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Virgin Orbit’s Journey from the Final Frontier to Financial Collapse

No one ever claimed that exploring the cosmos would be simple, but certain endeavors are best left behind as quickly as possible.

Take, for instance, Sir Richard Branson. The billionaire’s pursuit of outer space has faltered so significantly that the odds of discovering Elvis on the Moon appear higher than the bearded magnate launching another rocket. Even so, investors in his Virgin Orbit venture might be inclined to try it themselves, with Branson in tow.

In Branson’s tumultuous world, he might argue that failures are commonplace – an inherent cost of true entrepreneurship. However, this failure might surpass all others, even outdoing the ill-fated Virginware that ended in a fire sale of 35,000 Virgin-branded undergarments.

The Downward Spiral of Virgin Orbit

The decision to terminate 85% of Virgin Orbit’s workforce after a frantic, unsuccessful pursuit of emergency funding effectively marks a sudden and premature conclusion to the company’s aspirations of becoming a reputable commercial satellite launch provider. Absent a substantial financial infusion, Virgin Orbit is projected to collapse.

In truth, its ambitions perished in January on the picturesque Cornish coast, where the company’s attempt to execute the first-ever satellite launch from British soil concluded in catastrophe, witnessed by a gathering of astrophiles.

The spectacle was short-lived. A rocket deployed shortly after 11 pm plummeted back to Earth less than an hour later, carrying nine costly satellites and dragging Virgin Orbit’s share price and prospects down.

The Impact on the UK’s Space Industry

This debacle will not aid the UK’s goal of evolving into an international space hub, particularly when considering the drawn-out catastrophe that befell satellite internet startup OneWeb.

Rarely has a prominent company, backed by such a high-profile supporter, unraveled so rapidly. Established as a subsidiary of Virgin Galactic in 2017, its shares have been listed on the Nasdaq stock exchange for under 18 months. 

Virgin Orbit exemplifies the peak-of-the-market frenzy for blank shell companies that engulfed Wall Street when inexpensive funds sought investment opportunities—or, in some instances, any opportunities.

Valued at $3.7 billion upon its initial public offering, the company’s shares are presently worth less than $100 million after plummeting 44% in aftermarket trading in the US. Yet, surprisingly, they continue to be traded.

Branson’s Exit and the Future of Virgin Galactic

Even Branson himself is ready to abandon ship, having allegedly invested over $1 billion in the company since its inception, including around $55 million in recent weeks after it exhausted its funds.

Branson’s Virgin Group has contributed $11 million to finance severance packages for nearly 800 employees facing unemployment and other outstanding expenses. In exchange, the group will secure rights over the company’s Boeing 747 aircraft and additional assets in the event of bankruptcy.

However, the Cornwall fiasco might not be solely responsible for the downfall. Virgin Orbit was a product of the cheap money era, burning through cash and likely struggling to survive in a more challenging funding landscape, regardless of any marketing flair attached.

It reveals that despite rumors of external parties offering rescue financing, a high-profile figure like Branson has been unable to convince anyone else to invest.

An Early Demise of Interstellar Ambitions

As the interest cycle shifts dramatically, risk appetite diminishes, and investors increasingly avoid unproven business models and unprofitable startups.

Virgin Galactic, Branson’s space tourism venture already grappling with competition from Elon Musk and Jeff Bezos, now faces uncertainty regarding its future. Who would back it against such strong opposition? While there is room for competition, it is unlikely every company will be a winner.