SpaceX funding update
SpaceX is one of the most valued private companies in the world. Many IPO CLUB investors love to have the Rocket Launcher in their portfolios.
However, will SpaceX raise money again soon, or will it be done with fundraising for a while? Elon Musk’s ability to drive private equity into the company has resulted in billions of dollars flowing into SpaceX to continue developing Starship and Starlink. Historically, space companies have been terrible investments, but now you’re missing out if you aren’t investing in space.
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Positive cash flow in sight.
It’s safe to say that SpaceX’s Falcon 9 program is profitable, as the company has been successfully launching customer payloads for over two decades. The company has used that money to grow and become one of the most sought-after places of employment for college graduates. Its Falcon 9 rocket launches have become relatively common, and even the landing of its boosters is expected each time.
In addition to private investment, SpaceX has won around $4 billion in contracts from NASA to develop Starship into a lander that can put astronauts on the moon. That funding should help keep the project going.
"They have a lot of money now from the government specifically to do this," says Lori Garver, former NASA deputy administrator and author of the forthcoming book Escaping Gravity, about NASA's relationship with commercial space companies. "I think those deep pockets will serve them well through a test program."
STARLINK SPIN-OFF
SpaceX has stated that Starlink could be spun off and go public once it is more financially stable. However, that might not be easy with the changing economic times, and reports that Starlink is too reliant on no-cost Falcon 9 launches. Nevertheless, it would be the perfect business for those interested in getting their hands on another Musk jewel company to invest in.
According to SpaceX president Gwynne Shotwell, that network is likely to be cashflow-positive this year. But that’s not the same as a return on investment, particularly as SpaceX will probably need to start replacing its earliest satellites in orbit in 2025 as they approach the end of their useful lives.
Some analysts expect Starlink to be spun out as a public company to help fund SpaceX’s ambitions. However, Chris Quilty, a space market analyst, wonders whether Starlink’s reliance on SpaceX for cheap and frequent launches would make spinning out the business difficult.
No need for funding SECURED?
In addition to spending billions building its Starlink worldwide internet constellation, the other cash-burning project has been Starship, the largest fully reusable rocket ever built. Neither of these has been cash-flow positive; the latter is still in development and needs lots of cash to succeed.
In a Twitter space, Musk discussed what was learned during SpaceX’s first integrated launch of its Starship vehicle. In detailing what went wrong, Musk talked about how they would be just fine financially to keep developing SpaceX’s new rocket.
This confidence in not needing outside funding is a good sign that SpaceX is operating well. Many other companies within the space sector are still relying on revenue from private funding rounds or the sale of their shares publicly. SpaceX looks to be moving toward self-sustainability, depending only on its income to fund its crazy programs.
SpaceX’s dominant position in the space sector—particularly its near-monopoly on US human spaceflight and flying national security missions for the US government—makes it difficult to bet against Musk pulling in new capital.
What is SpaceX
SpaceX, founded in 2002 by Elon Musk, is a private aerospace manufacturer and space transportation company headquartered in Hawthorne, California. It aims to reduce space travel costs and enable the colonization of Mars. SpaceX is known for its reusable rockets, such as the Falcon 9, and the Dragon spacecraft. Additionally, SpaceX operates Starlink, a satellite internet constellation designed to provide high-speed internet access globally, particularly in underserved areas.
SpaceX is projected to bring in roughly $11.5 billion in revenue in 2023, more than the expected $2 billion spent on Starship development this year. However, the costs of running Starlink, an extremely talented workforce, and other operating expenses are still unknown.
That suggests investors value the company at about 12 times its revenue.
If money managers believe it will be worth a trillion dollars, then $137 billion makes perfect sense.
What is IPO CLUB
We are a club of Investors with a barbell strategy: very early and late-stage investments. We leverage our experience to select investments in the world’s most promising companies.
