Virgin Orbit Stock Plunges on Reported Collapse of Investment Deals

Shares of Richard Branson’s Virgin Orbit (NASDAQ: VORB) plunged again on Monday amid a report that negotiations with two separate investors had broken down during the three previous days.

Shares plunged 33% to $0.54 in regular trading on Monday. They sunk an additional 10% to $0.48 in after-hours trading.

Texas-based venture capitalist Matthew Brown had confirmed last week that he had been negotiating a $200 million deal that would have left him with a controlling stake in the cash-strapped air-launch company. However, CNBC reports:

But discussions between Virgin Orbit and the Texas-based investor stalled and broke down late last week, a person familiar told CNBC. As of Saturday those discussions had ended, the person said.

Separately, another person said talks with a different potential buyer broke down on Sunday night.

Virgin Orbit shares had plunged below $1 after the company instituted a week-long pause in operations and furloughed nearly all of its employees on March 15. Shares had recovered somewhat by the end of last week amid reports about negotiations with Brown and the return to work of a small group of employees to continue work on a LauncherOne booster.

CNBC reported that CEO Dan Hart had expected to provide employees an update on Monday. The update has been postponed to no later than Thursday amid an extension of the unpaid furloughs.

In an interview with CNBC last week, Brown said his company, Matthew Brown Companies, had invested in 13 space companies, which he considers to be “neighbors” in the industry.

Brown claimed that Virgin Orbit has “something special,” specifically the capability to launch payloads into orbit with only a few hours’ notice. He said this set the company apart from ground-based launch systems that require much longer lead times.

The Pentagon would like to have access to a booster capable of launching on very short notice. However, if Virgin Orbit has this capability, it has yet to demonstrated it. Months have passed between the company’s launches.

Virgin Orbit has struggled with growing losses, strong competition, economic headwinds and an inability to ramp up its launch cadence. The company has launched only six times since May 2020, with four successes and two failures. The most recent launch from Spaceport Cornwall failed in January, resulting in the loss of nine small satellites.

Branson has pumped $60 million into Virgin Orbit since early November. All of the investments have the stipulation that Virgin Investments Ltd. would take possession of virtually all of the company’s assets in the event of a default.

Raising additional money has been challenging in recent months. Virgin Orbit announced in December that it would not issue additional stock to the public due to unfavorable economic conditions.

Virgin Orbit has faced stiff competition from the industry’s dominant player, SpaceX, and small launch provider Rocket Lab.

SpaceX’s six Transporter rideshare missions have launched more than 400 satellites into orbit since January 2021. These flights and rideshare missions by other providers have greatly reduced the number of satellites available for small launch providers. Large rockets have also carried small satellites as secondary payloads along with larger spacecraft.