Virgin Orbit is hiring and suspending operations while seeking funding

(Bloomberg) – Shares of Virgin Orbit Holdings Inc. fell after the satellite launch company founded by Richard Branson announced it would cease operations while trying to secure more funding.

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The company plans to conserve capital while it “discusses potential funding sources and explores strategic opportunities,” according to a regulatory filing filed Thursday. The pause in operations is expected to last until March 21.

Virgin Orbit, a sister company of space tourism company Virgin Galactic Holdings Inc., announced the plan Wednesday at a meeting with all employees, according to a person familiar with the matter. Almost all Virgin Orbit employees were furloughed for the week, said the person, who asked not to be identified to discuss non-public information.

Also Read: Virgin Orbit Rating Under Review at Canaccord Amid Funding Issue

A Virgin Orbit spokesman said the company “expects to provide an update on continued operations in the coming weeks.”

Shares plunged 35% to 66 cents as of 9:39 a.m. New York, the biggest one-day drop since trading began in late 2021, leaving the company with a market value of about $222 million.

The operational upheaval shows the extent of the problem for Virgin Orbit, which had run out of money. At its previous earnings announcement, the company reported an operating loss of $149 million for the first nine months of 2022. It also had regular funding from Virgin Investments Ltd. procured. The company is expected to report earnings for the fourth quarter of 2022 on March 29.

startup error

Virgin Orbit is also recovering from a high-profile launch failure in January. It was to launch nine small satellites from Spaceport Cornwall in what would be the first orbital rocket launch from British soil. However, the rocket suffered an in-flight mishap and never reached orbit, resulting in the loss of all satellites on board.

Virgin Orbit has since blamed the accident on a fuel filter that became detached during launch.

“On the operations side, our investigation is almost complete and our next production rocket with the required modification is in the final stages of integration and testing,” the spokesman said in the statement.

(Updates with share decrease in fifth paragraph.)