Merging with Virgin Orbit, Disruptive Satellite Launch Leader Projecting 150+% CAGR Going Public at 6.4x 2025e EV/EBITDA, a 41% Discount to Its Peers



KEY POINTS
  • NextGen Acquisition Corp II is merging with Virgin Orbit and will trade on Nasdaq under the symbol VORB. With the world’s first air-launched, liquid-fueled launch system, it is disrupting the satellite launch market and is projected to grow revenues to over $2 billion by 2026.
  • Virgin Orbit’s design advantages over its competitors include: (1) quickly launching from anywhere at any time, (2) higher reliability as evidenced by its commercial launch records and simpler propulsion system (2 engines vs. up to as many 11 engines on competitors), (3) lower cost, weather flexibility, and longer range capabilities, and (4) significantly lower environmental impact. No other provider can offer these capabilities, leading to markets that only VORB can service.
  • The company operates in three markets and its $72 billion TAM is part of a growing $1.1 trillion space economy. Its markets include: (1) Small-Satellite Launch Market – $25 billion TAM in commercial, civil, and national security launches, primarily targeting low Earth orbit; (2) Space-Based Connectivity Market – $30 billion TAM in specialized Internet-of-Things (IoT) applications like ship management, pipeline monitoring, intelligent agriculture, and connected aircrafts; and (3) National Security Market – $17 billion TAM in missile defense targets and hypersonic applications.
  • Virgin Orbit had its first successful launch on January 17th, 2021. Since then, the company has built up $4 billion in opportunities with near-term visibility. Each new customer is a significant win for the launch system and represents validation of the technology, the team, and the company.
  • Virgin Orbit estimates more than 50% of its 2022 forecast revenue is already accounted for by active contracts. The company has $2.3 billion in identified opportunities and $1.3 billion in active proposals. The long‑term nature of its launch contracts, and its customer wins in 2021, give it enough confidence to publicly forecast a 5-year CAGR of 166%.
  • The company’s comparables include space-based companies of a similar size and growth rate. Its comps have an average 2025e EV/EBITDA of 10.8x while VORB is priced at 6.4x, a 41% discount. Rocket Lab is the only small launch competitor to have also reached regular commercial operations, making it the best comp, but its 2025 EBITDA margin is projected to be 22%, while Virgin Orbit’s is expected to be 32%.
OUR INSIGHTS

The Opportunities

Virgin Orbit’s unique air-launch system could propel it into becoming a disruptive leader in a $72 billion market. The significant design advantages (particularly anytime/anywhere/ any orbit), its proven capabilities, and its reception by customers have given management the confidence to project 2026 revenues of over $2 billion. The stock is valued at a 41% discount to its peers on 2025e EV/EBITDA.

The Obstacles

COVID-19 continues to be a risk as the company’s manufacturing and launches require on-site personnel. The company is operating in the relatively new market for small low Earth orbit (LOE) satellites. Virgin Orbit’s high profile means any failures could be public, and failures by others in its industry could impact its brand and stock negatively.

The Transaction

The business combination values Virgin Orbit at an initial enterprise value of $3.2 billion. The transaction will provide the company with $483 million in cash which will be used for technology development and business growth. Approximately 25% will be used for Space Solutions development, 35% to accelerate R&D, 25% to add launch vehicles, and 15% to accelerate manufacturing capabilities.

Read our reports and view our videos about Virgin Orbit on our website.

NextGen Acquisition Corp II is merging with Virgin Orbit and will trade on Nasdaq under the symbol VORB. With the world’s first air-launched, liquid-fueled launch system, it is disrupting the satellite launch market and is projected to grow revenues to over $2 billion by 2026.

DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.

WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information p...