Shulou(Shulou.com)11/24 Report--

March 28 news, recently, the British space company Virgin orbit is on the verge of bankruptcy, and continues to seek external financing. Richard Branson (Richard Branson), the founder of Virgin Group, as the company's main shareholder, was surprisingly "silent" in the storm. Some analysts believe that this is because the business situation of Virgin track is too bad, and the stacking environment is not good.

Branson, founder of the British Virgin Group, has long been regarded as a force that cannot be ignored in the field of private space.

Branson made his first space trip with Virgin Galactic in 2021, beating Amazon founder Jeff Bezos, a billionaire who is also interested in the private space business. Virgin orbit is another time Branson has invested in space exploration. The company uses modified jets to launch rockets from the air, and mission names such as Start Me Up also reflect Branson's fanfare and maverick.

In January, a technical glitch led to the failure of Virgin's plan to launch a rocket from the UK for the first time, bringing the company to the brink of bankruptcy.

Virgin track shares fell 33% to $0.54 on Monday, the biggest one-day drop on record.

Virgin track is running out of cash and it is not clear how to implement the next launch plan, and the company has given way to all employees at its headquarters in long Beach, California, on unpaid leave.

Branson's Virgin Group has invested more than $1 billion in Virgin track and has invested $60 million in the past six months, but has not recently invested much-needed money. That forced Virgin track to approach outside investors, including Texas venture capital investor Matthew Brown (Matthew Brown).

Last week, Brown boasted that he might be the savior of Virgin track. But it was reported on Monday that the financing deal broke down over the weekend and Virgin track may still be looking for interested investors.

After Virgin Galactic went public in 2019, Virgin orbit went public at the end of 2021 after just two successful flights, with a market capitalization of more than $3.5 billion. Unlike competitors using ground launch systems, Virgin orbit uses modified Boeing 747s to launch LauncherOne rockets, sending small satellites into space. But experts warn that this is a very special market and may not support many companies.

"Virgin orbit is the first domino to fall," said Caleb Henry, head of research at Quilty Analytics, a space consultancy. "it will be harder for companies to list through SPAC in the future."

Virgin track and Branson's Virgin Group declined to comment. Brown, a Texas investor, did not immediately respond to a request for comment.

For now, the company was full of warnings at the beginning of its IPO. Virgin Rail had planned to raise nearly $500m through an IPO, but the SPAC deal raised less than half of it, just $228 million. The subsequent two successful launches in the US seemed to reassure sceptical investors, but the failed launch in the UK in January had too many negative effects.

Earlier this month, Virgin track employees learned in a video conference attended by chief executive Dan Hart and human resources executives that the company had temporarily suspended operations and that most employees would take time off without pay.

Last week, Virgin orbit began to recruit some employees and promised to continue to focus on the next launch plan, but the troubles facing the company have hit the entire space industry.

Space startups have grown over the years with easy access to SPAC deals and the help of billionaires, but now they are finding that the environment is getting worse. SPAC transactions among launch suppliers, satellite manufacturers and space technology companies have slowed, and private investment in the space industry plummeted 58 per cent last year, according to venture capital firm Space Capital. In addition, the financial turmoil triggered by the collapse of Silicon Valley banks is expected to bring more challenges.

"the world we live in has changed," said Carissa Christensen, founder and chief executive of Bryce Space and Technology, a market consultancy. Available capital has changed, risk tolerance has changed, and overall, the attractiveness of start-ups that venture capital once favored has changed. "

In the technology-intensive and capital-intensive space industry, the risk of failure is particularly serious. This makes it more difficult for Virgin track to recover from failure.

"the market is tough and it's difficult to get into orbit," said Chad Anderson, managing partner of Space Capital. "when a listed company tries to get into orbit and fails in public, it only makes things more difficult."

SPAC trading hot commercial space industry boom is due in large part to the brief boom in SPAC trading. Virgin Galactic is listed through a merger with Social Capital Hedosophia, a subsidiary of Chamath Palihapitiya, the "king of SPAC". Space companies that have taken a similar route include Astra Space, Rocket Lab, Planet Labs and others. A manufacturer of lunar landers has even joined the craze.

"if you are a space company joining the SPAC deal and your income is good, this is a godsend and an exit opportunity for your investors," Henry said. "if you don't have an income and you may need to find another change, it is tantamount to being sentenced to death."

Virgin track disclosed in its first earnings report that its cash and equivalents were $194.2 million at the end of 2021. Virgin track spends more than $40 million a quarter, with a cash balance of $71.2 million by the end of September 2022. The company did not release its results for the last few quarters.

Cash flow has fallen sharply. Virgin track's earnings after listing can only be described as meagre. The company completed two rocket launches last year, with a single launch costing about $12 million.

Virgin orbit is scheduled to complete its first orbit launch in the UK in January 2023. Although Virgin orbit is headquartered in California, its name and relationship with Branson make it a reasonable choice to lead Britain into the space industry.

The mission began as planned, the modified Boeing 747 took off smoothly from the Cornwall space port in southwest England, and the LauncherOne rocket successfully escaped from ignition from under the wing. The company even mistakenly posted on social media Twitter that the aircraft had entered orbit and then clarified that the rocket malfunctioned during the flight and that all nine satellites were destroyed.

The failure led to a collapse in Virgin orbit shares and disrupted plans to improve launch efficiency this year. As the CEO told some returning employees, a successful launch is a necessary condition for the company to survive.

Satellite Revolution Virgin orbit is not the only company to go public at an early stage. Astra Space announced plans to go public before the rocket went into orbit, and many satellite manufacturers began public trading before launching many satellites. Rocket labs are an exception, and the company's electronic small rockets have been successfully launched nearly 20 times before they went public.

Both listed companies such as Virgin orbit and Astra Space and privately held companies such as Firefly Airlines want to use small rockets to provide lower-cost launch services for small satellite customers.

But the market is already threatened by large rocket launch suppliers, such as Elon Musk's SpaceX, which has begun carpooling, using a large rocket to package and launch small satellites and sending payloads into orbit in batches. Although the cost of a single launch of the rocket will be higher, it can save customers money.

Speaking at a satellite industry conference in Washington on March 15, Tory Bruno, chief executive of the United launch Alliance (ULA), said there was only "room for one or two companies" in the small launch market. "maybe a rocket lab, one more at most."

For rocket launchers, success may mean more than just launching satellites. SpaceX's Star chain business makes satellites and provides broadband Internet services, while Rocket Lab has its own satellite manufacturing division.

"Rocket launches alone can't do business," says Mr Anderson. "starting with SpaceX, all launch companies that successfully get into orbit will tell you that the launch market is not enough to support a company. They are doing other things."

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