Apparently sources say that the Magic Leap hasn't been able to get their core innovation working properly. They had a concept for a new display type called a Fiber Scanning Display, and they haven't been able to get it to work.
Read the full article here
Think they will be able to get back in the game, or will they just fade out from here?
I don't know. I suspect they are in damage control mode now and they will in fact release something but it will be more like Hololense then anything they promised and therefore investor will flee and the product will be too expensive and sell poorly; Unlike MS with a larger warchest they will not be able to survive on these sales and will likely be bought up by someone for whatever useful patents they may have. I am not feeling optimisitic about their future atm.
Look this article I found:
Magic Leap Augmented Reality News: Was AR Demo Video Faked?
Basically it says the demo Magic Leap showed in 2015 to great interest may have been faked, potentially to oversell what the company was capable of at the time. As it turns out, former employees say the video was not created using the Magic Leap technology, but was generated instead by an external special effects company.
So even when it was amazing it wasn't real.