Virgin Orbit stock sinks on news of job cuts
Yahoo Finance Live anchors Rachelle Akuffo and Brad Smith discuss the decline in stock for Virgin Orbit following news that the aircraft engineering company will layoff 85% of its workforce.
Well Well Brad, let's check in on what's trending at the moment. We have shares of Virgin Orbit holdings in the red after announcing it will lay off 85% of workers. In a filing with the SEC the space launch startup said in order to reduce expenses, they will be cutting approximately 675 employees.
BRAD SMITH: All right. So Virgin Orbit, we've talked about the cost for every single one of these launches just a few weeks ago. This was a company that essentially had to say, all right, we're going to furlough everybody, or make massive changes to the number of people that can actually come to work just so we can figure out if we have enough in order to make sure that we can pay everybody. So for corporations it gets into a legal challenge if you are ending up bringing people into work and unable to pay them, as we've discovered, with everything that had ensued with some of the banking crisis that are taking place for those regional banks.
But as it pertains right now to Virgin Orbit, the number of flights that they were looking, or launches that they were looking to have in order to put satellites into orbit, just in order to make sure that there's a connectivity player that they can monetize and profit from in the future. It doesn't even look like they're going to be able to fully get to that point. This was another one of those companies that had made its debut, I believe in 2021, even as a spate of spacs had made their entry into the markets here.
Virgin Galactic, of course, Richard Branson is one of his other Virgin entities. They were the initial, or perhaps one of the poster children of that spac wave. But Virgin Orbit, the other entity here, certainly just mired in some larger question marks here with regard to how much it's going to need to operate and where it could find that funding from.
RACHELLE AKUFFO: And you have to wonder what this means for the space race. Obviously you had Jeff Bezos, Richard Branson, Elon Musk really competing in this space here. So it's interesting to see that Virgin has now having to take some of these cost cutting measures, and really seeing where they go from here. Spacex still continuing.
Especially we saw that they really were thriving off of the back of the Russia-Ukraine crisis. They were able to position themselves in a better way that perhaps Virgin Orbit has not been able to. So interesting to see those declines there.
BRAD SMITH: Yeah, cost them about $12 million per launch year, essentially. And they had done five launches of the LauncherOne. But they had run into issues with some of the other launches actually being able to take place on time, or just running into mechanical issues along the way as well. And so we'll see what more the company has to provide going forward from here.