Richard Branson’s Virgin Orbit appears to be on the brink of death after another high-risk tech investment by the British billionaire flopped.
Weeks after an attempted launch of a payload from British soil failed, a important milestone The company is now running out of money to start using the satellites.
As a result, the company will have to lay off 675 employees, or about 85% of its total workforce, and charge $15 million in the first quarter to help offset the cost of the layoffs.
The company, founded by Branson in 2017, said it needed to downsize “to reduce spending given the company’s inability to secure meaningful funding,” according to a SEC Filing on Thursday.
It even comes as Branson’s Virgin Investments Limited has now agreed to lend Virgin Orbit $10.9 million in the form of a senior secured bond convertible into shares.
Virgin Orbit shares first listed on the stock market at a valuation of $3.7 billion in August 2021, are expected to halve when trading begins on Friday.
Best known for founding Virgin Records and Virgin Atlantic, Branson controls a vast empire of companies more diverse than Elon Musk. Already a decade ago The Observer described his About 400 operations as a “tangled web of companies owned by an intricate array of offshore trusts and foreign holding companies.”
Recently, however, his more ambitious gambles have not paid off.
Both its investments in space tourism and the Hyperloop have been major disappointments
Space tourism company Virgin Galactic is still waiting to begin its first-ever commercial service, scheduled for Q2, but is on track repeated delays and security Issue this led to the recent departure of its president for aerospace systems.
The public company, which is currently worth just over $1 billion, is on the ropes financially. In February it said it had burned $400 million in cash last year with a net loss of half a billion and sales of just $2.3 million.
It had to ask shareholders for more funding back in August and only ventured so far as to forecast its first-quarter cash burn rate, predicting that the company would need an additional $130 million just to keep operating to maintain, not to mention investing in new equipment.
His investment in Hyperloop One, later renamed Virgin Hyperloop, has also proved a disaster. The futuristic technology that transports people through a vacuum tube at incredibly high speeds was famously touted as “not that hard” by Musk nearly a decade ago.
However, to date, the technology hasn’t gone anywhere, with just one successful passenger test through a 500-meter tube at a speed of 100 miles per hour – almost a tenth of what it should be doing.
In October 2021 it is Co-founder and CEO left and four months later half of his staff were eliminated after plans for passenger services were abandoned to focus on freight services.
Musk himself still hasn’t managed to deliver on his own Promise for a Hyperloop.
This story was originally featured on Fortune.com
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Source : finance.yahoo.com