Virgin Orbit, Sir Richard Branson’s rocket company, has filed for bankruptcy in the US after failing to secure new funding. After ceasing operations weeks ago, the satellite launch company is seeking a buyer. 85% of the company’s 750 employees will be laid off, the California-based company announced last week.
The news comes after a Virgin Orbit rocket failed to launch its first satellite from UK soil earlier this year.
To discuss this in more detail, CNBC Television’s “Closing Bell Overtime” interviewed Bank of America Senior Equity Analyst, Ron Epstein.
“Yeah, I mean, you said it, space is tough,” said Epstein. “Does it add a chill, I don’t think so. You know, it’s a sector that has if you look at the post the SPAC [editor’s note: Special Purpose Acquisition Companies] boom a lot of the space names underperformed relative to that. This year, some were starting to come back, but you know, it’s a difficult space. It requires a lot of capital.”
Epstein was then asked what names he would be buying into right now and why. The Bank of America Senior Equity Analyst had two names in particular that jumped out at him.
“One is Rocket Lab. Rocket Lab is a launch provider. They do a more traditional launch than Virgin Orbit, as they’re not launching off the wing of an aircraft. They launch from Wallops Island and also in New Zealand. They’re the most successful, commercially traded, market-traded commercial launch company outside of SpaceX… They have a broad customer base, and they’ve also diversified the business away from just launch. They do satellite components, everything from solar panels to reaction wheels, and so on and so forth. So that’s one we like a lot. They’ve been very successful. A Good business model.”
Epstein then mentioned Terran Orbital, an end-to-end satellite solutions company.
“Terran Orbital is a satellite manufacturer, and they do synthetic aperture radar satellites, but they are a contract manufacturer essentially for satellites. They’ve got a big backlog right now with the US government. And I think that’s an important thing. When you look at the space market, space markets tend to be driven by a government customer. And what we look for in space companies are space companies that have a good government backlog that can supplement any commercial activity they have on the side.”
Epstein finished by saying that for both companies as they go into this year they should increase the regularity of launches and satellite builds which will be a boost for the two businesses.
Featured image: Screenshot from ‘Virgin Orbit’s failure: What it means across the space sector’ Credit: CNBC Television