How does spaceX make money

as side hustles go

elon musk’s rocket company spacex is

really quite something

entirely separate from the humdrum day

job at tesla where his only real

challenge is weaning humanity off the

internal combustion engine

musk’s multi-billion spacex operation

sets itself no lesser target than

bringing down the cost of space travel

and

ultimately helping mankind colonize mars

spoiler alert

firing gigantic rockets into space every

other week is not a cheap undertaking

and while there’s no question elon musk

aren’t bottomless

somehow all those dazzling launches and

landings need to pay for themselves

so strap in and get ready for ignition

sequence while we investigate today’s

burning question

how does spacex make money in october

this year

influential investment bank morgan

stanley went on record

saying it believed spacex would very

soon be worth a cool 100 billion dollars

which is all very exciting until you

start to think about the maths behind

that figure

because as awesome as space travel is

it’s a high risk endeavor requiring

hundreds of millions of dollars in

hardware and expensive labor just to get

started

and even if you make it to orbit it’s

not as if there’s a long line of paying

punters out there in the frozen wastes

of the solar system to help you recoup

your costs

that’s why historically the financial

heavy lifting in space has fallen on

governments

so why is it suddenly so commercially

viable spacex currently makes the

majority of its money serving

earth-based customers who need to put

stuff into low earth orbit that’s

unlikely to be you personally or anybody

you know for that matter

but for communications companies like

orbcom ses

iridium in marsat or tycom musk’s

ability to deposit their hardware up

into orbit more cheaply than the

competition makes all the difference

but cheaply of course we mean still many

tens of millions of dollars

the going rate for launching a satellite

on one of spacex’s tried and tested

falcon 9 rockets

is 62 million spacex doesn’t reveal the

ins and outs of its company finances

but it’s believed launching a newly

built falcon 9 costs the company

something like 50 million dollars

so from a single launch it’s fair to

assume a working profit margin per

launch of around 12 million dollars

not bad when you consider the company is

scheduled to complete 21 flights this

year with an aspiration to launch around

50 in 2021

it gets better one of spacex’s core

brand missions is to make rocket flights

reusable

or at least the first stage so when the

first stage is reused

that cost believed to be in the region

of 35 million minus maintenance

overheads

removed from the equation makes musk’s

business suddenly seem very profitable

to put that into context one particular

falcon 9 first stage rocket recently

completed its seventh mission so even

with spacex offering deep discounts on

second-hand rocket flights a snipper 50

million dollars a launch

that’s still over 100 million dollars in

profit generated over the life of that

one rocket so far

spacex doesn’t just serve bland

terrestrial communications companies

it also holds lucrative contracts to

place us government satellites and top

secret u.s air force hardware up there

too

the extra security and complexity of

these missions is reckoned to add

something like 20 million dollars to the

price tag of each launch

just think back to last month when

humans were delivered safely to the iss

on a spacex craft

talk about high value payload these

profit margins don’t happen by accident

by all accounts bosses at spacex

headquarters in hawthorne los angeles

run a tight ship

as recently as 2019 a good year by the

company’s standards

some 10 of the company workforce was

laid off in a brutal cost cutting

exercise

and in a telling anecdote that’s gone

down in spacex folklore

engineer steve davis apparently once

asked elon musk to sign off on a 120 000

quote for a component manufactured by an

outside supplier

musk is said to have laughed davis out

of the room telling him he had five

thousand dollars to make one himself

in-house davis went away and indeed

figured out how to make the same

component for just three thousand nine

hundred dollars

still however lean mean and hyper

efficient spacex gets

and however many third-party satellites

it eats into orbit

it doesn’t account for morgan stanley’s

100 billion dollar valuation

so where’s the rest of that money set to

come from part of the answer is already

over our heads

musk’s starlink satellite program a

network of orbiting spacex satellites

that will broadcast high-speed internet

to presently unreachable regions of the

globe

is predicted to be a huge money spinner

over the coming years

as with everything space related it’s

pricey at first

musk himself has estimated the cost of

getting a functioning array of several

thousand such satellites into orbit with

supporting ground infrastructure to be

around 10 million dollars

however predicted revenues with users

paying 99

a month are set to exceed 30 billion

dollars as soon as the year 2025.

morgan stanley goes still further

suggesting that if spacex is able to

secure just 10

of projected growth in worldwide

broadband take up over the coming years

its starlink business alone will soon be

worth a whopping 52 billion dollars

no wonder private investors are already

queuing around the block at hawthorne

for a piece of starlink action

google parent company alphabet is one

such benefactor with an estimated 900

million dollar stake

beyond the bread and butter low earth

orbit haulage missions and the coming

revolution in how we go online

future spacex ventures might yield even

more profit

space tourism is just on the cusp of

feasibility

with tickets currently changing hands

for 50 million dollars a pop and the

first flight set to occur as early as

late next year

and when the next generation spacex

craft excitingly named starship

starts flying regular missions as early

as 2022 they’ll be even better

still at carrying lucrative payloads

into orbit there’s also the exciting

prospect of point-to-point orbital

travel between destinations on earth

though still very much on the drawing

board any business that can potentially

get you from new york to singapore in

around half an hour should be

quite the money spinner of course

there’s also mars

when it’s difficult to see exactly what

shape the martian economy will take

there’s likely to be a significant first

mover advantage for elon musk and his

company

and a hefty payday hot on the heels of

that beyond mars who can say

for now spacex keeps its financial

details close to its chest

partly to prevent prying eyes from

questioning the wisdom of elon musk’s

ultra expensive r d habit

but who can argue with a company that

makes a fortune even as it sets mankind

up for our ultimate destiny among the

stars

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