Virgin Orbit (NASDAQ:VORB) fell 8.5% on Jan. 9, then 21.5% more overnight after its effort to launch British satellites from an airplane failed. VORB stock, which was worth $10 per share a year ago, currently trades around $1.59.
Virgin strapped a rocket called LauncherOne carrying nine satellites to a modified 747 jet, with plans to send the satellites into orbit. The company said an unspecified anomaly in the second stage engine of LauncherOne caused the mission failure. It was Virgin Orbit’s sixth mission and its second failure.
Falling to Earth
Launching rockets from cruising altitude should cost less than lifting them from the ground because of the difference in gravity. The theory is sound and there are dozens of companies trying to get into the business.
Virgin Orbit had revenue of $30.9 million in the September quarter of 2022, but lost $43.6 million. By the end of the quarter its cash balance was down to $71 million from nearly $195 million at the start of the year. The company responded by raising $25 million in November from founder Richard Branson’s Virgin Group.
The failure brought Virgin Orbit’s market cap to just more than $500 million. That’s less than one-quarter of where it stood a year ago when it came public through a special purpose acquisition company (SPAC).
The attempted launch from Cornwall in the southwest corner of England was broadly hyped as “a historic first for Europe.” The company broadcast it all on social media.
CEO Dan Hart promised a full investigation and corrective actions, but it’s unclear whether Virgin has the financial ability needed to succeed. The failure is also a blow to the British space industry, which can make satellites but must rely on companies elsewhere for launches.
What Happens Next for VORB Stock?
The transparency that marked the pre-launch disappeared when the launch failed. Branson now faces the difficult job of convincing public or private investors that Virgin can get space right.
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On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.