Richard Branson’s space ambitions appear stalled as financial troubles mount at his two space ventures, Virgin Orbit and Virgin Galactic.
Virgin Orbit, a satellite launch startup under Branson’s Virgin Group, yesterday (March 15) furloughed nearly all of its employees and told them at an all-hands meeting the company will cease operations for at least a week as it works to raise funds, CNBC first reported.
In a statement confirming the report, Virgin Orbit, based in Long Beach, California, said it’s initiating an operational pause starting today (March 16) and expects to provide an update in the coming weeks.
Virgin Orbit shares fell more than 30 percent to $0.69 today on the news. The company’s stock price has plummeted 61 percent this year and is down 93 percent since its IPO price of $10 two years ago.
Virgin Orbit, along with its sister company, Virgin Galactic, has been rapidly burning cash. In its latest quarter ended September, Virgin Orbit reported a $43 million loss on $31 million in revenue. In the first nine months of 2022, the company lost $140 million and had $71 million in cash at the end of September
That $71 million didn’t last the company very long, however. By November, Virgin Orbit had raised $25 million from Virgin Investments Limited (VIL), an investment subsidiary under Branson’s Virgin Group. In December and January, it raised two more rounds, $20 million and $10 million, from the same firm.
Virgin Galactic shares plunge 90 percent as losses mount
Branson’s other space venture, Virgin Galactic, faces a similar cash crunch. The space tourism startup, which aims to fly paying customers to suborbital space for short trips, reported a $500 million loss last year on just $2.3 million of revenue. It had $980 million of cash on hand at the end of 2022 but reported a negative cash flow of $135 million and projected cash flow to remain negative for the first three months of 2023.
Virgin Galactic’s stock has lost half of its value since going public in March 2018 and is down more than 90 percent from its peak in June 2021.
As their cash situations sour, neither Virgin company is making meaningful progress in their core businesses.
Virgin Galactic, based in Mojave, California, flies tourists to suborbital altitudes using a similar system, which consists of a carrier aircraft and a spaceplane.
In July 2021, Virgin Galactic successfully flew Branson and five of his employees in the company’s first full-crew flight. Virgin Galactic initially aimed to begin commercial flights shortly after that but it has yet to happen. The company is now targeting the second quarter of 2023, CEO Michael Colglazier said during an earnings call on Feb. 28.
Virgin Galactic sells its suborbital trips for $450,000 per person. The company said it has about 800 customers on the waitlist who have put down a deposit, a main source of revenue for now.
Virgin Orbit provides launch services for small satellite operators with revenue primarily from business clients. The company delivers satellites to low Earth orbit using a modified Boeing 747 aircraft with a small rocket attached under one of its wings.
It has launched only three missions in the past two years—a pace financially unviable. In January, the company attempted to launch its first mission from the U.K., but that rocket failed to reach orbit due to a technical difficulty mid-flight.
Update: This article has been updated with more information about Virgin Galactic’s cash position at the end of 2022.