Richard Branson's Virgin Orbit Dreams Crash As Funding 'Not Secured'
Virgin Orbit shares crashed in premarket trading as the satellite-launch firm associated with British billionaire Richard Branson suspended operations indefinitely due to cash-crunch pressures, which has left the startup financially paralyzed.
CEO Dan Hart held a company-wide meeting on Thursday evening. He told employees that funding was not secured and most employees would be laid off.
"Unfortunately, we've not been able to secure the funding to provide a clear path for this company," Hart said, according to audio of the 1700 ET meeting obtained by CNBC.
"We have no choice but to implement immediate, dramatic and extremely painful changes," Hart said, adding this is "probably the hardest all-hands that we've ever done in my life."
The CEO explained 90% of the workforce would be laid off, leaving about 100 employees to oversee the process of winding down operations. In a securities filing, the company said 85% of its workforce would be laid off "in order to reduce expenses in light of the company's inability to secure meaningful funding."
"This company, this team — all of you — mean a hell of a lot to me. And I have not, and will not, stop supporting you, whether you're here on the journey or if you're elsewhere," Hart said.
Hart added that Virgin Orbit would "provide a severance package for every departing" employee.
As a result of the news, shares of the company plunged as much as 53% in premarket trading in New York. The stock was worth more than $7 a year ago, and after this morning's drop, it's only now worth pennies.
Earlier this month, Virgin Orbit announced an "operational pause" due to its inability to raise capital. Funding woes likely stem from the demise of Silicon Valley Bank as the VC funding market froze.
Besides a funding crunch, the company was hit with a major setback after a rocket launch failure in January.
Virgin Orbit is still looking to sell all or part of its business, according to Bloomberg, citing a person familiar with the matter.