Deutsche Bank analysts value the global space launch market at around $8 billion in 2022 and $35 billion by 2030, and Richard Branson's commercial satellite launch venture, Virgin Orbit (VORB), wants to earn its share of that market. But it will be more difficult for Branson's brainchild to reach its full potential after a mission failure earlier this month.
Whether the market's reaction was justified is debatable, but this isn't the final chapter in Virgin Orbit's story. The outcome of an in-progress investigation -- and any follow-up launches -- could give Virgin Orbit investors a reason to shoot for the moon.
Mission not accomplished
In the pre-market hours of Jan. 10, Virgin Orbit stock plunged 22.3% as traders absorbed some unfortunate news: The company's LauncherOne rocket's payload of nine satellites failed to reach its target orbit. As Virgin Orbit's news release explained it, the "system experienced an anomaly, ending the mission prematurely."
The market's response extended an already severe drawdown in Virgin Orbit stock. Once worth $10 each, the shares now trade below $2.
The past year was tough on growth stocks generally. This was a particularly bitter pill to swallow, though; when an exchange-listed spaceflight business has minimal or no earnings, any launch mission can be make-or-break for the company.
This event was more "break" than "make" for Virgin Orbit, are there were broader implications. Had it been successful, this mission (dubbed Start Me Up) would have represented the first launch of a satellite into orbit from the U.K. -- or from anywhere in Western Europe, for that matter.
One small step
Critics might call this incident a failure to launch (though that's not entirely accurate), but investors can choose to adopt a glass-half-full perspective. Failure is often a stepping stone on the perilous path to success, especially for businesses that choose to innovate rather than just imitate.
Virgin Orbit certainly belongs in that category. Its approach to spaceflight is unique, and not only because the company is launching from the U.K. By deploying a satellite-bearing rocket from a modified Boeing 747, Virgin Orbit is (at least in theory) demonstrating the potential to operate a launcher from practically anywhere on the planet.
Virgin Orbit isn't just going to give up on this quest to disrupt spaceflight as we know it. In an update, the company provided further clarity on what went wrong with the Start Me Up mission.
Just as importantly, Virgin Orbit said it collected an "enormous quantity of data during the mission" and has initiated an investigation into the source of the failure. Along with that, the company teased that it could be back in the U.K. later this year, attempting another potentially history-making launch. Prospective investors should consider, however, that there's no guarantee that this will work; as always in the sphere of spaceflight, repeated failure is a possibility.
Still, one can hope that the Virgin Orbit team will have parsed the data, learned from its mistakes, and built a new and vastly improved launch system by the time Start Me Up's sequel is attempted. This leaves open the possibility (though not the inevitability) of success in the wake of failure and, with that, a victory lap for risk-tolerant Virgin Orbit shareholders who buy now, while the price is low and believers are scarce.
