A Forbes article by a knowledgeable writer on the Space Industry has some more insights on SpaceX’s financial situation.
SpaceX generated about $2.5 billion in revenues annually. In the 12 months ending in September, it produced $270 million in earnings before interest, taxes, depreciation and amortization. A Bloomberg account of a SpaceX debt placement found SpaceX included pre-payments by customers in its earnings calculations while excluding some research expenditures. Without those adjustments, SpaceX would have sustained a loss.
SpaceX is still moving fast. In December, it appears they will be able to reuse the $6 million nosecone farings. They made the farings waterproof. If SpaceX sustained 20 launches per year then this would save them about $100 million per year. I am assuming $1 million for recovery and reconditioning.
In December, SpaceX proved that they should be able to reuse the first stage four times or more. Previously they were able to reuse two times. They flew the first stage once and then reused it once. They can now fly it once and re-use three or more times. SpaceX believes they can reuse it nine or ten times and then give them an overhaul and continue using them.
In 2019, let us suppose the average first stage re-use is four times. I think the first stage is about $30 million in cost. If half were used twice and half were used once in the 12 months up to September, then the cost was about $23 million per launch. In 2019, if half are used once and half are used four times, then the average cost is $60 million over five launches. This is $12 million per launch.
Twenty launches times $11 million is $220 million per year.
Sometimes they will need to launch once because they will not re-land.
I think SpaceX will be $300 million to $400 million more profitable on Falcon 9 block 5 launches.
If SpaceX gets higher profit NASA crewed launches two or three times per year and higher profit Falcon Heavy launches and some military launches then they make an estimated $50 million to $100 million of profit for each of those launches. Five of those launches is $250 million to $500 million.
Starlink and Super Heavy Starship
Previously Nextbigfuture has calculated how the Super Heavy Starship will make deploying the Starlink satellite network $1 to $2 billion cheaper to launch than with Falcon 9s.
Nextbigfuture also estimates, SpaceX Starlink will make several billion dollars per year from the finance industry for premium low latency connections. It was worth New York and Chicago $100 million per year to put a premium microwave data connection between the two cities. This was to shave 5% of the time from pricing updates and order placement.
There would be 190 combinations of pairs of the top 20 financial cities. There are 435 combinations of pairs of the top 30 financial cities. If the top $100 million per year was paid by the top 20 cities, then this would be $19 billion per year. If the premium internet pairing for the connections to 21 to 30 was worth $10 million per year then this would be another $2.45 billion per year. Even with a half-price discount, the total would still be $10 billion per year.
The SpaceX Starlinks could save 30-50% of the latency time. The value for the Starlink financial latency reduction should be even higher.
Given the future value of the Starlink satellite network, will Elon Musk be able to arrange the financing?
It only makes sense for SpaceX to go all out for that Starlink and Super Heavy Starship future.
This along with Elon Musks personality and history of making the daring business moves.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
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7 thoughts on “SpaceX Will Go All-In For SuperHeavy Starship and Starlink”
Just a quick update: It hadn’t occurred to me that you can get to 33.2 degrees inclination by launching through the Yucatan Channel. That reduces the delta-v for the plane change by quite a bit (roughly 1000 m/s), which lets you carry a lot more Starlinks in the cargo launch. As an example, take the 340.8 km x 48 degree orbit:
Launch delta-v to 340.8 x 33.2: 9360 m/s
Plane-change delta-v from 33.2 to 48 degrees: 1985 m/s
You can get 98 t of Starlinks (170, if they’re 500 kg wet + 75 kg of dispenser per bird) to that 340.8 x 33.2, and it takes 1.7 tankers’ full of prop (167 t) to get the BFS and Starlinks to the target 340.8 x 48 orbit and still allow it to get home empty. (I’m not dealing with cross range here, so it could be a little less.)
Presumably, you can preserve the other 30 t of prop for the next flight, although boil-off will be an issue. Figure that you therefore need about 2.8 launches per 170 birds, which averages out to 60 per launch. That’s pretty much as good at the FH can do launching directly from the Cape.
I haven’t worked all the numbers, but it looks like the BFR will be at least as cost-effective as the FH in almost all Starlink orbits, and likely much more cost-effective for the VLEO constellation.
Yet Another Update:
OK, I reworked my numbers. Here’s what I get (feel free to disagree with my per-launch costs–they’re what I get assuming 10x reusability):
I guess once you factor in all the SpaceX activities they are running they have about a 10% profit margin (at best) before interest payments … which is not going to fund the big plans. It shows that the pure hardware costs are only 1/2 of the costs of running things … no big surprise. Looks like around $1B must have been factored in from NASA to get that revenue number to $2.5B (18x80M= 1.44B). Dragon 10x first stage and fairing reuse could add maybe $200M profits a year you still have all the people, facilities, R&D and fuel …
I saw that this Starlink won’t be supporting high frequency trading, so “SpaceX Starlink will make several billion dollars per year from the finance industry for premium low latency connections” may not show up.
So … where will the money come from? Tesla stock? Bank loans? Private stakes? DoD support? All of the above? You can see why they need Starlink to create much larger profits … and maybe the DoD will upfront some $$$ to accelerate this. The huge issue with Starlink is so much investment is needed to get gapless coverage before you can charge $1. But once you have this there should a huge ramp up in revenue. Best of luck SpaceX … folks are cheering for you … but it looks like as much of a financial challenge as a technical one.
SpaceX will certainly not IPO. Musk has been clear about that in the past and is probably even less inclined now.
But that doesn’t mean he couldn’t do debt financing, or private equity placement (though for that latter he’d insist on keeping a majority vote…he owns 54% of SpaceX and 78% of its voting shares).
I’ve done more work on the deployment of Starlinks, using all of F9, FH, and BFR. You can find it here: https://radical-moderation.blogspot.com/2018/12/some-thoughts-about-starlink.html
Take a look at the launch azimuths for the 53, 48, and 42 degree inclination orbits from Boca Chica. The red lines are all approximately 1500 km long, which is about how far BFS is downrange to do an orbital insertion.
There’s simply no way that any sane range safety regime is going to allow these launches to go over areas that densely populated.
In a long argument with Tom Perkins (see https://www.spot.im/s/00nL30OYL2eF ), I pointed out that, while BC is OK for doing 26 degree inclinations, the plane change to the higher inclinations is prohibitively expensive. He countered that the BFS could be refueled on-orbit, but it actually takes two refuelings to get to the point where most of the interesting inclinations are accessible by BFR, which effectively chops the average number of Starlinks carried per launch to a third of what could be carried otherwise.
After cranking through the numbers (which are in the comment and the post links above–many assumptions to check), I got the following comparison:
550×53: FH=$310K/bird, BFR=$667K/bird
1110×53.8: FH=$362K/bird, BFR=$833K/bird
345.6×53: FH=$310K/bird, BFR=$667K/bird
340.8×48: FH=$310K/bird, BFR=$294K/bird
335.9×42: FH=$310K/bird, BFR=$175K/bird
So BFR is better in two of the orbits, but only significantly better in one of them.
Yeah. Stock offering would cripple SpaceX. They would be handcuffed to the whims of the market and the press, SEC.
SpaceX already has a bunch of heavy hitter defense contractors gunning for it. Think of all the extra B.S Musk would have to go through if it were a public company. Lol
Plus Starlink is going to essentially be a money machine. Once that gets going Musk will be able to fund a grand tour of the whole damn solar system if he wants.
I think it more likely that eventually Musk makes enough off of SpaceX to take Tesla private.
I disagree 🙂 with the experience from Tesla, should delay stock offerings until he wants to cash out. He should have plenty of equity in private markets
ORRR issue a stock offering and raise billions!
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