Is SpaceX Profitable? Whether the company is profitable or not can only be based on estimations. SpaceX is a private company that doesn’t reveal its annual revenue data from Starlink or launch, two of its key verticals, to the public.
According to financial expert analysis, SpaceX makes $980 million and $2.27 billion in Starlink and launch revenues, respectively. Elon Musk, the founder, has been raising money through investors to keep the business afloat. In 2022, the company raised $2.2 billion to make it the most valuable private company in the U.S.
In 2023, SpaceX launched a new round of funding to raise $750 million. If successful, this will set the company’s value at $137 billion. Andreessen Horowitz, a venture capital firm, will spearhead the funding round. Other partners involved in the funding drive include Founders Fund, Gigafund, and Sequoia.
Does raising funding increase the company’s chances of profitability? Despite revolutionizing the space and technology industry, SpaceX has had to wade through some challenges, which we shall discuss later in the article. Here are comprehensive details about SpaceX’s current financial position.
Timeline of SpaceX’s Financial Growth and Funding
SpaceX timeline of growth and financing started before the company was launched. In 2001, Elon Musk and his friends visited Russia to buy intercontinental ballistic missiles. He was not ready to start a business yet and wanted to buy a Russian rocket at a friendly price. He would use the rocket to deliver mice or plants to Mars and guarantee their safe return. Elon would later launch SpaceX in 2002, ushering in the commercial spaceflight era. SpaceX is the short form of Space Exploration Technologies Corporation.
1998-2005: Peter Thiel, the co-founder of Confinity, merged with Elon’s X.com to create PayPal. The platform facilitated the use of eBay. eBay later acquired PayPal in 2002 for $1.5 billion. Thiel used the funds to establish Palantir Technologies in 2004 before launching the Founders Fund in 2005. The venture capital firm invested in various companies, including SpaceX. SpaceX revealed plans to develop a human-rated commercial space project, which later became the Dragon spacecraft.
2006-2010: SpaceX made its inaugural Falcon 1 launch, which ended prematurely despite starting successfully due to a fuel leak and fire. However, the company’s launching order revenue was in the sum of millions of dollars. Other unsuccessful Falcon 1 launches occurred in March and August 2007 and 2008, respectively. In September 2008, SpaceX successfully launched a liquid-fueled rocket into orbit.
The company would win a NASA International Space Station servicing contract worth over $1 billion. SpaceX’s financial position started changing when its fourth launch attempt succeeded. Elon divided his remaining $30 million between Tesla and SpaceX. In December, the company won NASA’s first Commercial Resupply Services (CRS) contract, saving it from a financial crash.
NASA committed to purchasing various commercial flights as long as they demonstrated particular capabilities, accelerating the development of Falcon 9. This development began with seed capital from the COTS (Commercial Orbital Transportation Services) program in 2006. The entire contract was worth US$278 million.
2012-2016: In early 2012, Elon owned nearly two-thirds of SpaceX stock, with his 70 million shares estimated to be worth $875 million. SpaceX’s value then was $1.3 billion. In May 2012, the company’s Dragon C2+ would become the inaugural commercial spacecraft to transport cargo to the ISS. After the flight, SpaceX’s equity valuation almost doubled to $20 per share, or $2.4 billion. Then, SpaceX was running on around $1 billion in funding in its premier decade of operations.
Out of this amount, private equity provided around $200 million, with Elon investing around $100 million while other investors invested approximately $100 million. In 2014, 20 contracts were competed openly worldwide, out of which SpaceX won nine. Arianespace requested European governments to provide extra subsidies to face SpaceX’s competition.
During the same year, SpaceX’s pricing and capabilities started influencing the market for the initiation of U.S. military payloads, which had been dominated by the ULA (United Launch Alliance.) This monopoly had triggered the rise of U.S. launch costs to more than $400 million. At the beginning of 2015, SpaceX raised $1 billion in funding from Fidelity and Google for 8.3% of the company. After this funding, SpaceX’s valuation was estimated to be $12 billion.
2017-2021: SpaceX made $350 million in July 2017, raising the company’s valuation to $21 billion. In the same year, the company gained a 45% global market share for allocated commercial launch contracts. By early 2018 the company had over 100 launches, representing around $12 billion in contract income.
SpaceX established The Boring Company in 2017 and started building a test tunnel adjacent to the SpaceX manufacturing and headquarters facility. The Boring Company later became a separate corporate entity whose 6% of the equity was channeled to SpaceX. In late 2020, SpaceX raised $1.9 billion worth of funding, raising its valuation to $46 billion.
The company raised another $1.61 billion in 2021 from 99 investors, raising its valuation to around $74 billion. By 2021 SpaceX had raised more than $6 billion in equity financing, raising its valuation to $100.3 billion. In the same year, the company entered into a contract with Microsoft Azure to offer networking and on-ground computer services for Starlink.
When did SpaceX first Become Profitable?
SpaceX first became profitable in 2013 after launching the Falcon 9 rocket. The company’s profitability has grown massively as it became one of the world’s most prosperous space transportation firms. According to a Wall Street Journal analysis, SpaceX’s income peaked in 2014 before falling to $945 million in 2015.
The company makes very little profit from its income, regardless of how much it earns. In 2017, analysts predicted a 3% profit margin for SpaceX 2018 based on how successful their operations would have been that year. The analysts mentioned that SpaceX could boost its profit margin if it started reusing damaged rockets. SpaceX strives to reduce space transportation costs by reusing rockets and remodeling technology.
Financial Performance of SpaceX: Overview of revenues, expenses, and profits
According to compiled data, SpaceX has raised up to $9.8 billion in 32 rounds. They raised their latest funding in July 2022. The company is funded by 80 investors, with the International Holding Company and Alpha Dhabi being the latest investors.
SpaceX’s valuation data shows that the company’s worth in 2010 was more than $1 billion. This figure has grown from approximately $33.3 billion in May 2019 to $46 billion in August 2020. SpaceX’s worth in October 2021 and July 2022 was $100 billion and $127 billion, respectively. The company’s market value has grown fourfold in three years.
With a $140 billion valuation, SpaceX has overtaken industry giants like Lockheed Martin and Boeing and could be at the same level as ByteDance. According to a Bloomberg Billionaires index estimation, Elon owned 44% of shares in the company. As a result, the SpaceX stock valuation in his personal holdings was approximately $61.6bn.
According to Elon Musk, the Falcon 9 rocket’s launch cost since 2016 is $62 million. Christopher Couluris, the director of vehicle integration at SpaceX, can reduce launch costs by $30 million. During a media briefing held in 2020, Couluris said ″The rocket costs $28 million to launch; that’s with everything. Reusing the rockets brings the price down significantly.”
Chances are that the Inspiration4 mission cost much more, especially because its additional resources required a crew. SpaceX had to guarantee the crew’s safety in orbit and on landing back to earth during this launch. However, the launch expenses are less than the money collected from raffle ticket sales.
SpaceX makes a huge percentage of its money from launching satellites into orbit. Commercial businesses pay the company to launch satellites they can leverage for their firms. The launch fee per service is $62 million, but could be higher for complex launches. As we’ve mentioned in the beginning, SpaceX is a private company that neither discloses how it makes money. As a result, there is no factual information on the company’s profitability. Still, financial analysts point out satellite launches as SpaceX’s core profit earner.
Analysis of Disruptive Impact on the Traditional and Modern Space Industry
SpaceX made history in February 2017 when it launched the Falcon Heavy, which SpaceX says is “the most powerful operational rocket in the world by a factor of two.” In December 2018, a Wall Street Journal report suggested that the company was raising $500 million to fund a big satellite internet project named Starlink. After launching Falcon 9, the company claimed the process cost was approximately $90 million.
SpaceX has achieved cost efficiencies, which Elon Musk explained in an interview. He said the company was running on a “Silicon Valley operating system and DNA as applied to the problem of space transport.” SpaceX is a vertically integrated company that has built its supply chain from scratch, innovating technology and its processes.
The launch of SpaceX’s inaugural reusable rocket proves that rocket launch costs will drop significantly. Elon plans to send humans to Mars, and after launching the Falcon Heavy, he is edging closer to achieving his plans.
Impact on the Cloud Industry
SpaceX and Google have collaborated to transform the cloud industry. They plan to deliver applications, cloud services, and data to consumers at the network edge, relying on Google’s cloud infrastructure and SpaceX’s Starlink low-Earth-orbit satellite constellation to offer high-speed broadband internet across the globe.
Google and SpaceX are committed to managing the connectivity demands of firms with broad footprints, like companies operating in remote or rural areas requiring access to cloud applications, businesses with a network edge presence, and public sector agencies.
With this partnership, SpaceX will start locating Starlink ground stations within Google data center properties. This will enable data delivery for over 1,500 Starlink satellites released to orbit points at the network edge through Google cloud.
SpaceX Business Financials
A recent report from Bloomberg showed that SpaceX had authorized insiders to sell their shares at $77, which would have raised the company’s valuation to around $140 billion. In 2022, SpaceX raised over $2 billion, including the $250 million funding in July. According to a CNBC report, the company’s valuation was $127 in May during an equity round.
Potential for Profitability
Many industry experts and institutional investors are sure that SpaceX will be more valuable than Tesla. Morgan Stanley, an analyst, wrote, “the majority of our clients (by survey and client discussions) believe SpaceX could ultimately command a higher valuation and significance than even Tesla.”
Tesla’s market value is $858 billion, while SpaceX attained a $100.3 billion valuation following a secondary share sale. Morgan surveyed to establish which between SpaceX and Tesla was a more irresistible investment, and which between the two could become more valuable in the long term. He received 32 responses, out of which 63% of answers were in favor of SpaceX.
Challenges that SpaceX Faces as a Business
SpaceX faces various challenges as a business, with competition being one of the biggest challenges. The company faces competitors like OneWeb, based in London and backed by Richard Branson of Virgin Group and the SoftBank Group Corp. of Japan, as well as LeoSat Enterprises, Inc., based in Washington, D.C., Arianespace and Boeing Satellite Systems, Inc.
The international market for commercial space launches is not large, with analysts estimating it to rotate about $6 billion yearly. While SpaceX claimed almost half of the market, the demand for geostationary satellites dropped significantly in 2016, with the average number of launches for the subsequent three years being eight per year. Arianespace, one of SpaceX’s main competitors, says ten launches per year would be viable.
Military market access. SpaceX recently missed out on a contract award from the U.S. Air Force, which controls national-security space programs. While SpaceX can compete in the program’s second phase, the U.S. government is unlikely to fund a new launch rocket or vehicle engine for the company.
Civil space safety. After learning that Elon had smoked marijuana through a podcast, James Bridenstine, the NASA administrator, ordered a safety evaluation of the two companies authorized to transport astronauts to the ISS. This evaluation may delay SpaceX’s efforts to get space clearance and continue operations.
Weak business profitability. Media coverage of gloomy debt placement by SpaceX showed that the company generates approximately $2.5 billion annually. However, Bloomberg’s debt placement reports revealed that SpaceX incorporated customer pre-payments and excluded various research expenditures. Were not for those adjustments, the company would have incurred a loss.
SpaceX’s value has grown tremendously in recent years. The company’s plans to raise funds to work on Starlink and the advanced rocket Starship would grow its value to $127 billion. Despite its high valuation records, reports about SpaceX’s profitability may not be conclusive, since the company doesn’t reveal its records. What is certain, however, is that the company makes a percentage of its money through launches. Considering the expense of operations, SpaceX’s profit margin may be low.