How much money does SpaceX need annually to survive?

[Tywin]

Could Tesla's crisis and SpaceX's high valuation be a problem for further funding of SpaceX in future VC rounds?

[Robotbeat]

No.

[deadman1204]

Stock price has no direct bearing on a public company's operations (though the reverse is different).
Tesla stock could drop to $1 - that wouldn't effect the day to day. The company would still be making just as much money as before and doing its business.

SpaceX stock is different, because its not an open market (or public company). Its whatever the few investors feel that its worth.

[M.E.T.]

Stock price has no direct bearing on a public company's operations (though the reverse is different).
Tesla stock could drop to $1 - that wouldn't effect the day to day. The company would still be making just as much money as before and doing its business.

SpaceX stock is different, because its not an open market (or public company). Its whatever the few investors feel that its worth.

Incorrect.

There is a huge waitlist for people wanting SpaceX stock. This is a market, just not a public one. Supply and demand governs it just like any other market. This market is just far more selective in the participants it lets in.

[RedLineTrain]

Could Tesla's crisis and SpaceX's high valuation be a problem for further funding of SpaceX in future VC rounds?

The fact that SpaceX has never had a down round, through thick and thin, big raises and small tender offers, should tell you all you need to know.

Note that this up round is during a severe VC winter.  Everybody is adjusting valuations downward except SpaceX.

[Tywin]

Could Tesla's crisis and SpaceX's high valuation be a problem for further funding of SpaceX in future VC rounds?

The fact that SpaceX has never had a down round, through thick and thin, big raises and small tender offers, should tell you all you need to know.

Note that this up round is during a severe VC winter.  Everybody is adjusting valuations downward except SpaceX.

For how long?

Maybe is a big bubble...

[Tywin]

Stock price has no direct bearing on a public company's operations (though the reverse is different).
Tesla stock could drop to $1 - that wouldn't effect the day to day. The company would still be making just as much money as before and doing its business.

SpaceX stock is different, because its not an open market (or public company). Its whatever the few investors feel that its worth.

And by the way, if Musk has to put money into SpaceX and has to sell Tesla shares, it's not the same to sell at $500 as it is to sell at $150 or $50...

[Tywin]

https://open.spotify.com/episode/5Dd9PQX9KJMltP9qMCLW5o?si=0bET2ObxRSqpnvXazrmvBw&nd=1

And if we listen to AE Industrials, the biggest space fund, SpaceX is already too expensive for them...

[meekGee]

Could Tesla's crisis and SpaceX's high valuation be a problem for further funding of SpaceX in future VC rounds?

The fact that SpaceX has never had a down round, through thick and thin, big raises and small tender offers, should tell you all you need to know.

Note that this up round is during a severe VC winter.  Everybody is adjusting valuations downward except SpaceX.

For how long?

Maybe is a big bubble...

JFC, are you asking or are you here to opine again?

SpaceX doesn't need Musk or the stock market to continue doing what it is currently doing, which is to dominate the launch business.

It probably doesn't need either in order to finish Starship and continue through Starlink 2.0 and continue to dominate that too.

What SpaceX does need Musk for is the Mars program. If that never takes off, it's everyone's loss, including yours.

[Robotbeat]

Could Tesla's crisis and SpaceX's high valuation be a problem for further funding of SpaceX in future VC rounds?

The fact that SpaceX has never had a down round, through thick and thin, big raises and small tender offers, should tell you all you need to know.

Note that this up round is during a severe VC winter.  Everybody is adjusting valuations downward except SpaceX.

For how long?

Maybe is a big bubble...

JFC, are you asking or are you here to opine again?

SpaceX doesn't need Musk or the stock market to continue doing what it is currently doing, which is to dominate the launch business.

It probably doesn't need either in order to finish Starship and continue through Starlink 2.0 and continue to dominate that too.

What SpaceX does need Musk for is the Mars program. If that never takes off, it's everyone's loss, including yours.

Unlike every one of these other companies, SpaceX is already at an astounding operational launch rate (even without Starship, about 60 flights per year... and this is with a vehicle that's like 20-100 times larger than the ones by Rocketlab, VirginOrbit, and Astra), an operational orbital commercial cargo and crew program serving both NASA with multiple flights per year and multiple private customers, with over half a million Starlink subscribers (might be almost a million by end of year) or about enough to pay for the ongoing program maintenance...
...plus Starship HLS, Starlink v2.0 (including basic cell service), Starship crewed lunar flights, eventual point to point (starting with uncrewed military logistics demos), etc.

That's just the things they've started to get initial revenue from (of course the missions for Starship need Starship to actually, you know, launch).

SpaceX is also privately held, so if they were public their value may well actually be higher (if that weren't true, then private investors would instead put money in the public market...).

I mean even their sworn competitors like OneWeb are now launching on them.

E has been doing a bunch of self-damaging stuff (egged on by equally-Twitter-poisoned folks who want to watch it all burn), but SpaceX is at the point where it doesn't particularly need him at the moment. Meekgee is right, though. Without Musk, SpaceX isn't going to be doing a big Mars program (unless NASA pays them). But they're already a more valuable company than *all of Boeing*, and this is while still privately held and during a VC winter.

[M.E.T.]

To get back to the titular question of the thread, SpaceX’s annual cash needs are indeed substantial - but that’s because they are doing very ambitious, very cash intensive things.

But, the long term cash generation potential of Starlink is not some pie in the sky dream, it is very real:

Starlink currently generates about $1B annually from ~3000 Gen 1 satellites.

Upwards of 7000 Gen 2 satellites are already approved. Each of those satellites have at least 7 times the capacity of Gen 1 satellites - so that means a 15X overall network capacity increase is already approved and just awaiting rollout. That means 15 times the revenue potential of the current operational network - fully approved and awaiting launch. So that’s $15B annual revenue potential.

A further doubling or tripling of the network is already applied for, and awaiting approval.

For that potential pay off, some temporary cash investment is more than justified - hence investors assigning SpaceX a $140B valuation.

Quite simple, really.
 

[Reynold]

To get back to the titular question of the thread, SpaceX’s annual cash needs are indeed substantial - but that’s because they are doing very ambitious, very cash intensive things.

But, the long term cash generation potential of Starlink is not some pie in the sky dream, it is very real:

Starlink currently generates about $1B annually from ~3000 Gen 1 satellites.

Upwards of 7000 Gen 2 satellites are already approved. Each of those satellites have at least 7 times the capacity of Gen 1 satellites - so that means a 15X overall network capacity increase is already approved and just awaiting rollout. That means 15 times the revenue potential of the current operational network - fully approved and awaiting launch. So that’s $15B annual revenue potential.

A further doubling or tripling of the network is already applied for, and awaiting approval.

For that potential pay off, some temporary cash investment is more than justified - hence investors assigning SpaceX a $140B valuation.

Quite simple, really.
 

It could be argued that a 7x expansion in Gen 2 network capacity won't be filled, but I suspect this 7x capacity increase won't cost 7x to build and launch, more like 2x or 3x even if the upper stage Starship turns out not to be reusable (the SH booster is likely to be, worst case put legs on it and land it like the F9 booster).  They seem very likely to at least be able to find demand for 2x or 3x their current network capacity, so worst case is Gen 2 would be break even for a while.

And from the overbuilding of optical fiber capacity back in 2000 which has all been soaked up years ago, internet service demand always seems to grow to meet any supply available over a reasonable time frame. 

[spacenut]

Starlink allows or will allow SpaceX to be as big or bigger than NASA.  NASA gets about $25 billion a year to operate.  SpaceX is approaching that.  With Starlink they will blow past NASA to get Starship going, and be able to fund the Mars program. 

Tesla is not in a crisis.  They are still selling cars like candy bars.  They are 10 years ahead of the big automakers in electric car production, and they have a charging infrastructure.  Still waiting on the pickup truck.

[M.E.T.]

A per satellite revenue/cost model might give people a clearer picture:

3000 Gen 1 satellites are generating $1B annual revenue.  That's $300k per satellite. Their lifespan is 5 years, giving us $1.5M lifetime revenue per Gen 1 satellite. The satellites cost around $250k to manufacture and $500k to launch. So call it $750k to build and get to orbit.

With 1 million customers, that equates to about 300 customers per operational satellite. If SpaceX subsidized each customer's user terminal by $1000, that's $300k terminal costs that can be allocated per satellite. So that brings us to around $1m build and launch cost per Gen 1 satellite. So SpaceX has to keep the total operational cost over 5 years below ~$500k over 5 years to break even.

I think this is challenging, and probably not quite achievable, which is why Elon said the Gen 1 constellation is not financially viable and that Gen 2 is needed for Starlink to be a success.

So now let's look at the Gen 2 per satellite revenue/cost model:

With 7+ times the capacity (let's use 7 times to be conservative), the equation changes completely. Customer base goes from ~300 customers per launched satellite, to ~2000 per launched satellite. That's ~$2M annual revenue per satellite, and ~$10M over the 5 year lifespan.

Even if manufacturing cost now goes to $1M per satellite, and launch does the same (which will not be true if Starship is even remotely as effective as planned, but let's be conservative for now), that gives us a build and launch cost of $2M per satellite. Supporting 2000 users, and assuming that SpaceX continues to subsidize each user terminal by about $1000 (which again, is not the plan, as they intend to improve terminal manufacturing efficiency to the point where no subsidy is required), that's another $2M terminal subsidy cost that can be allocated per operational satellite.

So this brings us to a total of ~$4M build, launch and terminal subsidy cost per launched satellite over its 5 year lifespan. Compared to $10M revenue. So now SpaceX has ~$6M excess revenue per launched satellite to cover all operational costs for a 5 year period.

By my estimations (which might bore you so I left it out), that leads me to ~$3B annual gross profit. And that's before the larger, yet to be approved constellation rolls out. And with lots of efficiency improvements in manufacturing and Starship launch costs not yet factored in.

EDIT

And note, this focuses only on normal subscriber revenue, ignoring all revenue from sources like airline inflight wifi, military contracts, shipping revenue or any other non-private revenue sources. So my revenue estimations are likely significantly understated.

[su27k]

Nobody actually answered the title question "How much money does SpaceX need annually to survive?", here's an attempt: Most of the cost would be labor, let's assume fully burdened labor cost of $250k/year, then 10k employees would cost them $2.5B per year.

Note that Cameron County commission stated that SpaceX invested $400M in Boca Chica facility in 2021 and created 1,600 jobs, so $250k/year seems to be a good estimate.

BTW, if you look up SpaceX's government contracts, the total amount obligated to them in 2022 is around $3B.

[Robotbeat]

$250k/year is too high, especially as SpaceX has locations other than California.

[XRZ.YZ]

There is also diminishing marginal returns.
You can not scale revenue linearly with capacity

[jasonjulius1122]

Could Tesla's crisis and SpaceX's high valuation be a problem for further funding of SpaceX in future VC rounds?

No, Tesla's crisis should not directly impact SpaceX's funding prospects in future VC rounds, as they are separate entities with distinct financial situations and evaluations.

[spacenut]

Tesla is a public company selling selling and trading stock.  Sometimes the stock market is fickle.  Also, Tesla is the most shorted stock out there.  There are a lot of people who do not like electric cars, or they don't like Musk, so they short the stock.  They have lost billions over the years doing so.  Tesla keeps shining through.  Tesla model 3 or model Y has passed Toyota Corolla as the most car sold this past year.  This is huge.  Also, Tesla is branching out into robotics as well as solar panels. 

SpaceX is still at least 51% owned by Musk.  Starlink has over 1-1/2 million customers bringing in $1.5 billion in profit a year now and only growing.  This alone can sustain SpaceX.  However, SpaceX is still making a couple of billion or more a year launching for others.  This is helping.  F9/FH are adult products now with no further changes or development costs, thus making more profit per launch, especially with used rockets.  All SpaceX's profits are being used to complete development of Starship/Superheavy and launch facilities.  Once this design is sealed, bugs worked out and operational, anything is possible with SpaceX.  Space stations, lunar landers, fuel depots, as well as Mars ambitions.  Space opens up.  Others will follow or get out of the business.  Hopefully Blue Origin will follow with New Glenn reusable.  Maybe others as time goes on.  All playing catch up to SpaceX. 

Tesla doesn't affect SpaceX. 

[freddo411]

No.

Channeling Jim.   Appropriately though.

[RedLineTrain]

https://open.spotify.com/episode/5Dd9PQX9KJMltP9qMCLW5o?si=0bET2ObxRSqpnvXazrmvBw&nd=1

And if we listen to AE Industrials, the biggest space fund, SpaceX is already too expensive for them...

Listen carefully, because what Kirk Konert said at 24:35 is precise and describes a reality that is exactly opposite of what you imply it is.  SpaceX is too expensive for them because of deal size, not because it is a bad investment at this valuation.

Like other earlier-stage venture capital funds, they don't want to be one investor among many, each taking a small piece of a company.  Rather, they want to take a big piece of a small company.  Unless you are an enormous fund, SpaceX is valued so highly that it is impossible to take a big piece of it.

Kirk:  We're too late! [laughs long and hard]  Alright?
For us, from our standpoint, we target three times our money in terms of return.  Where SpaceX is today, it's a great investment, but it's hard for us to take a very small position in a really great company.  It isn't our investment thesis.

[meekGee]

How for the love of all things space did this idiotic sub-thread get resurrected?

It's like one of those WWII bombs they keep finding in Cologne or Berlin...  Amusing, but not funny when you stop and think about it.