Virgin Orbit Shares Slide as First UK Space Launch Fails

The Virgin Group spinoff was struggling before a malfunction destroyed a rocket carrying 9 satellites

The Virgin Orbit Launcher One rocket in its hanger at Newquay Airport.

Getty Images / Hugh R. Hastings

Virgin Orbit (VORB) shares slumped 12% Monday after the California company spun off by Richard Branson's Virgin Group aborted its first space launch from U.K. soil, citing a booster rocket malfunction.

Key Takeaways

  • The first space launch from U.K. soil failed late Sunday when Virgin Orbit's rocket malfunctioned.
  • The California company's shares plunged 12% in Monday's trading.
  • Virgin Orbit had already flagged doubts it can remain a going concern amid heavy financial losses.
  • The mission's failure was also a setback for the U.K., which invested $24 billion to turn a Cornwall airport into a base for the Boeing jet used by Virgin Orbit to launch its rockets.

Virgin Orbit began as a project within Branson's Virgin Galactic (SPCE) and, like the space tourism company, launches its space vehicle from a carrier jet plane flying at a high altitude. Virgin Orbit's 'Cosmic Girl' Boeing 747, adapted from passenger service for Virgin Atlantic, took off from Cornwall late Sunday and successfully released its LauncherOne space vehicle, the company said. An unspecified "anomaly" during the firing of that rocket's second stage scuttled the mission.

The "technical malfunction" destroyed the nine small satellites LauncherOne was carrying into low-Earth orbit for a mix of government and private clients. It marked a setback for the U.K.'s ambitions to develop a homegrown space industry and for Virgin Orbit, whose future was already in doubt amid heavy financial losses.

Virgin Orbit lost a cumulative $820 million through the end of 2021, according to its annual report, which flagged "substantial doubt" about the company's ability to remain a going concern. Virgin Orbit reported a loss of $157.3 million for fiscal 2021 on revenue of $7.4 million. Over the first nine months of fiscal 2022, the company posted net losses of $139.5 million on revenue of $33 million.

Virgin Group and Abu Dhabi's sovereign wealth fund invested some $1 billion in Virgin Orbit, which came public via a deal with a special purpose acquisition company (SPAC) that initially valued Virgin Orbit at $3.7 billion. However, the deal, completed just before the end of 2021, raised just $228 million for the company, less than half of what was once expected.

Monday's decline dropped Virgin Orbit's market capitalization to $583 million. The company held $71.2 million in cash as of Sept. 30. Virgin Orbit canceled a planned securities offering in late 2022; it received a further $25 million investment from Virgin Group in November. Before Sunday night's failure, Virgin Orbit had conducted four straight successful space launches from the Mojave Desert in the western U.S.

The U.K. invested 20 billion British pounds ($24.4 billion) to turn Cornwall's small commercial airport into "Spaceport Cornwall," a hoped-for hub for the domestic space industry.

Article Sources
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  2. Virgin Orbit "Historic U.K. Mission Reaches Space Falls Short of Orbit."

  3. "Virgin Orbit Rocket Suffers Anomaly During 1st Launch From UK."

  4. The New York Times. "Failure of Britain’s First Space Launch Is a Setback to Emerging Industry."

  5. Virgin Orbit. "Form 10-K, March 31, 2022," Page F-9.

  6. Virgin Orbit. "Form 10-K, March 31, 2022," Page F-4.

  7. Virgin Orbit. "Virgin Orbit Announces Third Quarter 2022 Financial Results."

  8. CNBC. "Branson’s Virgin Orbit to Go Public Through a SPAC at $3.7 Billion Valuation."

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  10. Parabolic Arc. "Virgin Orbit Abandons Securities Offering Amid Shrinking Cash Reserves, Financial Losses and Launch Delays."

  11. Reuters. "Britain's Satellite Hopes Undimmed by Mission Failure."

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