Yahoo Finance markets reporter Ines Ferre discusses Virgin Orbit’s filing for Chapter 11 bankruptcy and the pressures the company faced in the commercial space tourism industry.

Video Transcript

SEANA SMITH: Well, Richard Branson's Virgin Orbit filing for Chapter 11 bankruptcy protection today. We want to bring in Ines Ferre, who has been following this story for us. And, Ines, what can you tell us?

INES FERRE: Yeah, Seana, as you just mentioned, Virgin Orbit, not to be confused with Virgin Galactic-- in fact, Virgin Orbit had spun out of Virgin Galactic back in 2017-- the company went public in 2021 via a SPAC. And Virgin Orbit is a company which launched small rockets, offering launches from pretty much anywhere. In January, the company tried to launch from Britain and the launch was not successful.

The rocket and nine satellites fell to Earth. Those satellites belonged to Britain, to the United States, to other countries. And this was a big failure. And it was a big deal at the time as well because it was the first time that it was trying to launch from Western Europe. And Virgin Orbit was trying to establish itself as a big player.

Now, earlier this-- back in March, earlier in March, Virgin Orbit said that it was trying to find a lifeline, a funding lifeline, and it had to furlough workers as it was seeking funding. It was not able to obtain that funding. And last week, it announced that it would be ceasing operations and it was laying off most of its workers.

Look, the bottom line is that it is more expensive to borrow capital with these higher interest rates. In fact, it's estimated that VC investments in space ventures are now down 50% year over year. And that's according to VC firm Space Capital.

The CEO of Virgin Orbit also, in a court document, said that the changing capital market and higher interest rates environment made obtaining new capital difficult-- also noting that heavy pricing pressure from well capitalized competitors in the commercial launch market made it difficult for Virgin Orbit. It competed with other companies like SpaceX, for example, Rocket Lab, and United Launch Alliance.

SEANA SMITH: All right, Ines, great job. Thanks so much for breaking that down for us.