Why Virgin Orbit Stock Is Diving Tuesday

Shares of Richard Branson's satellite launch company Virgin Orbit Holdings Inc VORB are falling Tuesday after the company filed for bankruptcy.

What Happened: Virgin Orbit said it filed for voluntary Chapter 11 bankruptcy in order to effectuate a sale of its business. The company plans to use the Chapter 11 process to maximize value for its business and assets.

The announcement comes just days after the company said it was cutting a majority of its workforce due to the inability to raise sufficient capital to continue operating its business as usual.

"While we have taken great efforts to address our financial position and secure additional financing, we ultimately must do what is best for the business. We believe that the cutting-edge launch technology that this team has created will have wide appeal to buyers as we continue in the process to sell the Company," said Dan Hart, CEO of Virgin Orbit.

To help fund the process and protect operations, Virgin Investments Ltd made a commitment to provide $31.6 million in new debtor-in-possession financing. Virgin Orbit said it's focused on completing the sale process swiftly. 

Branson's Virgin Galactic Holdings Inc SPCE shares ticked slightly lower Tuesday morning after falling more than 4% during Monday's trading session.

VORB Price Action: Virgin Orbit shares were down 23.4% at 15 cents at time of publication, according to Benzinga Pro.

Photo: courtesy of Virgin Orbit.