When Virgin Orbit closed its SPAC deal, it raised less than half of the nearly $500 million expected due to high shareholder redemptions, shortening its runway. With the broader markets turning against riskier yet-unprofitable assets like many new space stocks, Virgin Orbit shares began a steady slide, further limiting its ability to raise substantial outside investment.
Branson, Virgin Orbit’s largest stakeholder, was unwilling to fund the company further, as CNBC previously reported. Instead, he began hedging against his 75% equity stake through a series of debt rounds. That debt gives the flashy British billionaire first priority of Virgin Orbit assets in the event of the now-impending bankruptcy.
While Virgin Orbit touted a flexible and alternative approach to launch small satellites, the company was unable to reach the rate of launches necessary to generate the revenue it sorely needed.
Virgin Orbit’s technical staff acquitted themselves well over the company’s brief existence, but were ultimately undone in by its leaders’ financial mismanagement. It’s a story too often told in the history of the space industry: Exciting, or even innovative, technologies do not necessarily equal great businesses.
It became one of a few U.S. rocket companies to successfully reach orbit with a privately developed launch vehicle. It launched six missions since 2020 — with four successes and two failures — through an ambitious and technically difficult process known as “air launch,” with a system that uses a modified 747 jet to drop a rocket mid-flight and send small satellites into space.
But Virgin Orbit had dug a nearly $1 billion hole, flying missions just twice a year while its payroll expenses climbed. The company’s leadership was aware of the deteriorating situation and lack of progress, and even considered changes last summer to make the business more lean. But no clear or dramatic plan came to fruition – leading to Thursday’s fall.
This story collects insights from CNBC’s discussions with company insiders and industry investors over the past several weeks, as well as from regulatory disclosures, to explain where things went wrong for Virgin Orbit. Those people asked to remain anonymous in order to discuss internal or competitive matters.
A Virgin Orbit spokesperson declined to comment for this story.
The company’s 747 jet “Cosmic Girl” releases a LauncherOne rocket in mid-air for the first time during a drop test in July 2019.
Greg Robinson / Virgin Orbit
Virgin Orbit was spun-off from Branson’s space tourism company, Virgin Galactic, in 2017, after a team within the latter sister company saw potential in using an aircraft as a platform to launch satellites. While “air launching” satellites was not a novel idea to Virgin Orbit, the company aimed to surpass the air-launched Pegasus rocket – developed by Orbital Sciences, which is now owned by Northrop Grumman –for a fraction of the cost per mission.
Headquartered in Long Beach, California, Virgin Orbit flew most of its missions out of the Mojave Air and Space Port. The exception to that was its most recent launch, which took off from Spaceport Cornwall in the United Kingdom. Virgin Orbit had been working with other governments to provide launches by flying out of airports around the world, signing agreements with Japan, Brazil, Australia and the island of Guam.
The advertised flexibility and potential of Virgin Orbit’s approach attracted quite a bit of attention from leaders in the U.S. national security community. Following meetings with top Pentagon brass in 2019, Branson proclaimed that Virgin Orbit is “about the only company in the world that could replace [satellites] in 24 hours” during a military conflict.
At the time, the Air Force’s acquisition lead, Will Roper, said he was “very excited about small launch” after meeting with Branson. He said the U.S. military had “huge money to invest” in buying rocket launches.
The company had hoped to launch its debut mission as early as 2018, but that goal kept moving every six months or so. Eventually, Virgin Orbit launched its first mission in May 2020, which failed shortly after the rocket was released from the jet. It got to orbit successfully for the first time in January 2021.
Given the company’s burn rate near $50 million a quarter, Virgin Orbit was targeting profitability once it got beyond a launch rate, or cadence, of a dozen missions per year. When it went public, Virgin Orbit CEO Dan Hart told CNBC that the company was aiming to launch seven rockets in 2022, to build on that momentum.
At the same time, Virgin Orbit was already in a deep financial hole – with a total deficit of $821 million at the end of 2021, due to steady losses since its inception. While Virgin Orbit had aimed to launch seven missions last year, that number was steadily guided down quarter after quarter, closing out 2022 with just two completed lunches – the same as the year before.
Some people within the company who had been critical of Virgin Orbit’s execution pointed to several executives’ backgrounds at Boeing, which has had its share of space-related snags over the years.
Virgin Orbit CEO Dan Hart had spent 34 years at Boeing, where he was previously the vice president of its government space systems. COO Tony Gingiss joined Virgin Orbit from satellite broadband company OneWeb, but before that had spent 14 years in Boeing’s satellite division. And Chief Strategy Officer Jim Simpson had also spent more than eight years in Boeing’s satellite division before joining Virgin Orbit.
As one person emphasized, the company launched the same amount of rockets in a year with a staff of 500 as it did with a workforce of over 750 people. Others complained of a lack of cross-department coordination, with projects and spending done in silo of each other – leading to a disconnect in schedules.
Two people mentioned wastefulness in ordering materials. For example: The company would buy enough expensive items with limited shelf-life to build a dozen or more rockets, but then only build two, meaning it would have to throw away millions of dollars’ worth of raw materials away.
When Virgin Orbit announced an employee furlough March 15, people familiar with the situation said the company had about half a dozen rockets in various states of production in its Long Beach factory.
As the lack of a financial lifeline made the situation increasingly more desperate, multiple Virgin Orbit employees voiced frustration with how Hart communicated the company’s position – and even more so with the lack of clarity after the furlough.
The day of the initial pause in operations, people described company leadership running around frantically while many employees stood around waiting for word on what was happening. One person emphasized the tumultuous and sudden furlough happened because executives tried to keep the company alive as long as possible. Several employees expressed disappointment with Hart holding the March 15 all-hands meeting virtually, speaking from his office rather than face-to-face, and not taking any questions after announcing the pause in operations.
That frustration continued after the pause, with employees confused by the lack of specifics about which investors were speaking to Virgin Orbit leadership. Thursday’s update that a deal fell through came as little surprise to a workforce that was largely in limbo. Many were already hunting for new jobs.
The rocket for the company’s second demonstration mission undergoing final assembly at its factory in Long Beach, California.
Virgin Orbit
A pivot in Virgin Orbit’s strategy became apparent and necessary shortly after it went public.
Virgin Orbit aimed to raise $483 million through its SPAC process, but significant redemptions meant it raised less than half of that, bringing in $228 million in gross proceeds. The funds it did raise came from the minority of SPAC shareholders who stuck around, as well as private investments from Virgin Group, the Emirati sovereign wealth fund Mubadala, Boeing, and AE Industrial Partners.
Unlike its sister company Virgin Galactic, which built its cash reserves to more than $1 billion through stock and debt sales after going public in October 2019, Virgin Orbit did not build its cash coffers. And that meant leadership should have buckled down and made changes to run the company in a more lean way, one person emphasized, to rebuild momentum.
And then Virgin Orbit’s apparent strength in the national security sector began to falter. Despite half of its missions flying Space Force satellites, the company lost out to competitor Firefly Aerospace for a launch contract under the “Tactically Responsive Space” program. Awarded in October, the mission seemed right up Virgin Orbit’s alley, especially since the prior mission under that Space Force program flew on the similarly air-launched Pegasus rocket.
As the financial situation worsened, a few bankers who spoke to CNBC wondered why the search for a deal was dragging on. According to one banker, Virgin Orbit could raise anywhere from $10 million to $15 million quickly to stop-gap the situation while it found a larger buyer. Another investor estimated that Virgin Orbit had about $270 million in net tangible assets, further sweetening the potential for a wholesale deal even despite its plunging market value.
A white knight seemed to appear last week in the form of Matthew Brown, who discussed making an 11th-hour deal with Virgin Orbit, to reportedly inject as much as $200 million into the company. However, within days, the talks fell apart. The company continued to discussions with another, unnamed investor this past week.
But in the words of Hart on Thursday, Virgin Orbit was “not been able to secure the funding to provide a clear path for this company.”
And while the 675 employees laid off Thursday likely have strong job prospects, Virgin Orbit seems now destined for bankruptcy.
It looks like business is not cleared for landing at Virgin Orbit as the satellite launch company has reportedly laid off 85% of its staff after putting a majority of employees on furlough just weeks ago.
During an all-hands company meeting, CEO Dan Hart told employees that the company couldn’t secure the funding it sought to continue as operational.
“Virgin Orbit is initiating a company-wide operational pause, effective March 16, 2023, and anticipates providing an update on go-forward operations in the coming weeks,” the company said earlier this month, confirming this week that the operational pause would continue “for the foreseeable future.”
It’s estimated the company will slash around 90% of its total workforce.
According to CNBC, Hart had been updating employees regarding the company’s financial standings via email, leading employees to believe that there’s light at the end of the tunnel after citing promising conversations with interested investors.
Per the SEC filing on behalf of Virgin Orbit that beget the near-company-wide furlough that began on March 15, Virgin Orbit put itself on an operational pause “in order to conserve capital” while seeking “potential funding sources.”
Employees that were placed on furlough were not paid, though they were given the option to cash out on their PTO days.
Virgin Orbit is the satellite launching company owned by Richard Branson, which is different from the Virgin Group’s space exploration company Virgin Galactic.
As of Friday afternoon, Virgin Orbit was down 34.8% in a 24-hour period.
A Wall St. sign in front of the New York Stock Exchange (NYSE) in New York, US, on Monday, March 20, 2023.
Michael Nagle | Bloomberg | Getty Images
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A New York grand jury voted Thursday to indict former President Donald Trump in connection with a $130,000 hush money payment to porn star Stormy Daniels before the 2016 election, Trump’s lawyer told CNBC. Trump, who is the first former president to be charged with a crime, is expected to appear before New York State Supreme Court Judge Juan Merchan next Tuesday. In a statement, Trump called the indictment a “Witch-Hunt.”
U.S. markets traded higher Thursday as a measure of market volatility showed investor fears are abating. Asia-Pacific stocks mostly rose Friday. Japan’s Nikkei 225 climbed 0.91% as the country’s consumer price index (excluding fresh food) rose 3.2% in March, 10 basis points lower than February’s reading.
In the event of a bank rescue in the European Union, the EU will start by “absorbing equity stack, and then the AT1 and then the Tier 2 and then the rest,” Dominique Laboureix, chair of the EU’s Single Resolution Board, told CNBC in an exclusive interview.
Fears are subsiding and markets are rebounding. But it’d be too premature to celebrate — at least not until we find out how the economy’s doing from reports coming out soon.
Yesterday, all major indexes rose. The S&P 500 climbed 0.57%, the Dow Jones Industrial Average advanced 0.43% and the Nasdaq Composite added 0.73%. Investors continued flocking to technology stocks: Amazon rose 1.75%, Microsoft gained 1.26% and Netflix climbed 1.93%. “The Silicon Valley Bank fiasco was just the oxygen the tech bull needed to snap out of its funk and get back to work,” CNBC’s Jim Cramer said.
How do we know investors are regaining confidence, other than inferring their sentiment from market moves? We look at the CBOE Volatility Index. Derived from the price of S&P 500 options, the volatility index measures the market’s expectations of how the S&P will move over the next 30 days. Hence, it serves as a proxy of investors’ fears. Currently, it’s around levels last seen at the start of March, before SVB collapsed.
In other words, markets seem to be pricing in the best of both words: “a recession that allows rates to be low and brings inflation down sharply, yet one that does not have a massively negative effect on corporate earnings,” Ajay Rajadhyaksha, global chairman of research at Barclays, wrote in a Thursday note.
That might be premature, as Rajadhyaksha suggests. While yesterday’s jobless claims number is 7,000 more than the previous week’s, it’s still below what the Federal Reserve would like to see for the labor market to slow substantially. We’ll get more granular data on the economy with the release of the Personal Consumption Expenditures Price Index later today, and the March jobs report next week.
For now, though, it’s undeniably nice to have a respite from the banking crisis.
— CNBC’s Dan Mangan contributed to this report
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Virgin Orbit flew its modified Boeing 747 airplane “Cosmic Girl” with the company’s LauncherOne rocket under its wing for the first time on November 18, 2018.
Virgin Orbit
Virgin Orbit is returning a “small” team to work on Thursday, according to a company-wide email obtained by CNBC, as it aims to prepare for its next rocket launch even as its future remains in doubt.
“Any viable path for our operations will require us to successfully launch,” Virgin Orbit CEO Dan Hart wrote in the email to employees.
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Hart described this as a “first step” in an “incremental resumption of operations,” while Virgin Orbit is extending the unpaid furlough and pause in operations for the rest of than more than 750 person company “through at least Monday.”
“We’ve made some important progress this week, but there is still work to be done,” Hart wrote.
The modified 737 aircraft “Cosmic Girl” lifts off from Mojave Air and Space Port in California carrying a LauncherOne rocket on June 30, 2021.
Virgin Orbit
A Virgin Orbit spokesperson confirmed in a statement to CNBC that the company is returning a subset of its employees on Thursday, but declined to specify how many are resuming work. Hart’s email said the staff returning will “focus on critical areas for our next mission,” including work on testing and installing the rocket’s engines. Reuters first reported the partial work resumption.
Virgin Orbit developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket from under the aircraft’s wing mid-flight. But the company’s last mission suffered a mid-flight failure, with an issue during the launch causing the rocket to not reach orbit and crash into the ocean.
In an update last week, Virgin Orbit said its internal investigation is nearly complete, with the rocket for its next launch featuring modifications and “in final stages of integration and test.”
Hart in his email wrote that Virgin Orbit is “facing uncertainty and I know that is very uncomfortable,” noting that employees not returning to work yet can continue to use vacation or sick days to help cover the unpaid time.
Virgin Orbit’s attempt to make history as the first satellite mission to launch out of the UK failed on Tuesday due to unforeseen and rather rare circumstances.
The rocket, which launched out of Cornwall Airport in Newquay, England (also known as Spaceport Cornwall) began well and looked to be on track to complete its mission of placing nine satellites into orbit from the LauncherOne rocket, which was attached to Cosmic Girl where the flight crew was located.
However once airborne, the Virgin Orbit rocket suffered an unexpected secondary engine failure that left the rocket unable to reach orbit. The company called it an “anomaly.”
As we find out more, we’re removing our previous tweet about reaching orbit. We’ll share more info when we can.
The crew that was part of the original capsule, Cosmic Girl, landed safely back on the ground.
Virgin Orbit is a flight company that offers “launch services for small satellites” born out of Virgin Galactic, the Virgin Group’s full space exploration company.
Shares of Virgin Orbit reportedly plummeted in pre-market trading amid the news, dropping as much as 20% this morning.
As of late Tuesday afternoon, shares were still down around 14% in a 24-hour period.
The launch failure is another tough hit for the Virgin Group, which suffered a rocket launch crash that left one pilot dead in 2014 through Virgin Galactic.
The news of Tuesday’s flight comes after a Sunday Times interview with Branson in which he revealed that ahead of his first trip into outer space, he was greeted by a barefoot Elon Musk inside his kitchen in the early morning hours.
Virgin Galactic is set to begin launching commercial space flights in the second quarter of 2023.
Virgin Orbit (NASDAQ:VORB – Get Rating) is one of 17 publicly-traded companies in the “Search & navigation equipment” industry, but how does it weigh in compared to its rivals? We will compare Virgin Orbit to related companies based on the strength of its earnings, dividends, analyst recommendations, valuation, institutional ownership, risk and profitability.
Analyst Ratings
This is a summary of current ratings and target prices for Virgin Orbit and its rivals, as reported by MarketBeat.
Sell Ratings
Hold Ratings
Buy Ratings
Strong Buy Ratings
Rating Score
Virgin Orbit
1
0
2
0
2.33
Virgin Orbit Competitors
74
493
570
19
2.46
Virgin Orbit presently has a consensus price target of $13.67, indicating a potential upside of 409.95%. As a group, “Search & navigation equipment” companies have a potential upside of 11.36%. Given Virgin Orbit’s higher probable upside, research analysts plainly believe Virgin Orbit is more favorable than its rivals.
Earnings and Valuation
This table compares Virgin Orbit and its rivals gross revenue, earnings per share and valuation.
Gross Revenue
Net Income
Price/Earnings Ratio
Virgin Orbit
$7.39 million
-$157.29 million
-4.79
Virgin Orbit Competitors
$5.50 billion
$842.29 million
16.87
Virgin Orbit’s rivals have higher revenue and earnings than Virgin Orbit. Virgin Orbit is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.
Profitability
This table compares Virgin Orbit and its rivals’ net margins, return on equity and return on assets.
Net Margins
Return on Equity
Return on Assets
Virgin Orbit
-546.24%
-128.75%
-64.94%
Virgin Orbit Competitors
-280.20%
-7.26%
-5.31%
Risk and Volatility
Virgin Orbit has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500. Comparatively, Virgin Orbit’s rivals have a beta of 1.02, suggesting that their average stock price is 2% more volatile than the S&P 500.
Institutional & Insider Ownership
11.4% of Virgin Orbit shares are held by institutional investors. Comparatively, 60.4% of shares of all “Search & navigation equipment” companies are held by institutional investors. 5.0% of Virgin Orbit shares are held by company insiders. Comparatively, 10.3% of shares of all “Search & navigation equipment” companies are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Summary
Virgin Orbit rivals beat Virgin Orbit on 11 of the 13 factors compared.
Virgin Orbit Holdings, Inc., a vertically integrated aerospace company, designs and develops commercial space orbital air pad launch solutions for small satellites across government, research, and education industries. It offers launch services for national security and defense; rideshare satellite launch services; civil spaceports; and space solutions. The company is headquartered in Long Beach, California.
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