Virgin Orbit Shares Drop 12% in 2023 After UK's First Space Launch Failure

Virgin Orbit, a Virgin Group spinoff, faced a major setback when its rocket malfunctioned during the UK's first space launch attempt, impacting its financial outlook.

On Monday, Virgin Orbit (VORB) shares fell sharply by 12% following the failure of its first-ever space launch from the United Kingdom. The California-based aerospace company, originally part of Richard Branson's Virgin Group, cited a booster rocket malfunction as the cause of the aborted mission.

Key Highlights

• The UK's inaugural space launch attempt by Virgin Orbit ended in failure due to a rocket malfunction on Sunday night.
• Virgin Orbit's stock price dropped 12% in Monday trading as a result.
• The company had already expressed concerns about its financial viability amid significant losses.
• This mission failure also represents a setback for the UK’s £20 billion investment in Spaceport Cornwall, aimed at developing a domestic space industry.

Virgin Orbit began as a project within Virgin Galactic and operates by launching its rockets from a carrier jet flying at high altitude. Its modified Boeing 747, dubbed 'Cosmic Girl', departed from Cornwall and successfully released the LauncherOne rocket. However, an unspecified anomaly during the rocket's second stage ignition caused the mission to fail.

This technical malfunction destroyed nine small satellites destined for low-Earth orbit, which were intended for a mix of government and private sector clients. The failure impacts both Virgin Orbit's future prospects and the UK’s ambitions to establish a homegrown space sector.

Financially, Virgin Orbit has faced substantial challenges, reporting cumulative losses of $820 million through 2021. The company disclosed a $157.3 million loss on $7.4 million revenue for fiscal 2021, and a $139.5 million loss on $33 million revenue in the first nine months of 2022.

Virgin Group and Abu Dhabi’s sovereign wealth fund invested approximately $1 billion in Virgin Orbit, which went public via a SPAC merger initially valuing the company at $3.7 billion. However, the deal raised only $228 million, less than half of initial projections.

Following Monday’s stock decline, Virgin Orbit’s market capitalization fell to $583 million. As of September 30, the company held $71.2 million in cash. After canceling a securities offering in late 2022, Virgin Orbit received an additional $25 million investment from Virgin Group in November. Prior to this UK mission, Virgin Orbit had achieved four consecutive successful launches from the Mojave Desert.

The UK government invested £20 billion ($24.4 billion) to transform Cornwall’s small commercial airport into Spaceport Cornwall, envisioned as a central hub for the domestic space industry.

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