Virgin Orbit seeks funding as it temporarily suspends operations and furloughs employees

Virgin Orbit has decided to furlough nearly all its employees and suspend operations for a week while it searches for a funding lifeline.

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The share price of Virgin Orbit fell as much as 36% on Thursday compared to its previous close of $1.01 a share. Since December 2021, the stock has dropped steadily from its debut near $10 a share.

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An all-hands meeting was held by executives of the company for staff to be briefed on the situation at 5 p.m. Eastern Time on Wednesday, according to people who were there at the meeting. In the case of furloughs, the employees are not paid, though they can use their PTO and only a small team is continuing to work during that time. It has also been announced that Virgin Orbit will shift payroll to Friday by a week.

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It was disclosed in an all-hands meeting that company leaders had told employees that they planned to provide an update by next Wednesday or Thursday on the furloughs and funding situation, according to the people who asked to remain anonymous in order to discuss internal matters.

It has been confirmed by a Virgin Orbit spokesperson, in a statement to Trade Algo, that Virgin Orbit has begun an "operational pause." The company is planning to give "an update on the progress of operations going forward in the coming weeks," according to the spokesperson.

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Rocket-building company Northrop Grumman developed a system for sending satellites into space from a modified 747 jet by dropping a rocket from under the wing of the aircraft mid-flight. On the other hand, the company had a mid-flight failure on its last mission, in which a problem during the launch led to the rocket not reaching orbit and crashing into the ocean.

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“The investigation into this matter is nearly finished, and we are in the final stages of incorporating the necessary modification into our next production rocket that will take us into orbit,” a Virgin Orbit spokesperson said.

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Virgin Orbit disclosed $71.2 million in cash on hand as of the end of its third quarter in early November. Virgin Orbit reported a $42.9 million loss in adjusted EBITDA for the period despite $30.9 million in revenue.

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The company has steadily raised funds from Richard Branson's Virgin Group via its investment arm since the fourth quarter. After raising $25 million in an unsecured convertible note in November, the company raised $20 million and $10 million in senior secured convertible notes in December and February. Branson's parent company has "first priority" over Virgin Orbit's assets under the notes.

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The company has not yet announced when it will report its fourth-quarter 2022 results.

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Dan Hart, CEO of Virgin Orbit, canceled at the last minute a scheduled appearance during a space industry conference set for Tuesday.

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As one of the few Wall Street firms to have analysts covering Virgin Orbit, Canaccord Genuity said in a note to clients on Thursday that it was placing its rating on the company's stock under review until investors get a resolution on the company's financing before making any decisions about the stock.