It's official. Virgin Orbit is history -- and won't be rising from the ashes ever again.
Virgin Orbit, Sir Richard Branson's airplane-assisted satellite-launching venture -- as distinguished from Virgin Galactic (SPCE 22.38%), which launches human tourists to space -- had a good run, launching six rockets in the general direction of space over the past three years. Four of those six rockets actually made it into orbit -- but the last one didn't.
And that's where things started to go really wrong for Virgin Orbit.
Image source: Getty Images.
Burning through cash at a rate of more than $230 million a year, and in need of more cash -- and quickly -- Virgin Orbit's second-out-of-six-attempts launch failure came at a bad time for the company. (Generally speaking, the best time to sell stock and raise cash is when people are optimistic about your chances, not pessimistic.) Unable to complete a fix, resume operations, and begin generating cash before it ran out of money, Virgin Orbit filed for bankruptcy protection last month.
And then this week Virgin Orbit sold itself for parts in a bankruptcy auction.
Rapid, scheduled disassembly
When SpaceX rockets blow up, Elon Musk often quips that they have experienced "Rapid Unscheduled Disassembly," or RUD. In contrast, the disassembly of Virgin Orbit's business has been on the schedule for at least the past week.
It began when Stratolaunch offered to buy Virgin Orbit's "Cosmic Girl" mothership (the plane that carried Virgin Orbit's rockets to altitude for launch) for $17 million last week. (Stratolaunch, for those not familiar, is another fly-to-altitude-then-launch-the-rocket company that came close to bankruptcy itself not long ago.)
Then earlier this week the bankruptcy court adjudicating distribution of Virgin Orbit's assets announced that, after conducting an auction, three other bidders had emerged to buy other bits and pieces of the defunct space company.
Rocket Lab (RKLB 2.51%), arguably Virgin Orbit's closest rival in the small-rockets-launching-small-satellites business, will spend $16.1 million to take over the lease on Virgin Orbit's 140,000-square-foot Long Beach manufacturing facility and corporate headquarters. Along with the facility itself, Rocket Lab CEO explained that Rocket Lab will take possession of Virgin Orbit's rocket-building equipment contained in the facility, which it can use to develop its new Neutron space rocket.
Virgin Orbit built a fantastic production facility with the very best equipment. We're fortunate to have nearly completed the acquisition of this facility and equipment to help advance Neutron's future production and reduce the overall cost of the program significantly. https://t.co/LFqQF9S8qJ
-- Peter Beck (@Peter_J_Beck) May 23, 2023
Finally, a subsidiary of private space station developer Vast Space bid $2.7 million to acquire various other "machinery, equipment and inventory" from Virgin Orbit, as CNBC reported on Tuesday.
What it means for investors (in Virgin Orbit)
Throw in another $650,000 that a liquidation company is paying for Virgin Orbit's office furniture and equipment, and potentially a bit more for the company's intellectual property and rockets still in assembly (none of which anyone has offered to buy just yet), and it looks like the grand total liquidation value of Virgin Orbit will max out somewhere in the neighborhood of $37 million.
That's quite a comedown for a company that at one point -- back during the height of the SPAC craze in 2021 -- was valued at nearly $4 billion.
If there's any good news for shareholders, it's that between the proceeds from all the asset sales, the $55 million or so that Virgin Orbit had in the bank (according to the most recent data from S&P Global Market Intelligence), and the company's $56 million or so in debt, there might be a little bit of cash left over to return to shareholders after all the company's debts are paid off.
What it means for investors (in companies other than Virgin Orbit)
As for investors elsewhere in the space sector, the good news from Virgin Orbit's demise is simply this:
In the space industry, at least, capitalism is alive and well. Well-run, profitable companies like Lockheed Martin and Northrop Grumman survive and thrive. Less-well-run, unprofitable companies like Virgin Orbit fail and are sold off for parts -- to companies like Stratolaunch, Rocket Lab, and Vast Space that hope to become profitable in the not-too-distant future.
That's perhaps small consolation to Virgin Orbit shareholders today, but it does hold the promise of paying off for investors in other space stocks tomorrow.
