Virgin Orbit (NASDAQ:VORB) stock is tanking today for a number of reasons. Specifically, the company has been unable to secure the funding it needs. This has resulted in a round of Virgin Orbit layoffs that investors aren’t happy to hear about.
Virgin Orbit is a space flight and satellite company founded by famous billionaire entrepreneur Richard Branson. A Form 8-K filed yesterday reveals that Virgin Orbit intends to terminate around 675 employees by April 3.
Sometimes, you hear about a company laying off 5% or 10% of its workforce. In those instances, stock prices can actually go up. That isn’t the case with Virgin Orbit today, however. The space flight company’s headcount reduction will be quite severe, at around 85%.
Virgin Orbit is implementing this round of layoffs to “reduce expenses in light of the Company’s inability to secure meaningful funding.” CEO Dan Hart reiterated this point, acknowledging that Virgin Orbit has “not been able to secure the funding to provide a clear path for this company.”
Virgin Orbit Layoffs Wreak Havoc on VORB Stock
Given these developments, you can probably guess what happened to VORB stock this morning. Shares have cratered more than 40% as of this writing, crash-landing at around 20 cents per share.
Moreover, Hart disclosed that Virgin Orbit is ceasing its operations “for the foreseeable future.” So, the company’s stakeholders probably shouldn’t hold their breath, waiting for Virgin Orbit’s next rocket launch.
Reportedly, Hart appeared to get emotional when he declared, “We have no choice but to implement immediate, dramatic and extremely painful changes.” Without a doubt, this is one of the most challenging chapters in the story of the company.
So, now it’s a question of whether Virgin Orbit can get back on its feet. The company will need to secure the necessary funding and provide an indication that it can resume operations. Until or unless that happens, there may be more downside coming for VORB stock.
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On the date of publication, David Moadel 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.