Author Topic: Motley Fool says Spacex is no longer cash positive  (Read 13158 times)

Offline Jim

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Offline Jcc

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #1 on: 12/11/2016 05:42 pm »
They seem to be under the impression that launch companies receive no revenue for a launch until they actually launch. Not so, they receive most of the payments well in advance as I understand it.

Never the less, it's hard to imagine Spacex not taking a profit hit as they would not get the final payments until launches resume, and probably will slow the progress payments considerably, besides the significant costs of the investigation, rebuilding LC40, continuing work on 3 other launch sites, LV recovery and reusability, Raptor/ITS development, internal contribution to Red Dragon, and their satellite constellation, while receiving virtually no revenue from any of that. The fact they could have been profitable prior to the mishap while supporting all of the other unfunded activities is rather amazing in my opinion.

Offline Nomadd

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #2 on: 12/11/2016 06:09 pm »
 The CNN comments section is about as credible as anything Motley Fool puts out.
« Last Edit: 12/11/2016 09:15 pm by Nomadd »
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Offline rickyramjet

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #3 on: 12/11/2016 06:22 pm »
Motley Fool is all about promoting itself and sounding smug in it's articles.  They love to paint various organizations as "doomed" and how they in their infinite wisdom predicted it.  (If only Elon had listened to Motley Fool!) 

It's not surprising SpaceX is having financial struggles with the intense pace that Elon has set for them, especially after losing a couple of vehicles and payloads in a short time.  As long as they can resume launching successfully for a few years they will be fine (IMO).   

Offline meberbs

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #4 on: 12/11/2016 06:51 pm »
What this really proves is that when SpaceX has not been held up by failure investigations, they were sufficiently cashflow positive that they built up enough cash reserves to continue paying employees, suppliers and contractors over these investigation periods, despite the presumable reduced receipt of milestone payments while they are not launching.

This is impressive, since they have been funding a lot of extra-curricular things (new launch sites, Raptor and ITS tank development, their satellite division etc.), so in normal circumstances their launch business has been bringing in enough income to cover all of these expenses while also saving away for a rainy day. The fact that a rainy day has come and is causing them to use their rainy day funds doesn't matter too much as long as they get back to flight, before those funds run out.

Offline hkultala

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #5 on: 12/11/2016 06:58 pm »
The purpose of SpaceX is not to create dividents to it's shareholders.

The purpose of SpaceX is to develop technology that make colonization of other celestial bodies
1) possible
2) cheaper.

SpaceX is not cash positive because it's using it's margins to develop Raptor and BFR/ITS which are not immediately bringing any money to company.

SpaceX could/would be cash positive if it would freeze development of Raptor/BFR/ITS and not spnt any money on those.

Offline ChrisWilson68

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #6 on: 12/11/2016 07:06 pm »
Why would it surprise anyone or concern anyone to find out SpaceX isn't currently cashflow-positive?

SpaceX took a $1 billion dollar investment recently from a combination of Google and Fidelity.  What exactly did anyone think they were going to do with that money?  They would either have to spend it on buying other companies or investing organically.  SpaceX has shown zero inclination to buy other companies, which means that they took the money so they could invest in their business.  They're not investing it in their business if they're cashflow-positive.

Offline Ronsmytheiii

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #7 on: 12/11/2016 07:16 pm »
Also important to note that since the second accident, SpaceX has lost bookings (ie Inmarsat) and has not won many new ones due to the failure.  Priority 1 needs to be safely returning to flight, and reducing launch delays (again safely). If we want re-usability to continue, the SpaceX Comm constellation, Red Dragon and then eventually ITS then profitability needs to be priority number 1.

Offline meekGee

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #8 on: 12/11/2016 07:35 pm »
Given all the commentary in previous years about how they can't be cash positive anyway - it's interesting that they are "no longer" cash positive now.

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Offline ChrisWilson68

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #9 on: 12/11/2016 07:38 pm »
Also important to note that since the second accident, SpaceX has lost bookings (ie Inmarsat) and has not won many new ones due to the failure.  Priority 1 needs to be safely returning to flight, and reducing launch delays (again safely). If we want re-usability to continue, the SpaceX Comm constellation, Red Dragon and then eventually ITS then profitability needs to be priority number 1.

I disagree.  Profitability does not need to be priority number 1.

Amazon spent many years being unprofitable, and it is because they did that they currently have such a dominant position in e-commerce.

For example, one route to success for SpaceX is to be unprofitable for years while they invest heavily in the communication constellation, then start generating huge amounts of money from the constellation 15 years from now.

Offline Lar

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #10 on: 12/11/2016 07:42 pm »
"a SpaceXplosion"

That sums up Fool writing lately. Cutesy. But not much else.
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Offline Johnnyhinbos

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #11 on: 12/11/2016 07:45 pm »
SpaceXploitation?
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Offline Ronsmytheiii

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #12 on: 12/11/2016 08:08 pm »
Also important to note that since the second accident, SpaceX has lost bookings (ie Inmarsat) and has not won many new ones due to the failure.  Priority 1 needs to be safely returning to flight, and reducing launch delays (again safely). If we want re-usability to continue, the SpaceX Comm constellation, Red Dragon and then eventually ITS then profitability needs to be priority number 1.

I disagree.  Profitability does not need to be priority number 1.

Amazon spent many years being unprofitable, and it is because they did that they currently have such a dominant position in e-commerce.

For example, one route to success for SpaceX is to be unprofitable for years while they invest heavily in the communication constellation, then start generating huge amounts of money from the constellation 15 years from now.


Well Elon seems to disagree with that statement from this slide for ITS (note, no mention of a satellite constellation)

He has repeatedly stated that Falcon 9/Heavy profits are essential, with the stand down and lost bookings that will effect everything

ITS development lives and dies by profits. No Profits no ITS
« Last Edit: 12/11/2016 08:09 pm by Ronsmytheiii »

Offline ChrisWilson68

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #13 on: 12/11/2016 08:19 pm »
Also important to note that since the second accident, SpaceX has lost bookings (ie Inmarsat) and has not won many new ones due to the failure.  Priority 1 needs to be safely returning to flight, and reducing launch delays (again safely). If we want re-usability to continue, the SpaceX Comm constellation, Red Dragon and then eventually ITS then profitability needs to be priority number 1.

I disagree.  Profitability does not need to be priority number 1.

Amazon spent many years being unprofitable, and it is because they did that they currently have such a dominant position in e-commerce.

For example, one route to success for SpaceX is to be unprofitable for years while they invest heavily in the communication constellation, then start generating huge amounts of money from the constellation 15 years from now.


Well Elon seems to disagree with that statement from this slide for ITS (note, no mention of a satellite constellation)

I don't see any evidence here of Elon disagreeing with what I said.  That's something you're reading into it.

He has repeatedly stated that Falcon 9/Heavy profits are essential, with the stand down and lost bookings that will effect everything

Yes, and that is completely consistent with what I said.

You seem to be conflating profits from a particular part of the business with profitability of the business as a whole.

Nobody ever thought that the $1 billion investment from Google and Fidelity was to fund Falcon 9 and Falcon Heavy.  Obviously, those are supposed to be sources of income.

The point is that SpaceX as a company is investing in more than just Falcon 9 and Falcon heavy.  They need Falcon 9 and Falcon Heavy in addition to the $1 billion they are investing.

ITS development lives and dies by profits. No Profits no ITS

First of all, that's not true.  ITS could end up being funded by money from Tesla if Tesla becomes enormously successful, or it could be funded by Larry Page giving Elon $40 billion.

Secondly, even if ITS were entirely dependent on profits from SpaceX, profits from the current Falcon 9 and Falcon Heavy businesses are never going to be enough to fund it.  They could only be dependent on future, much larger, sources of profits, such as the communication constellation.  And to get those future, larger profits to fund ITS, SpaceX would need to be investing in them and not be profitable for years to get there.

Offline Ronsmytheiii

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #14 on: 12/11/2016 08:47 pm »
First of all, that's not true.  ITS could end up being funded by money from Tesla if Tesla becomes enormously successful, or it could be funded by Larry Page giving Elon $40 billion.

Elon Can't just take money from Tesla and give it to SpaceX, they are two different companies with different shareholders. Since Tesla is publically traded, the board would have to vote on such a move and I don't think they would want to just summarily take on debt for a private corporation that doesn't plan to go public anytime soon.

Quote
Secondly, even if ITS were entirely dependent on profits from SpaceX, profits from the current Falcon 9 and Falcon Heavy businesses are never going to be enough to fund it.

Hence the Slide above, where Elon has stated that he is trying to find new sources of revenue for mars

SpaceX is not committed to building the internet constellation so it really wont be a big drain on resources right now.  Look at what Gwynne Shotwell said back in October:

Quote
Where are you with your satellite constellation and what’s the time frame?

The time frame is pretty TBD. We are looking at building a broadband constellation in LEO, low Earth orbit. We’re definitely in the development phase, although we’re not really committed to that right now.

There have been a number of attempts at doing something like this, and all of them have largely failed. So you don’t go and spend $5-plus billion on a system that’s not going to be a benefit to folks. We are developing test-flight satellites that we hope to launch next year. But really the key for us is the technology for the user equipment. If I can’t build an antenna that’s going to install easily on your roof or in your yard for a couple of hundred dollars, then it’s going to be very difficult to compete with the existing systems.

So we really need to crack that code. We’re working, but we haven’t quite cracked that yet. Once we’ve done that, then we will pretty much go all in on the constellation. Sorry to be a little vague on it, but we’re still trying.

http://spacenews.com/spacexs-shotwell-on-falcon-9-inquiry-discounts-for-reused-rockets-and-silicon-valleys-test-and-fail-ethos/
« Last Edit: 12/11/2016 08:48 pm by Ronsmytheiii »

Offline Robotbeat

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #15 on: 12/11/2016 09:18 pm »
SpaceX hasn't launched for months. It's hardly news to say you slow down your revenue when not launching.

Musk has monied interests now going after him and spreading crap all over the news about his companies, in addition to random crazy people with an ax to grind. http://fortune.com/2016/02/22/elon-musk-koch-brothers-twitter/
« Last Edit: 12/11/2016 09:19 pm by Robotbeat »
Chris  Whoever loves correction loves knowledge, but he who hates reproof is stupid.

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Offline Robotbeat

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #16 on: 12/11/2016 09:21 pm »
First of all, that's not true.  ITS could end up being funded by money from Tesla if Tesla becomes enormously successful, or it could be funded by Larry Page giving Elon $40 billion.

Elon Can't just take money from Tesla and give it to SpaceX, they are two different companies with different shareholders.
...
He sure as heck can. He holds billions in Tesla shares and can sell or leverage those shares to help fund ITS.
Chris  Whoever loves correction loves knowledge, but he who hates reproof is stupid.

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Offline ChrisWilson68

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #17 on: 12/11/2016 09:22 pm »
First of all, that's not true.  ITS could end up being funded by money from Tesla if Tesla becomes enormously successful, or it could be funded by Larry Page giving Elon $40 billion.

Elon Can't just take money from Tesla and give it to SpaceX, they are two different companies with different shareholders. Since Tesla is publically traded, the board would have to vote on such a move and I don't think they would want to just summarily take on debt for a private corporation that doesn't plan to go public anytime soon.

You've misunderstood what I was saying.

Obviously, Tesla as a company isn't going to move company money into SpaceX.  That's bonkers and nobody would think that.

What I'm saying is that Elon Musk holds shares of Tesla that are currently worth billions of dollars.  He can simply sell those shares, get billions of dollars in cash, and invest them in SpaceX.  He wouldn't have to do it all at once, he could do it over time.  And the Tesla shares he owns are already worth billions of dollars.  If Tesla is very successful, they could be worth much more than that.

Quote
Secondly, even if ITS were entirely dependent on profits from SpaceX, profits from the current Falcon 9 and Falcon Heavy businesses are never going to be enough to fund it.

Hence the Slide above, where Elon has stated that he is trying to find new sources of revenue for mars

Which just supports my point.

SpaceX is not committed to building the internet constellation so it really wont be a big drain on resources right now.  Look at what Gwynne Shotwell said back in October:

Quote
Where are you with your satellite constellation and what’s the time frame?

The time frame is pretty TBD. We are looking at building a broadband constellation in LEO, low Earth orbit. We’re definitely in the development phase, although we’re not really committed to that right now.

Yeah, and that just means that they could in the end decide to cancel the project.  It doesn't say they aren't spending any money on it.

Anyway, you're getting way too hung up on one particular example I gave of how they might be investing now to try to make more money later.  This is an example.  It's not the only thing they might be investing in.

The point is, there's no reason to believe that being unprofitable now or for years to come is bad news for their ITS plans.  In fact, all the money they're spending on ITS is reducing profits now.  Even if they weren't investing in anything else and the F9/FH business was generating huge amounts of cash that they were spending on ITS, they wouldn't be profitable.

If they were to make profits the number one priority, as you claim they should, then they would stop Raptor and other ITS development.  How exactly does that help their ITS plans?

Offline Chris Bergin

Re: Motley Fool says Spacex is no longer cash positive
« Reply #18 on: 12/11/2016 09:29 pm »
I'm not a particularly good writer, but I'd throw myself off a cliff if I wrote "Why so mum, chum?"

Reads like click bait for CNES folk desperate to see some bad news about SpaceX. Having said that, it's probably true. But - and forgive me for being positive - it shows SpaceX can't be accused of rushing RTF for the sake of money.
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Offline russianhalo117

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Re: Motley Fool says Spacex is no longer cash positive
« Reply #19 on: 12/11/2016 09:41 pm »
I'm not a particularly good writer, but I'd throw myself off a cliff if I wrote "Why so mum, chum?"

Reads like click bait for CNES folk desperate to see some bad news about SpaceX. Having said that, it's probably true. But - and forgive me for being positive - it shows SpaceX can't be accused of rushing RTF for the sake of money.
Id say lock this given the overall place news site that its coming from and is written by an opinion editorial writer and not a true journalist.
« Last Edit: 12/11/2016 10:18 pm by russianhalo117 »

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