SpaceX— Billionaire Passion Project or Revenue Machine?

Read time: 5 minutes

Good morning! It's Tuesday, March 5th. Today, we’re digging into SpaceX and how it recently hit profitability through its Starlink internet services!

THE FEATURE

SpaceX— Billionaire Passion Project or Revenue Machine?

Space exploration is a stereotypical interest among billionaires. For instance, Jeff Bezos with Blue Origin and Richard Branson with Virgin Galactic have launched themselves and friends into orbit. 

However, neither Blue Origin nor Virgin Galactic has accomplished anything substantial besides marginally increasing the "suborbital space tourism" industry. 

Elon Musk's SpaceX is an entirely different animal. Rather than being a billionaire's passion project, SpaceX is profitable and reached an estimated $8.7B in revenue for 2023!

So, What's the Business?

SpaceX was founded in 2002 with a similar mission to Blue Origin and Virgin Galactic— to usher in an era of commercial spaceflight. 

The company started gaining traction and major investments in 2008 when it secured its first NASA contract and launched the Falcon 1 rocket. Since then, SpaceX has hit historic milestones, such as being the first commercial spacecraft to dock at the International Space Station and the first company to launch a reusable rocket. 

As the leading innovator in the aerospace industry, Elon's privately held SpaceX is reportedly worth $180B! For comparison, Blue Origin is valued at an estimated $2B to $3B, and Virgin Galactic has an enterprise value of just $219M. 

SpaceX still isn't quite as large as established space stocks, like Lockheed Martin's space division and Boeing's Space and Security business, which generate $13B and $25B in revenue, respectively.

Lockheed Martin and Boeing are ahead in revenue for now, but they've both struggled to add revenue and have seen their profits decline from 2021 to 2023. On the other hand, SpaceX is growing at breakneck speeds and becoming more profitable:

Revenue Growth: 

• 2021: $2.3B

• 2022: $4.6B

• 2023: $8.721

So, how is SpaceX pulling it off? The company isn't necessarily taking contracts away from Lockheed Martin and Boeing. Instead, it's expanding into the consumer market. 

The Innovation: An Aerospace Company with Consumer Products

Payload recently did an in-depth estimate of SpaceX's 2023 revenues, and it shows just how much the company's internet service sector, Starlink, is boosting the company's growth. 

(Payload accurately estimated Starlink's 2022 revenue. So, we can put a relatively high degree of trust into these figures)  

Here are some highlights of SpaceX's revenue streams that show the company's reliance on both government and commercial sales: 

• Commercial Launches: SpaceX's Falcon 9 and Falcon Heavy to transport payloads and launch satellites for private companies ($1.06B)

• Government Launches: SpaceX's government contracts involve launches for national security, scientific research, and resupplying the International Space Station ($1.4B)

• Starlink: SpaceX serves as an internet provider via its satellite network that beams down internet access rather than using ground-based infrastructure. 

  • Residential subscriptions— $1.79B 

  • Government subscription— $480M 

Starlink is also used for RVs and businesses in the maritime and aviation industry, bringing total sector revenue to $4.18B— approximately half of SpaceX's annual revenue and double the $1.9B it generated in 2022. 

Payload believes that SpaceX will increase revenues to $13.5B in 2024, with Starlink being the primary contributor to the new growth. 

Key Observation

Musk's ultimate goal with SpaceX is to create the infrastructure necessary to fuel a multi-planetary civilization one day.

As it turns out, a critical step to achieving that goal is to get consumers to chip in.

By bringing aerospace innovations to the public, SpaceX is expanding global internet access and tapping into a recurring revenue stream that may just get them to Mars.

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