How Does SpaceX Make Money?

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Founded in 2002 by Elon Musk, SpaceX is a technology company on a mission to cut down the costs of space travel and ultimately enable the colonization of the red planet. The company also aims to revive public interest in space travel to channel more funds to NASA.

As it is, there is no question that SpaceX has and is making remarkable progress in space exploration and the entire tech space. But staying in the rocket business for nearly 20 years isn’t a cheap undertaking.

Plus, launching an aircraft every other week means you need a substantial amount of money to cater for the hardware, production, and labor, to name a few.

So, how exactly does the company make money? Read on to find out more.

Delivery of Goods to Space

SpaceX makes most of its money by delivering cargo to space, including the International Space Station (ISS). Currently, the company has contracts with three major types of customers: the U.S. military, commercial telecommunication companies, and NASA. All these customers have different needs, and SpaceX charges them based on the launch’s complexity and the payload’s weight.

NASA, for instance, signed a deal with the company to fly astronauts to the ISS in May 2020. The contract was worth $2.6 billion, and SpaceX was the only company that gave NASA a credible plan for launching crews into orbit. Other competing companies for the contract included Jeff Bezos’ Blue Origin and Boeing.

The company has also signed another deal with the agency to dispatch 70 payloads to the ISS. The total payload is estimated to be worth $1.6 billion.

However, SpaceX has worked with more government agencies than NASA. The company has also serviced the National Oceanic and Atmospheric Administration (NOAA). In 2012, it launched a satellite to monitor global sea levels and ocean circulations under a contract that earned the business a total revenue of $82 million.

In 2020, the company also signed contracts with the Air Force to fulfill 40% of all the U.S. military launch requirements. SpaceX doesn’t disclose how much it’s making from the contracts as a privately held company.

Civilian Space Travel

SpaceX recently set the record for being the first company in the world to send an all-civilian crew mission to space and return them safely to Earth. The famous Inspiration 4 mission was funded and commanded by Jared Isaacman, CEO and owner of Shift4 Payments, a payment gateway, and Draken International, a private airline. At the time of the mission, Isaacman had only 6,000 hours of flying experience.

The four crew members were everyday people, proving that space is truly a place for all. The mission was named after the number of crew members on board and the fact that it was the fourth space mission to launch from U.S. soil.

Inspiration 4 was powered by the Falcon 9, a reusable world-class rocket built by SpaceX. Although SpaceX does not publicly disclose the total revenue generated by the mission, the amount could have been in the tens of millions of dollars, according to USA Today. Regardless, there are likely to be similar missions in the future which could see the company’s revenue skyrocket.

In addition to government contracts and commercial launches, SpaceX also generates revenue through its satellite broadband business. Starlink is a network of small satellites designed to provide high-speed internet access to every inhabitant on Earth.

While the project is still in its early stages, SpaceX has already secured contracts with the U.S. government to provide rural Americans with high-speed internet access. The company also intends to build a network of more than 12,000 satellites, with 2,500 already in orbit.

Morgan Stanley, a highly esteemed finance firm headquartered in New York, estimates that if the company provides the service at $50 per month, its annual cash flow will total $24 billion by 2040. However, since SpaceX currently charges $99 per month plus a one-time fee of $499 to cover the hardware cost, the company will undoubtedly earn far more than Morgan Stanley anticipated.

To top things off, Starlink has a premium version that costs $2,500 for the hardware with a $500 monthly subscription. The Starlink project has gained over 400,000 customers and operates in more than 36 countries. The company is also looking to establish itself across Africa, Asia, and the Middle East, which could see its customer base hit all-time highs.

How Does SpaceX Make Money?

The RideShare Program

SpaceX’s rideshare program is an innovative and smart offering from Elon Musk. The program aims to make space travel more affordable while still generating profits for the company. The SpaceX RideShare Program works by letting small satellite operators split the costs incurred during launches by sharing space on the Falcon 9 rocket.

Sharing rockets is known for delays because if the customer with the primary payload isn’t ready by the scheduled launch time, the entire launch will be delayed, affecting all the other clients. In other words, all of the payloads must be ready at the same time. However, SpaceX is doing things differently.

The company assures its customers that if the launch date arrives, the aircraft they reserved will take off, and their satellite will launch regardless of whether their ride mates are ready. SpaceX’s RideShare Program might appear to be a minor improvement, but launch delays have historically hampered the development of small satellite companies in the past. So, it is a welcome relief.

SpaceX charges a base rate of $1.1 million for a spacecraft holding a payload of 200 kilograms, with any extra mass set at $5,500 per kilogram. These numbers seem enormous, but given that the company’s cheapest launch costs $67 million, this is the best option for small satellite operators. In addition, SpaceX has seen more than 100 satellite companies sign up for the RideShare Program, which makes it top of the list as another of SpaceX’s revenue.

Overview of the Rockets That Facilitate Launches

SpaceX uses three main types of starships, Falcon 9, Falcon 9 Heavy, and the Dragon, which enable these launch missions. The cost for a launch using the Falcon 9 has hiked from $62 million to $67 million due to inflation. Similarly, the Falcon 9 Heavy launch missions now cost as much as $97 million. SpaceX aims to make these rockets reusable, thus cutting down the costs and giving them a competitive edge over other launch providers.

SpaceX also has a big project underway, the Starship. The Starship aims to outperform the Falcon rockets series regarding its reusability payload and the total payload it can lift. While the Falcon 9 rocket is partially reusable, the Starship is designed to be fully reusable.

The company also intends to use the aircraft to facilitate faster point-to-point travel here on Earth, to reduce the time it takes to move between cities. In addition, the Starship vehicle means more money for SpaceX since the spacecraft will enable SpaceX to offer space travel beyond just Mars.

Musk has given hints via his favorite social media network, Twitter, that the Starship rocket could take to the skies as early as July this year.

SpaceX racked up 31 launches in 2021, most of which were for telecommunications firms. The company has already completed 26 launches in 2022, matching the total number of launches completed in 2019. Based on the trend over the past three years, the annual launches will likely rise exponentially in the coming years.

The company’s target for 2022 is to release an average of one launch per week, making up 52 launches. While SpaceX doesn’t share the ins and outs of its revenue projections, the total earnings for 2022 are expected to increase, considering that the company generated $1.4 billion with just 31 launches in 2021.

SpaceX Valuation

SpaceX’s current valuation is $125 billion, making the company the most valuable space company in the world. But unfortunately, individual investors cannot chip in their funds because the company isn’t publicly listed yet.

No one knows whether or not the company will ever be listed, but Musk hinted in a tweet that they are waiting for the business to stabilize. Regardless, one thing is sure: They already have the funds, and their priority is technological advancement rather than capital.

SpaceX: The Money Spinner

The government has long dominated space exploration, but SpaceX is fast altering the story. The business had set various records, most notably when it utilized its reusable Falcon 9 rocket to take NASA’s astronauts into space in 2020. These achievements, however, have not been without setbacks.

Previously, the company relied on NASA as its primary source of revenue. Still, it’s encouraging to see that the company is dipping its toes into several creative ideas, such as Starlink, that might diversify its revenue sources, allowing it to achieve its long-term goals. After all, putting all your eggs in one basket is never a good idea.

While SpaceX is valued at more than $125 million, we could see these figures skyrocket if it continues to develop innovative solutions that are here to help the whole of humanity. And if the dream to colonize Mars does materialize, the amount of money under its belt will be substantial.

What do you think SpaceX will be valued at by the end of 2022? Please let us know in the comments section below.

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