Virgin Orbit Holdings, Inc. (NASDAQ: VORB) is a company within Virgin Group that provides launch services for small satellites using its LauncherOne rocket. The company was formed in 2017 as a spin-off from Virgin Galactic, which primarily offers space tourism services. Since its IPO VORB stock has fallen a shocking 96% and will likely continue to plummet after the failure of its first UK rocket launch. The company will likely file for bankruptcy after announcing it has furloughed all of its employees and is pausing all operations. The only chance for its survival would be an outside investment which the company had hoped to achieve through a deal with investor Matthew Brown, but discussions ultimately broke down, causing the VORB stock price to plummet even more.
VORB Stock News
After months of research and development VORB took a proprietary launch style rather than settling for the traditional ground launch one. VORB developed a horizontal air-launch system in which an expendable two-stage LauncherOne rocket is carried to around 35,000 ft by a modified Boeing 747-400 passenger plane called Cosmic Girl. The company was betting on this new approach. VORB then conducted its first rocket launch attempt on May 25, 2020. However, after release, the mission was terminated due to an anomaly shortly after first stage ignition, which may indicate flaws being present in VORB’s horizontal launch approach.
About 7 months later, VORB worked with NASA deploying 10 payloads for the government agency, which was VORB’s second rocket launch and the first successful one at that. Later on VORB had another 3 successful launch missions including successfully delivering its first commercial payload to space on June 30, 2021.
However, attempting to conduct the first satellite launch mission from UK soil, VORB faced its second failure since its first launch mission attempt. An anomaly had prevented the LauncherOne rocket from reaching orbit. VORB later clarified that the failure occurred due to a premature shutdown during the firing of the rocket’s second stage engine. On the Next day, VORB’s shares dropped 20% reaching $1.66.
With only 4 successful launch attempts out of 6, VORB hasn’t been competitive with similar services showing that its approach is fundamentally flawed. Additionally, VORB’s LauncherOne current launch price is $40,000 per kilogram. Compared to SpaceX, one of VORB’s main competitors, SpaceX offers a much more competitive launch cost price. SpaceX’s Falcon 9 and Falcon heavy launch prices are $2,700/kg and $1,400/kg respectively. With SpaceX boasting nearly 300 successful launches to its name with minimal failures, VORB basically had no chance of success given the expenses it incurs from the launches, its testing, and SpaceX’s superior services.
So it comes as no surprise that by mid March 2023 VORB announced it was pausing operations and furloughing most of the company’s approximately 750 employees after sustaining significant financial losses. VORB has operated at a loss since its IPO,and as of September 2022 the company had generated total revenues of just $33 million with the cost of revenues reaching $61 million – nearly double its revenues. Moreover, the company has a high R&D cost of $30 million and no cash flow as the company suffered from a $139 million net loss. Without an investor stepping in, the current financial situation likely means VORB is on the verge of bankruptcy.
VORB has also stated the pause in operations will continue until the company finds a funding lifeline to avoid bankruptcy after spooked investors caused an 18% drop in VORB stock pushing its market capitalization to a record low of $150 million.
Even VORB’s owner, Sir Richard Branson, has claimed that he is no longer willing to fund the company – painting a very bleak picture for the company. VORB’s financial suffering may have caused Branson to lose his belief in the company or he may have concluded that the LauncherOne is just not usable.
However, a last minute announcement of VORB nearing a $200 million investment deal with Texas-based venture capital investor Matthew Brown, led to a 100% run up in the stock. The
private share placement which would have staved off bankruptcy likely led VORB to announce its plans to resume operations and recall some of its employees to prepare for its next mission.
The next day, Matthew Brown stated in an interview that he was in active discussions with VORB to complete the investment deal which would transfer the ownership of the company to him. Brown took an interest in VORB despite his investments in over 13 aerospace companies saying he believed that VORB has an edge since its horizontal launch approach would allow it to launch rockets at a few hours notice.
Yet, VORB is still searching for a new investor since discussions with Matthew Brown collapsed over the next weekend causing it to resume its operations pause and employee furlough. With the company still searching for a lifeline investment, VORB will likely file for bankruptcy without additional funding. Due to its dire situation, short interest is currently at 28%.
VORB Stock Financials
Looking into VORB’s financials as of September 2022, the company has $242 million in assets, including $71 million in cash and no restricted cash. Meanwhile, VORB has $153 million in liabilities, $72 million of which are current liabilities. In terms of revenues, the company generated $33 million in revenues. However, VORB reported $149 in operating loss, due to high cost of revenue of $61 million and expenses of $121 million. Finally, the company suffered a net loss of $139 million.
Media Sentiment
@TyroneLopez__ is watching VORB stock closely in anticipation of its potential chapter 11 filing.
Technical Analysis
VORB stock is in a downward channel with it trading below the 200 MA which makes its trend bearish. Despite showing bullish signs before the UK launch mission, the VORB stock price dropped from $2.23 to $1.55 the next day due to the mission’s failure. Recently the stock saw another massive drop from $1 to $0.65 on the day of VORB’s operations pause announcement. The stock continued declining ever since reaching an all-time low of $0.37.
VORB is currently trading below the 21 and 50 MAs with the RSI neutral at 38. The MACD recently witnessed a bullish crossover. The stock is seeing a high rate of distribution. A possible play would be to take a short position on the retest of $.45 resistance and take profits on retests of the all-time low while leaving a tail in anticipation of a bankruptcy filing. Stop loss would be above the resistance at $.48.
VORB Stock Forecast
With VORB failing in 2 of their 6 launch attempts and not being cost-effective, VORB isn’t presenting itself as a strong competitor in the aerospace market. The company has been suffering financially after its UK rocket launch failure, which caused the company to stop operations and furlough employees. Its current financial situation meant that the company needed to search for a funding life with current owner Richard Branson stopping his funding to the company. However, after being close to finalizing a deal with Matthew Brown it broke down overnight. All this news led VORB stock price to plummet continuously since the start of the year, which put the company on the verge of bankruptcy. The downfall of VORB could potentially be a good short candidate for bearish investors.
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