Virgin Orbit, the Richard Branson-founded space company, is halting operations indefinitely and cutting almost 90% of its workforce after failing to secure funding. The move prompted a sharp stock decline, with the company’s shares plummeting 40% in premarket Friday.

Virgin Orbit Ceases Operations as it Fails to Raise Funding

Shares of Virgin Orbit are down as much as 40% in premarket trading Friday, putting the satellite launch service provider at greater risk of bankruptcy after announcing massive layoffs and ceasing operations “for the foreseeable future,” on Thursday. The premarket decline comes after Virgin Orbit stock ended Thursday trading 16% lower at $0.34 per share.

According to its filing with the US Securities and Exchange Commission (SEC) on Thursday, Virgin Orbit is planning to reduce 85% of its workforce as part of its cost-cutting efforts. The move comes after the company failed to secure enough funding to remain afloat.

“Unfortunately, we’ve not been able to secure the funding to provide a clear path for this company.. We have no choice but to implement immediate, dramatic, and extremely painful changes.”

– said Dan Hart, CEO of Virgin Orbit.

Only 100 employees would not be affected by the layoffs, suggesting almost 90% of the workforce is being dismissed. Hart said the move would impact all teams and departments within the company.

Why is Virgin Orbit Reducing Staff and Halting Operations?

The decision to halt operations and let go of nearly all of its employees came due to a steep decline in the company’s business, exacerbated after its LauncherOne rocket failed to reach orbit following its first launch out of the UK due to a “dislodged fuel filter.” The unsuccessful launch put additional pressure on Virgin Orbit’s stock, down over 80% year-to-date.

Earlier this month, the Long Beach, California-based company furloughed all employees and announced an “operational pause” to raise additional capital. The company held talks with venture capitalist Matthew Brown, but the two parties disagreed. Virgin confirmed in the SEC filing that it could not secure new financing.

The company’s move marks another major workforce reduction by a US company in recent months. The layoffs have been particularly noticeable in the tech industry, with Amazon, Meta, and Microsoft all reducing staff to cut costs. Tech companies accounted for 28% of all layoffs in February, reducing 21,387 jobs.

This article originally appeared on The Tokenist

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