What happened
Shares of space company Virgin Orbit (VORB +0.00%) -- the satellite-launching sister company to Sir Richard Branson's more famous Virgin Galactic (SPCE +2.50%) people-launching company -- plunged 16.1% through 10:45 a.m. ET Tuesday after one of its rockets blew up.
Virgin Orbit had billed the Spaceport Cornwall launch, its first from a runway outside the U.S., as historic, and at first, all seemed to be going well. The modified Boeing 747 Cosmic Girl carrier aircraft took off from its runway, ascended to its designated drop zone...
Flight Director: Cosmic Girl, you are go for takeoff
-- Virgin Orbit (@VirginOrbit) January 9, 2023
PIC: Takeoff
And we have takeoff! 🛫
...deployed its payload rocket and lit its first-stage engine...
Confirming a clean separation from Cosmic Girl and successful ignition of LauncherOne's first stage rocket engine, NewtonThree. #StartMeUp
-- Virgin Orbit (@VirginOrbit) January 9, 2023
...then its second-stage engine, and everything seemed on course.
Confirming successful stage separation and ignition of LauncherOne's second stage engine, NewtonFour. Shoutout to our rockstar NewtonFour team for helping us blast into orbit!
-- Virgin Orbit (@VirginOrbit) January 9, 2023
Unfortunately, an anomaly during the second stage prevented the rocket from reaching full orbital velocity, which meant the mission had to be aborted.
We appear to have an anomaly that has prevented us from reaching orbit. We are evaluating the information.
-- Virgin Orbit (@VirginOrbit) January 9, 2023
OTC: VORB
Key Data Points
So what
It's unclear whether that ending involved a fiery explosion as the rocket was remotely detonated in space or whether Virgin Orbit's rocket was permitted to peacefully burn up on reentry into the atmosphere. What is clear is that Virgin Orbit's first international launch attempt has ended in failure.
Investors are understandably disappointed, and that's reflected in the stock price today. That being said, as space fan Eric Berger from Ars Technica pointed out last night, Virgin Orbit still has a pretty respectable track record for a rocket start-up, with failures on only its first flight and its last flight -- and four straight successes in between.
Virgin Orbit's LauncherOne vehicle now has four successes out of six launch attempts. This is not a terrible record for a start-up at all. But a failure on a high profile mission, with a company in a precarious financial position, may prove disastrous.
-- Eric Berger (@SciGuySpace) January 10, 2023
Now what
What about that bit about Virgin Orbit's "precarious financial position," though? That certainly sounds ominous!
And indeed it is. Reviewing Virgin Orbit's financials as reported by S&P Global Market Intelligence, it appears that Virgin Orbit is currently burning through more than $225 million per year in negative free cash flow. And the problem with that is that Virgin Orbit currently has only about $58 million in cash in the bank -- against $71 million in debt.
Even crediting the company with a further $45 million in funding received from Virgin Investments Limited in late 2022, you have to assume that pretty soon, Virgin Orbit will be returning to the public markets to raise more cash, in the form of either new share sales or additional debt. And the most recent news it will be able to show its financial backers will be...a rocket launch failure in England.
Suffice it to say that the company's prospects now look pretty dim.
