Billionaire Richard Branson’s space empire is getting a bruising reality check.
Virgin Orbit Holdings, the satellite-launch firm that only a few months ago was poised to play a major role in Britain’s space programme, filed for bankruptcy on Tuesday after cash dried up. That dragged down the stock of Branson’s other space company, Virgin Galactic Holdings, whose shares hit the lowest level this year.
The woes are a black eye for Branson, a pioneer of the private space industry. He has backed ventures in that market since the early 2000s, with the prototype SpaceShipOne flying to the edge of space in 2004. Virgin Orbit began in 2017 as an offshoot of Virgin Galactic and listed in December 2021 at the height of the Spac (special-purpose acquisition company) boom.
“This is yet another example of a Spac gone bad for longer-term investors,” said Timothy Galpin, a senior lecturer in strategy and innovation at the University of Oxford’s Said Business School. “It will likely damage Branson’s brand at least a bit, as the private space industry is high profile and any news, good or bad, is widely publicised.”
A representative of Virgin Orbit declined to comment. Branson’s Virgin Group and Virgin Galactic didn’t immediately respond to requests for comment.
Branson has become a face of the industry alongside fellow billionaires Jeff Bezos and Elon Musk, particularly after the British mogul’s 2021 space flight. Enthusiasm around that mission, aboard Virgin Galactic’s VSS Unity spaceship, sent Virgin Galactic’s market value above US$13-billion.
Delayed
That company has had its struggles since. After Branson’s flight, it was revealed that the craft had deviated from its intended flight path during the trip, triggering a federal investigation. While the US Federal Aviation Administration ultimately cleared Virgin Galactic to resume spaceflights in 2021, the company then announced it would pause flights to upgrade its vehicles. The company has since repeatedly delayed the start of commercial operations.
Virgin Orbit, meanwhile, burned through cash while pursuing air-based launch technology. The company was set to boost its profile with the first-ever launch from UK soil last January, but the failure of that mission sent it spiralling. Virgin Orbit halted operations in March and subsequently laid off the majority of its staff after failing to secure funding — and getting no lifeline from Branson.
While Branson has no operational role in Virgin Orbit, his Virgin Group Holdings is the majority owner of its shares. Virgin Investment is the largest shareholder in Virgin Galactic, with an 11% stake.
Virgin Galactic’s shares fell 12% at 2.27pm on Tuesday in New York, giving it a market value of $957-million. Virgin Orbit, which was worth more than $3.5-billion following its 2021 trading debut, tumbled 29% and was worth just $46-million.
“Branson obviously hasn’t kept up with his fellow space entrepreneurs, Musk and Bezos, and at this point it doesn’t look like he will,” said Galpin. — Siddharth Philip and Loren Grush, (c) 2023 Bloomberg LP
