Is SpaceX overvalued?

[su27k]

SpaceX currently charges 1.1m minimum for a cubesat launch on a rideshare mission. Does this mean that if starship's 2m per launch goal is achieved, they could break even by launching just 2 cubesats?

Sort of. $2M is the target marginal launch cost of Starship, this would include propellant cost, plus the labor for preparing the fully reusable Starship for a new launch. So if they can achieve this low cost, they can sell an entire Starship launch at $2M and breakeven, or more likely they sell the Starship launch at whatever price customer can bear, and pocket the difference as profit.

Note however the current $1.1M price for their rideshare service is not for a single cubesat, it's for 200kg of payload to orbit, you can fit a lot of cubesats in 200kg.

[marcus79]

Expanding the human presence in space does not pay the bills.

Of the $2 million figure, $900,000 is fuel. Even if it is more expensive, that will unlikely be the problem. However, the $ 1.1 of the salaries and fixed costs assume a flight rate of 3 flights per day. That translates into a cool $ 1,205 million operating cost per year. for a single Starship. And this is hypothesized for a future scenario when 1,000 Starships are flying to sustain the colonisation of Mars. In the beginning the costs are likely to be a bit higher.

Near term, Musk says he wants to get to $ 10 million in 2-3 years. He needs the Starlink V2 flights to amortise the fixed operating costs to achieve that. Also a high flight rate is necessary to amortise the building costs of Starships. Unit costs for the Starship have been estimated at $ 200 - 250 million and more for the booster. I'm not even thinking about the development costs.

https://www.fool.com/investing/2020/02/16/are-elon-musks-spacex-promises-even-possible.aspx

https://www.quora.com/How-much-will-it-cost-to-build-1-starship

If the flight rate is less, the amortisation of fixed, unit and development costs is less.
So Starlink is absolutely essential to lower the per flight costs, giving it hundreds of flights.
If not, I cannot see it competing for traditional medium/heavy payloads. The competitors will have rockets tailored to this market, indeed SpaceX would be kind of its own best competitor with Falcon 9 and Heavy.

Maybe there will be new kinds of commercial payloads that require super heavy lift, but this will take time. The government will only require so many missions per year, partly because they will keep spending on SLS for a bit.

The same logic applies to the Long March 9 btw, even in its new reusable design. They keep trying to find missions for it like space solar power and so on.

I'm not saying Starship will not somehow manage to tread this dangerous waters, just that the valuation of SpaceX is pretty volatile and to some extent in the eye of the beholder.

[su27k]

Expanding the human presence in space does not pay the bills.

Of the $2 million figure, $900,000 is fuel. Even if it is more expensive, that will unlikely be the problem. However, the $ 1.1 of the salaries and fixed costs assume a flight rate of 3 flights per day. That translates into a cool $ 1,205 million operating cost per year. for a single Starship. And this is hypothesized for a future scenario when 1,000 Starships are flying to sustain the colonisation of Mars. In the beginning the costs are likely to be a bit higher.

The $2M is the marginal launch cost, it doesn't include fixed cost. To breakeven on a new launch, they only need the launch revenue to exceed the marginal launch cost.

To breakeven on their overall cashflow, they'll need total revenue to exceed total expenses, the latter includes fixed costs. But these numbers are much harder to estimate, since there're a lot of unknowns. But we do know the $ obligated to SpaceX from their government contracts in the past 12 months is over $1.9B, and they spent $430M at Boca Chica last year with 1,600 employees. So extrapolate the latter to 10,000 employees gives an annual expenditure of close to $3B, and they just need less than $1B per year from non-government contracts to break even.

I think it's safe to say that the estimate of $200M to $250M for each Starship is wildly off mark.

[marcus79]

Expanding the human presence in space does not pay the bills.

Of the $2 million figure, $900,000 is fuel. Even if it is more expensive, that will unlikely be the problem. However, the $ 1.1 of the salaries and fixed costs assume a flight rate of 3 flights per day. That translates into a cool $ 1,205 million operating cost per year. for a single Starship. And this is hypothesized for a future scenario when 1,000 Starships are flying to sustain the colonisation of Mars. In the beginning the costs are likely to be a bit higher.

The $2M is the marginal launch cost, it doesn't include fixed cost. To breakeven on a new launch, they only need the launch revenue to exceed the marginal launch cost.

To breakeven on their overall cashflow, they'll need total revenue to exceed total expenses, the latter includes fixed costs. But these numbers are much harder to estimate, since there're a lot of unknowns. But we do know the $ obligated to SpaceX from their government contracts in the past 12 months is over $1.9B, and they spent $430M at Boca Chica last year with 1,600 employees. So extrapolate the latter to 10,000 employees gives an annual expenditure of close to $3B, and they just need less than $1B per year from non-government contracts to break even.

I think it's safe to say that the estimate of $200M to $250M for each Starship is wildly off mark.

Ok, maybe the Motley Fool article was muddying the waters somewhat as it said the $ 2 million included salaries (fixed costs, unless they hire temp workers). They also said SN8 cost $ 216 million.

Anyway, the operational costs are the most important from the point of view of how much a flight costs (for SpaceX).

[JayWee]

Ok, maybe the Motley Fool article was muddying the waters somewhat as it said the $ 2 million included salaries (fixed costs, unless they hire temp workers). They also said SN8 cost $ 216 million.

Anyway, the operational costs are the most important from the point of view of how much a flight costs (for SpaceX).

From the fool article:

If you assume that Starship, with four times Falcon's payload, costs roughly four times as much to build, this implies that building a single Starship might cost roughly $216 million

That's a very bad assumption. Stainless steel is $4-$5/kg, Falcon9's AlLi alloy around $40/kg.
Additionally, they base their calculation on the "list price". Obviously, that's not the "build cost". Garbage In, Garbage Out.

[alugobi]

Golly, Batman, all these peeps saying they know how much SX stuff costs.

I don't know who to believe.

[DanClemmensen]

Ok, maybe the Motley Fool article was muddying the waters somewhat as it said the $ 2 million included salaries (fixed costs, unless they hire temp workers). They also said SN8 cost $ 216 million.

Anyway, the operational costs are the most important from the point of view of how much a flight costs (for SpaceX).

From the fool article:

If you assume that Starship, with four times Falcon's payload, costs roughly four times as much to build, this implies that building a single Starship might cost roughly $216 million

That's a very bad assumption. Stainless steel is $4-$5/kg, Falcon9's AlLi alloy around $40/kg.

Also, the "roughly four times" is suspect. This Falcon 9 block 5 can launch 22.8 tonne to LEO if expended, but that's after ten years of tweaking the design. A recoverable launch is only 16.25 tonne. Falcon 9 V1.0 was at 10.4 tonne. We don't know where Starship will end up, But the effective Starship payload will be between 100 and 150 tonne when is reaches the maturity level of Falcon 9 Block 5, and this is between six and nine times the payload for a recoverable F9 launch. Is he now going to multiply his $54 mission by nine to get $486 million?

<sarcasm>Gee, it's a big new rocket with twice the liftoff thrust of the SLS. Surely it will cost twice the $4 billion SLS manufacturing cost. </sarcasm>

One of the major innovations of Starship is a transition of manufacturing from the aerospace model to the shipyard model. His cost computation is laughable.

[alugobi]

Quote from: Motley Fool

    If you assume that Starship, with four times Falcon's payload, costs roughly four times as much to build, this implies that building a single Starship might cost roughly $216 million

Stick to subjects you understand, Fool. 

No, it doesn't imply that.  Sheesh.

[wannamoonbase]

So the FUD has now subtly moved on from “Starship is not a real thing”, to “Can they launch enough Starships with just two launch pads”.

Once they have four launchpads, expect it to move seamlessly to “The Next Thing”.

Once they have a dozen ships on Mars it could become, but a dozen isn’t enough ships.

SpaceX is not under valued, but I say this based on Starlink.  I think Starlink can be a $500B to $1T company.  Maybe more.   And it could throw off hundreds of billions in profits each year for use to settle Mars.

Starlink could be revolutionary

[JayWee]

I'm actually quite surprised at the subscriber growth. It's almost 100k/month now.

[meekGee]

I'm actually quite surprised at the subscriber growth. It's almost 100k/month now.

Got mine the other day.  It's as plug and play as it can ever get.

The service is so revolutionary, and the implementation is so flawless - it's going to be everywhere.

But SpaceX's valuation should be much higher than Starlink's.  They're going to be the ground floor investors in a new planet.  The upside is mind boggling.

[vapour_nudge]

What is the value of SpaceX if, God forbid, Elon Musk was no longer around or at the helm?

[alugobi]

In Shotwell we trust.

[dondar]

I'm actually quite surprised at the subscriber growth. It's almost 100k/month now.

"Exponential growth" is a fantasy in the real world. If you want to estimate future market you have to look for the uncovered market. There is considerate incoming market in south East Asia (Indonesia, Tailand, Vietnam where the major clients will be local goverments), South America and US. The growth beyond 500k is bound by the proper development of inter-sat links (software is a prime target, I am extremely curious how they will solve routing paths) and proper bandwidth-ed ground stations (apparently SpaceX has some issues in some areas of US already). Basically yet another year to wait for the proper Starlink growth.

[DanClemmensen]

I'm actually quite surprised at the subscriber growth. It's almost 100k/month now.

"Exponential growth" is a fantasy in the real world. If you want to estimate future market you have to look for the uncovered market. There is considerate incoming market in south East Asia (Indonesia, Tailand, Vietnam where the major clients will be local goverments), South America and US. The growth beyond 500k is bound by the proper development of inter-sat links (software is a prime target, I am extremely curious how they will solve routing paths) and proper bandwidth-ed ground stations (apparently SpaceX has some issues in some areas of US already). Basically yet another year to wait for the proper Starlink growth.

The two issues are related. You need ISL to shift the teleport traffic away from the congested teleports.

No in-space routing at the IP layer. Use frame forwarding at the frame layer using a specialized frame layer. Because ISL topology changes are known in advance table updates are not reactive. Instead, forwarding tables have scheduled updates what change with microsecond precision. Similarly, the user terminals switch between beams in a precisely-timed fashion, as do teleport-satellite links: all of this is handled by the specialized frame layer and its forwarding tables.  I never worked for SpaceX so I do not know that they are doing it this way, but I did do a preliminary system design as part of a business proposal for a different constellation in 2014.

[Robotbeat]

Starlink could easily get to a similar revenue level as Comcast. (And yes, SpaceX could bundle TV, etc, like other cable or satellite providers.)

Comcast is worth about $200B, has about $120 billion in revenue from 30 million subscribers. Yes, it can operate in dense cities better than Starlink, but… It operates in just one country.

I think Starlink alone could get to $200B, maybe more as the global economy grows. Maybe $500 billion to a trillion in a couple decades, along with the rest of SpaceX. Starlink v1.5 will double in count, v2 will increase that count by 10 and bandwidth by almost 10 per satellite. They have over 500,000 subscribers now and by the time v2 is filled out could handle 100x that, especially as permission coverage increases globally and they further upgrade Starlink.

So I don’t think SpaceX is overvalued. I think it’s about right ($125B-$150B?) given uncertainties and possible future competition (which the launch side of SpaceX could actually benefit from).

[ajmarco]

Starlink could easily get to a similar revenue level as Comcast. (And yes, SpaceX could bundle TV, etc, like other cable or satellite providers.)

Unless you are separating the telecom portion out from those numbers please be aware the Comcast owns NBC Universal. So as a whole company they are a cable provider, streaming service, production company, theme park operator, etc...

[SimonFD]

Surely the question is moot as SpaceX is not a publicly traded company and so it doesn't have a 'value' in the same way as Tesla does (because it IS publicly traded).

i.e. There is no 'value' for it to be over anything


edit for grammar and spelling

[Arcas]

Surely the question is moot as SpaceX is not a publicly traded company and so doesn't have a 'value' in the same way as Tesla does (because is IS publicly traded).

i.e. There is no 'value' for it to be over anything

Every time they sell stock, they have a "value". What's the difference between the "value" of a private company and that of a public company other than the number of shareholders?

[JayWee]

What's the difference between the "value" of a private company and that of a public company other than the number of shareholders?

Speculation.