Virgin Orbit shares are plunging this morning after the company
Virgin Orbit shares are plunging this morning after the company

ditched its latest mission to launch a satellite into orbit from
ditched its latest mission to launch a satellite into orbit from

UK soil.
UK soil.

Virgin Orbit is ceasing operations for the foreseeable future after
Virgin Orbit is ceasing operations for the foreseeable future after

failing to secure a funding lifeline.
failing to secure a funding lifeline.

Richard Branson's Virgin Orbit filed for Chapter 11 bankruptcy
Richard Branson's Virgin Orbit filed for Chapter 11 bankruptcy

protection as it fails to secure the funding needed to recover from
protection as it fails to secure the funding needed to recover from

a January rocket failure.
a January rocket failure.

Virgin Orbit started out as a program at Virgin Galactic in 2012
Virgin Orbit started out as a program at Virgin Galactic in 2012

before being spun off into a separate company in 2017.
before being spun off into a separate company in 2017.

While the former focused on the space tourism market, Virgin
While the former focused on the space tourism market, Virgin

Orbit's goal was to build rockets capable of blasting small
Orbit's goal was to build rockets capable of blasting small

satellites into space.
satellites into space.

At the time, this was still a largely untapped market.
At the time, this was still a largely untapped market.

They were looking at the third and smallest category of
They were looking at the third and smallest category of

satellite delivery into orbit.
satellite delivery into orbit.

And what that looks like is satellites that are maybe the range
And what that looks like is satellites that are maybe the range

of like a microwave or an oven that are trying to get into orbit
of like a microwave or an oven that are trying to get into orbit

at low cost or at high speed.
at low cost or at high speed.

Virgin Orbit had a lot of promise, yet ultimately couldn't deliver,
Virgin Orbit had a lot of promise, yet ultimately couldn't deliver,

despite making quite a lot of progress over the years.
despite making quite a lot of progress over the years.

Virgin Orbit was one of the most well-capitalized launch companies
Virgin Orbit was one of the most well-capitalized launch companies

in existence, especially amongst startups in recent years.
in existence, especially amongst startups in recent years.

They are one of only two to have raised over $1 billion,
They are one of only two to have raised over $1 billion,

the other being Relativity Space.
the other being Relativity Space.

CNBC explores what went wrong with the Richard Branson-backed company
CNBC explores what went wrong with the Richard Branson-backed company

that once held so much promise.
that once held so much promise.

Virgin Orbit was founded by billionaire Richard Branson, who
Virgin Orbit was founded by billionaire Richard Branson, who

held a 75% stake in the company.
held a 75% stake in the company.

Emirati sovereign wealth fund, Mubadala, held the second-largest
Emirati sovereign wealth fund, Mubadala, held the second-largest

stake in Virgin Orbit at 18%.
stake in Virgin Orbit at 18%.

Virgin Orbit targeted the small satellite launch market, catering
Virgin Orbit targeted the small satellite launch market, catering

to customers whose satellites weighed up to 500kg or 1,100 pounds
to customers whose satellites weighed up to 500kg or 1,100 pounds

like small satellite maker Oneweb.
like small satellite maker Oneweb.

Virgin Orbit signed their largest ever customer in 2015
Virgin Orbit signed their largest ever customer in 2015

with Oneweb before spinning out, and that was for 39 launches, with
with Oneweb before spinning out, and that was for 39 launches, with

an option for up to 100 more.
an option for up to 100 more.

That's when the company was riding high.
That's when the company was riding high.

They had a major customer, significant backlog, engineering
They had a major customer, significant backlog, engineering

strength and it looked like everything was going in their
strength and it looked like everything was going in their

favor. And that's when Virgin Galactic sought to spin them off
favor. And that's when Virgin Galactic sought to spin them off

and let them stand as their own company.
and let them stand as their own company.

Virgin Orbit touted its unusual method of launching its rockets,
Virgin Orbit touted its unusual method of launching its rockets,

known as 'air launch,' as more flexible than launching from a
known as 'air launch,' as more flexible than launching from a

traditional launch pad like competitors Rocket Lab, Astra and
traditional launch pad like competitors Rocket Lab, Astra and

SpaceX among others.
SpaceX among others.

The method involved using a modified Boeing 747 jet that Virgin
The method involved using a modified Boeing 747 jet that Virgin

Orbit called, Cosmic Girl, to carry the company's LauncherOne
Orbit called, Cosmic Girl, to carry the company's LauncherOne

rocket to about 35,000ft of altitude before dropping it.
rocket to about 35,000ft of altitude before dropping it.

From there, the rocket would fire its engines and continue into
From there, the rocket would fire its engines and continue into

space.
space.

By launching from an aircraft, Virgin could take off from almost
By launching from an aircraft, Virgin could take off from almost

any airport around the world and turn these airports into
any airport around the world and turn these airports into

spaceports. Their last launch was from the United Kingdom.
spaceports. Their last launch was from the United Kingdom.

They were also in discussions with Japan and a launch site out of
They were also in discussions with Japan and a launch site out of

Brazil. So they were offering two different countries the ability to,
Brazil. So they were offering two different countries the ability to,

in a sense, have a sovereign launch capability because the
in a sense, have a sovereign launch capability because the

rocket would take off from their home soil.
rocket would take off from their home soil.

From the government's point of view, if satellites got lost in any
From the government's point of view, if satellites got lost in any

conflict in the future, God forbid, you know, we're about the
conflict in the future, God forbid, you know, we're about the

only company in the world that could replace them within 24 hours.
only company in the world that could replace them within 24 hours.

So they won't have to wait six months for a land-based rocket to
So they won't have to wait six months for a land-based rocket to

take off.
take off.

Air launching satellites was not a completely novel idea in the space
Air launching satellites was not a completely novel idea in the space

industry. Orbital Sciences, now owned by Northrop Grumman, has been
industry. Orbital Sciences, now owned by Northrop Grumman, has been

launching its Pegasus rocket from a plane since 1990.
launching its Pegasus rocket from a plane since 1990.

But Virgin Orbit promised to do this for cheaper.
But Virgin Orbit promised to do this for cheaper.

In the summer of 2021, Virgin Orbit successfully completed its
In the summer of 2021, Virgin Orbit successfully completed its

first commercial mission, launching seven satellites into
first commercial mission, launching seven satellites into

orbit for customers, including the US Department of Defense, the Royal
orbit for customers, including the US Department of Defense, the Royal

Netherlands Air Force and Polish company SatRevolution.
Netherlands Air Force and Polish company SatRevolution.

Management was feeling confident and began planning to take Virgin
Management was feeling confident and began planning to take Virgin

Orbit public.
Orbit public.

We have a pipeline that is currently at about $4 billion that
We have a pipeline that is currently at about $4 billion that

spans through about '24 or into '25.
spans through about '24 or into '25.

So there's an enormous market that is growing in the small satellite
So there's an enormous market that is growing in the small satellite

market. We've got $300 million in active contracts and LSAs,
market. We've got $300 million in active contracts and LSAs,

MOUs and letters of intent.
MOUs and letters of intent.

So with that, we're seeing huge momentum.
So with that, we're seeing huge momentum.

Unfortunately for Virgin Orbit, its trajectory was about to change for
Unfortunately for Virgin Orbit, its trajectory was about to change for

the worse. On December 28th, 2021, Virgin Orbit closed the deal
the worse. On December 28th, 2021, Virgin Orbit closed the deal

with special purpose acquisition company NextGen Acquisition Corp II
with special purpose acquisition company NextGen Acquisition Corp II

to go public.
to go public.

Lots of tech startups were using special purpose acquisition
Lots of tech startups were using special purpose acquisition

companies as a means to quickly get to market, have an
companies as a means to quickly get to market, have an

IPO and raise hundreds of millions of dollars in the process.
IPO and raise hundreds of millions of dollars in the process.

This, at the surface looked like a great deal for Virgin Orbit
This, at the surface looked like a great deal for Virgin Orbit

and arguably would have been had they raised as much money as they
and arguably would have been had they raised as much money as they

set out to raise.
set out to raise.

Virgin Orbit's goal was to raise around $480 million,
Virgin Orbit's goal was to raise around $480 million,

but they ended up raising just shy of $230 million.
but they ended up raising just shy of $230 million.

The result was disappointing for Virgin Orbit, especially
The result was disappointing for Virgin Orbit, especially

considering the fact that sister company, Virgin Galactic, made a
considering the fact that sister company, Virgin Galactic, made a

much bigger splash when it went public in 2019.
much bigger splash when it went public in 2019.

The space tourism company went through the SPAC process much
The space tourism company went through the SPAC process much

earlier, and the market dynamics, as well as the appetite for risk at
earlier, and the market dynamics, as well as the appetite for risk at

the time was very different than the point at which Virgin Orbit
the time was very different than the point at which Virgin Orbit

went public when the SPAC craze had really started to mature and
went public when the SPAC craze had really started to mature and

people were becoming much more wary of these kind of risky, low
people were becoming much more wary of these kind of risky, low

revenue ventures, and as a result raised much less capital than
revenue ventures, and as a result raised much less capital than

Virgin Galactic did.
Virgin Galactic did.

The market for rockets that launched small satellites is also
The market for rockets that launched small satellites is also

getting crowded. Experts estimate that there are between 100 and 120
getting crowded. Experts estimate that there are between 100 and 120

small rockets in various stages of development around the world as of
small rockets in various stages of development around the world as of

late 2022.
late 2022.

And when you disregard the demand from broadband mega-constellations
And when you disregard the demand from broadband mega-constellations

like SpaceX's StarLink and Oneweb, which almost exclusively launch on
like SpaceX's StarLink and Oneweb, which almost exclusively launch on

much bigger rockets, demand for launches of small satellites has
much bigger rockets, demand for launches of small satellites has

remained relatively stagnant since 2017.
remained relatively stagnant since 2017.

From 2012 to present, the average size of a communication
From 2012 to present, the average size of a communication

satellite, or any small satellite, has grown considerably.
satellite, or any small satellite, has grown considerably.

Communication satellites like Kuiper or StarLink,
Communication satellites like Kuiper or StarLink,

those are so big that they would at best be able to fit one
those are so big that they would at best be able to fit one

satellite or none on a LauncherOne.
satellite or none on a LauncherOne.

This trend has led many of Virgin Orbit's competitors to skew towards
This trend has led many of Virgin Orbit's competitors to skew towards

making larger rockets.
making larger rockets.

Henry says it's an approach that's proved beneficial for SpaceX, which
Henry says it's an approach that's proved beneficial for SpaceX, which

retired its small Falcon 1 rocket in favor of the larger Falcon 9
retired its small Falcon 1 rocket in favor of the larger Falcon 9

rocket, which it uses for rideshare missions where small
rocket, which it uses for rideshare missions where small

satellite companies can hitch a ride with other customers as a more
satellite companies can hitch a ride with other customers as a more

affordable launch option.
affordable launch option.

An advantage of small rockets over larger ones used to lie in their
An advantage of small rockets over larger ones used to lie in their

ability to insert satellites into their precise orbits.
ability to insert satellites into their precise orbits.

But space tugs are changing this dynamic.
But space tugs are changing this dynamic.

These vehicles can be launched on a large rocket alongside
These vehicles can be launched on a large rocket alongside

satellites, and thanks to their own propulsion systems, can drop
satellites, and thanks to their own propulsion systems, can drop

each satellite into its exact orbit, making the prospect of
each satellite into its exact orbit, making the prospect of

rideshares even more appealing.
rideshares even more appealing.

Launch delays also dogged Virgin Orbit.
Launch delays also dogged Virgin Orbit.

The company originally hoped to launch its debut mission in 2018,
The company originally hoped to launch its debut mission in 2018,

but didn't manage a launch until May of 2020.
but didn't manage a launch until May of 2020.

The demonstration mission failed shortly after the rocket was
The demonstration mission failed shortly after the rocket was

released. In total, the company launched six missions, four of
released. In total, the company launched six missions, four of

which were successful and two of which failed, including the latest
which were successful and two of which failed, including the latest

in January of 2023.
in January of 2023.

Welcome back, everyone.
Welcome back, everyone.

It appears that LauncherOne has suffered an anomaly which will
It appears that LauncherOne has suffered an anomaly which will

prevent us from making orbit for this mission.
prevent us from making orbit for this mission.

Each Virgin Orbit launch costs between $12 and $15 million, though
Each Virgin Orbit launch costs between $12 and $15 million, though

individual customers could pay less if they were launching
individual customers could pay less if they were launching

alongside other companies on the same rocket.
alongside other companies on the same rocket.

While reaching orbit multiple times was a great technical
While reaching orbit multiple times was a great technical

accomplishment, the company was never able to close the business
accomplishment, the company was never able to close the business

case, both because they needed about a dozen or more launches a
case, both because they needed about a dozen or more launches a

year to actually generate meaningful revenue and get close to
year to actually generate meaningful revenue and get close to

profitability, as well as start to reap the benefits of actually
profitability, as well as start to reap the benefits of actually

seeing that marketplace that they were promising come to fruition.
seeing that marketplace that they were promising come to fruition.

Customers grew impatient.
Customers grew impatient.

Virgin Orbit has had a backlog of business for years, dating back
Virgin Orbit has had a backlog of business for years, dating back

to when they spun out from Virgin Galactic.
to when they spun out from Virgin Galactic.

But a series of delays with getting LauncherOne in
But a series of delays with getting LauncherOne in

service resulted in a lot of those customers falling off.
service resulted in a lot of those customers falling off.

Virgin Orbit even sued its largest customer, Oneweb after the company
Virgin Orbit even sued its largest customer, Oneweb after the company

canceled its launch contract with Virgin Orbit, citing frustration
canceled its launch contract with Virgin Orbit, citing frustration

over the high cost of launches.
over the high cost of launches.

A challenge for the company and for any launch company is
A challenge for the company and for any launch company is

having an anchor customer, somebody who you can depend on to
having an anchor customer, somebody who you can depend on to

routinely buy a decent number of launches.
routinely buy a decent number of launches.

Virgin Orbit did not have an anchor customer.
Virgin Orbit did not have an anchor customer.

In the absence of a large customer.
In the absence of a large customer.

Virgin Orbit had to depend on smaller players like Spire Global,
Virgin Orbit had to depend on smaller players like Spire Global,

but these were not enough to keep up with the company's mounting
but these were not enough to keep up with the company's mounting

expenses and the rate at which it was burning cash.
expenses and the rate at which it was burning cash.

One of the more damning details of the past two
One of the more damning details of the past two

years has been the amount of money the company spent on
years has been the amount of money the company spent on

SG&A costs.
SG&A costs.

If you look at their annual reports, you'll notice a steady
If you look at their annual reports, you'll notice a steady

climb in the amount the company spent on personnel and headcount.
climb in the amount the company spent on personnel and headcount.

They were adding staff to their payroll at a rate that was much,
They were adding staff to their payroll at a rate that was much,

much faster than the revenue they were bringing in.
much faster than the revenue they were bringing in.

And when you see these two trends paired with a
And when you see these two trends paired with a

underwhelming launch rate, it did look like a recipe for disaster.
underwhelming launch rate, it did look like a recipe for disaster.

Henry says that Virgin Orbit did try to diversify its revenue
Henry says that Virgin Orbit did try to diversify its revenue

stream. The company made investments in several space
stream. The company made investments in several space

ventures, including satellite businesses, Hypersat, SatRevolution
ventures, including satellite businesses, Hypersat, SatRevolution

and Horizon Technologies, among others.
and Horizon Technologies, among others.

But they were all too early stage to meaningfully contribute to
But they were all too early stage to meaningfully contribute to

Virgin Orbit's needed launch volumes and revenue.
Virgin Orbit's needed launch volumes and revenue.

Virgin Orbit's latest financial results seem to be the last nail in
Virgin Orbit's latest financial results seem to be the last nail in

the coffin for the company.
the coffin for the company.

It reported an adjusted EBITDA loss of $42.9 million for the third
It reported an adjusted EBITDA loss of $42.9 million for the third

quarter of 2022 compared to a loss of $32.8 million for the same
quarter of 2022 compared to a loss of $32.8 million for the same

period the year prior.
period the year prior.

Virgin Orbit's cash reserves were also dwindling, fast.
Virgin Orbit's cash reserves were also dwindling, fast.

The bad news seemed to snowball from there.
The bad news seemed to snowball from there.

Virgin Orbit is furloughing nearly all of its employees and pausing
Virgin Orbit is furloughing nearly all of its employees and pausing

operations for a week as it looks for a funding lifeline.
operations for a week as it looks for a funding lifeline.

Shares tumbling on that news.
Shares tumbling on that news.

For the next two weeks, Virgin Orbit sought out investment that
For the next two weeks, Virgin Orbit sought out investment that

would help it survive, but to no avail.
would help it survive, but to no avail.

With Richard Branson refusing to finance the company any further
With Richard Branson refusing to finance the company any further

after injecting 25 million in new funding in November, Virgin Orbit
after injecting 25 million in new funding in November, Virgin Orbit

was desperate. Virgin Orbit's stock had been on a steady decline
was desperate. Virgin Orbit's stock had been on a steady decline

ever since the company signed its deal to go public via SPAC on
ever since the company signed its deal to go public via SPAC on

August 23rd, 2021.
August 23rd, 2021.

On April 4th, 2023, Virgin Orbit filed for bankruptcy.
On April 4th, 2023, Virgin Orbit filed for bankruptcy.

In a statement, Virgin Orbit CEO Dan Hart said, "We believe that the
In a statement, Virgin Orbit CEO Dan Hart said, "We believe that the

cutting edge launch technology that this team has created will
cutting edge launch technology that this team has created will

have wide appeal to buyers as we continue in the process to sell the
have wide appeal to buyers as we continue in the process to sell the

company. At this stage, we believe that the Chapter 11 process
company. At this stage, we believe that the Chapter 11 process

represents the best path forward to identify and finalize an
represents the best path forward to identify and finalize an

efficient and value maximizing sale."
efficient and value maximizing sale."

If somebody looks at this and chooses to buy them out of
If somebody looks at this and chooses to buy them out of

bankruptcy, they might look at it as $1 billion asset
bankruptcy, they might look at it as $1 billion asset

gone on sale. Perhaps a company that is not interested in spending
gone on sale. Perhaps a company that is not interested in spending

a billion of their own dollars will instead be willing to spend
a billion of their own dollars will instead be willing to spend

tens of millions of dollars to get what would essentially be a
tens of millions of dollars to get what would essentially be a

discount launch services provider.
discount launch services provider.

Experts see particular potential for Virgin Orbit in the defense
Experts see particular potential for Virgin Orbit in the defense

space, as Virgin's air launch system allows for a quick tactical
space, as Virgin's air launch system allows for a quick tactical

response, something that's a national security priority,
response, something that's a national security priority,

according to Henry. Finally, if Virgin Orbit were to reemerge, it
according to Henry. Finally, if Virgin Orbit were to reemerge, it

could be with a new focus on hypersonics.
could be with a new focus on hypersonics.

LauncherOne reaches speeds of Mach 5, or about 3,800mph and
LauncherOne reaches speeds of Mach 5, or about 3,800mph and

could help with weapons systems development, including acting as a
could help with weapons systems development, including acting as a

target for hypersonic missiles.
target for hypersonic missiles.

But even if Virgin Orbit were bought out of bankruptcy, experts
But even if Virgin Orbit were bought out of bankruptcy, experts

say it would be tough for the company to regain its talent in a
say it would be tough for the company to regain its talent in a

space market that's becoming ever more competitive.
space market that's becoming ever more competitive.

I think that this will be a warning sign to other launch companies
I think that this will be a warning sign to other launch companies

to avoid the same mistakes.
to avoid the same mistakes.

They're going to need to be aggressive in terms of hitting
They're going to need to be aggressive in terms of hitting

their launch schedules, in keeping their costs under
their launch schedules, in keeping their costs under

control.
control.

Virgin Orbit's legacy within the space industry is a story that's
Virgin Orbit's legacy within the space industry is a story that's

too often told where there are exciting or even innovative new
too often told where there are exciting or even innovative new

technologies. But that does not make necessarily for a smart
technologies. But that does not make necessarily for a smart

or financially sound business.
or financially sound business.

And that's going to be the resounding message that people
And that's going to be the resounding message that people

should take away from the story of this company.
should take away from the story of this company.