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What Is SpaceX?
SpaceX is the brand identity for Space Exploration Technologies Corp., a US-based aerospace company that is involved in space transportation, spacecraft and rocket manufacture, and space communication services. SpaceX is headquartered in Hawthorne, California, and was founded by Elon Musk in 2002 to improve and lower the cost of space transportation. Ultimately, Musk has expressed the goal of transporting people to Mars.
The company manufactures spacecraft, launch vehicles, rocket engines, and communications satellites. Thus far, it has built two types of rockets:
- Falcon 9: the world’s first orbital-class reusable rocket
- Falcon Heavy: which SpaceX says is “the most powerful operational rocket in the world by a factor of two”
They also manufacture the Dragon spacecraft, which can carry up to seven passengers to and from Earth’s orbit and beyond. The Dragon is the first private spacecraft to transport humans to the International Space Station.
SpaceX is also producing and deploying a cluster of communication satellites called StarLink, which is designed to provide global internet service.
The company has achieved numerous firsts in space transport, including the first privately funded liquid-propellant rocket to reach orbit, the first private company to send a rocket into orbit and recover it, and the first vertical take-off and vertical propulsive landing for an orbital rocket. It has had more than 100 successful launches thus far.
4 Ways SpaceX Makes Money
SpaceX generates revenue in a number of ways that can be summarized into four primary business lines:
1. Manufacturing Rockets and Spacecraft
The manufacturing operation builds rockets, crafts, and satellites for its own use as well as for others. A key customer is NASA, with whom SpaceX has billion-dollar-plus contracts to design and build spacecraft going as far back as 2006 and extending well into the future.
2. Transporting Humans and Cargo Into Space
The transportation business operates cargo and supply services for NASA missions to the International Space Station that include delivering and recovering astronauts themselves. A contract was finalized in 2020 to provide a similar service for the Lunar Gateway Space Station.
The company also offers transportation services for commercial purposes, such as satellite placements. In addition, SpaceX offers space tourism services for individuals, offering them the opportunity to have a personal space experience for as much as a million dollars.
3. Orbital Communications Satellites
SpaceX can deploy satellites for government or commercial enterprises and has developed and deployed its own satellite network called StarLink, which is intended to generate revenue as a global internet services provider.
4. National Defense Missions
SpaceX also has contracts with the US government for defense missions, including the Department of Defense and the United States Air Force Space and Missile Systems Center.
SpaceX Valuation
As a privately-held company, the valuation of SpaceX is determined by the latest stock offering made to private investors. In October 2021, it was revealed that SpaceX offered stock at $560 per share from new and existing shareholders, giving the company a valuation in excess of $100 billion and making it the most valuable private company in the world. The new stock sale increased the valuation by more than 30% over the prior valuation established in February 2021 but does not bring in new investment capital to the company itself.
While certainly a notable achievement, it is difficult to gain a detailed perspective on the metrics of that valuation relative to the company’s financials, since the company is not public and therefore does not report its full financials to the SEC or the media. In the absence of public filings, outsiders can only piece together a partial picture of the company’s costs, revenues, and future projections from anecdotal information such as awarded contracts that have been made public.
SpaceX enjoys advantages over the few competitors it has by virtue of its more focused business, its technology, and its manufacturing capability. Much of its future prospects, however, will emanate from rather substantial government and commercial contracts, making the revenue picture highly sensitive to the completion and renewal of such agreements.
Bottom Line
SpaceX is a unique and exciting company that is charting totally new ground in business and in science. It has established itself as a valuable resource for NASA, The Defense Department, commercial enterprises, and individuals looking for a unique opportunity to travel in space. As a private company, individual investors cannot currently invest in SpaceX but for a million dollars, they could potentially invest in the experience of their lives.
