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It is cool to know that there is an organization out there trying to find a planet habitable for humans. This organization’s name is SpaceX. But for the company to function, it will need funds. Going to space is not a cheap endeavor.
Now, the question is, ‘How Does SpaceX Make Money?’ It will be discussed in this article.
Entrepreneur Elon Musk founded SpaceX with the goal of revolutionizing the aerospace sector and making affordable space travel a reality. The company entered the competition with the two-stage, liquid-fueled Falcon 1 rocket. It was made to launch small satellites into orbit.
Furthermore, With two more launches scheduled as of March 23, 2022, SpaceX has successfully flown 11 Falcon 9 carrier rockets this year. Elon Musk’s American aerospace business claimed 31 liftoffs in 2021, 29 of which used reused rockets.
However, for the company to keep running, it needs money. Which begs the question, ‘how does SpaceX make money?’
Table of Contents
- What is SpaceX?
- Brief History of SpaceX
- How Does SpaceX Work?
- Business Model of SpaceX
- How Does SpaceX Make Money
- SpaceX Valuation
- FAQs on How Does SpaceX Make Money
What is SpaceX?
‘How does SpaceX make money’? This shouldn’t be your concern for now. First, know what SpaceX entails and what it is all about.
The American spacecraft manufacturer, space launch service, and satellite communications company Space Exploration Technologies Corp, is also known as SpaceX. It has its corporate headquarters in Hawthorne, California.
Furthermore, Elon Musk started SpaceX in 2002. With the intention of bringing down the price of space travel so that Mars colonization would be feasible. The Falcon 9 and Falcon Heavy launch vehicles, numerous rocket engines, the Cargo Dragon, crew spacecraft, and Starlink communication satellites. All these are produced by SpaceX.
Also, to offer internet service for a fee, SpaceX is creating the Starlink constellation of satellites. The Starlink constellation was the first and largest satellite constellation to be launched; as of May 2022. It had more than 2,400 small satellites in orbit.
Additionally, the business is also working on Starship. A fully reusable, privately funded super heavy-lift launch system for interplanetary and orbital spaceflight.
However, when Starship is operational, it will replace SpaceX’s current fleet of Falcon 9, Falcon zHeavy, and Dragon. The Starship will become the company’s main orbital vehicle.
Also, when Starship will make its debut in 2022. Pending launch authorization, it will be able to carry the most payload of any orbital rocket ever built.
Furthermore, one of SpaceX’s accomplishments was the first privately funded liquid-propellant rocket to orbit the Earth. Another was the first private company to successfully launch, orbit, and recover a spacecraft.
A third was the first private company to send a spacecraft to the International Space Station. A fourth was the first private company to reuse an orbital rocket. Over a hundred times have seen SpaceX launch and land the Falcon 9 series of rockets.
Brief History of SpaceX
In an effort to rekindle public interest in space exploration, Elon Musk developed the Mars Oasis project in 2001. This calls for the landing of a small experimental greenhouse and the cultivation of plants on Mars. Through Jim Cantrell’s connections in Russia, Musk initially tried to buy a Dnepr ICBM for the project.
Furthermore, Musk began hiring employees for his upcoming space company, SpaceX, in early 2002. Tom Mueller, a rocket engineer who subsequently became the CTO of propulsion at SpaceX. He was approached by Musk and extended an invitation to join his company.
However, SpaceX was established when Mueller agreed to work for Musk.
Additionally, the Falcon 1, SpaceX’s first orbital launch vehicle, was created using internal funds. The Falcon 1 was a two-stage small-lift launch vehicle that could be destroyed. Falcon 1’s development cost totaled between $90 million and $100 million.
Early in 2012, Musk owned roughly two-thirds of SpaceX stock. Also, at that time, the value of his 70 million shares on private markets was estimated to be US$875 million. This put SpaceX’s market value at US$1.3 billion.
Furthermore, in 2013, SpaceX launched its first commercial mission on behalf of a private customer. Out of the 20 contracts that were openly bid on globally in 2014, nine were awarded to SpaceX.
However, in order to compete with SpaceX at that time, Arianespace asked the governments of Europe for additional funding.
On August 19, 2020, SpaceX’s valuation rose to US$46 billion following a US$1.9 billion funding round. This became one of the largest single fundraising efforts by any privately held company.
Also, the company’s valuation increased to roughly US$74 billion in February 2021. This was after SpaceX raised an additional US$1.61 billion from 99 investors in an equity round. It was at a price of about $420 per share.
Furthermore, ‘A Shortfall of Gravitas’, is a new drone ship that SpaceX unveiled in July 2021. It made its first booster landing from CRS-23 on August 29, 2021.
Keep reading to get answers to the question, ‘how does SpaceX make money?’
How Does SpaceX Work?
Knowing how SpaceX works will give you insights to the question, ‘how does SpaceX make money’?
Focusing on offering space transportation to public and private entities is the main factor influencing the SpaceX business strategy.
Additionally, they specialize in satellite network construction and launch, as well as rocket design. Tom Mueller, a renowned rocket designer, helped the SpaceX crew develop its first rocket, the Falcon 1.
Furthermore, Elon Musk contributed $100 million of his own money to the first project’s funding. The Falcon 1 made its first successful flight in 2008. It was followed by the Falcon 9, the Falcon Heavy, the revolutionary Starship, and the Dragon. It has a maximum capacity of seven passengers for trips to and from Earth orbit.
However, according to SpaceX, the only spaceship currently in flight that is capable of returning considerable amounts of cargo to Earth is the Dragon.It is the first private commercial vehicle to transport US personnel to the International Space Station.
Additionally, the inventory that SpaceX builds is expensive. The Falcon Heavy spacecraft was built for about $90 million, while the Falcon 9 was built for $62 million.
SpaceX has previously asserted that they can someday reduce the price of commercial customer launches to $30 million. This is due to the reusability of several of its rockets.
Further, first stage boosters and the rocket’s fairing are also known as the nosecone. They are two of the most important components that SpaceX has been able to reuse. The boosters, which SpaceX frequently lands, account for 60% of the rocket’s overall cost, or roughly $37 million.
Also, the fairings, which were recovered by SpaceX and cost around $6 million, were also recovered.
Business Model of SpaceX
The business model might give insights to the question, How does SpaceX make money?’ Here is the business model of SpaceX;
A focused consumer base and a niche market model are features of SpaceX. The business advertises its products to both governmental and private companies that need to send goods into space.
Furthermore, commercial satellite launches, resupply missions for the space station, and government national security missions have all been among its undertakings. OrbComm, MDA Corporation, and the U.S. Air Force are a few examples of specific clients.
The three main value propositions that SpaceX delivers are brand/status, performance, and accessibility.
However, by making it possible to fly to space on very cheap means, the firm has increased accessibility. This has given numerous businesses looking to conduct exploration transportation opportunities.
See also: How Does Medmax Finance Work?
How Does SpaceX Make Money
Now, we’ve gotten to the section. ‘How does SpaceX make money?’ The answers lie below.There are numerous ways for SpaceX to make money. However, they can be categorized into four main business lines:
#1. Making spacecraft and rockets
The industrial facility produces satellites, ships, and rockets both for commercial and personal usage. NASA is a significant client for SpaceX. With whom it has billion-dollar contracts for the design and construction of spacecraft. It dates back to 2006 and continue well into the future.
#2. Launching Cargo and People into Space
The transportation industry manages the delivery and retrieval of astronauts themselves. As well as cargo and supply services for NASA missions to the International Space Station. For the Lunar Gateway Space Station, a contract to provide a comparable service was completed in 2020.
Additionally, the business provides transportation services for industrial uses like satellite installations. Additionally, SpaceX provides space tourism services for people. This allows them to have a private space experience for up to a million dollars.
#3. Satellites in orbit for communications
SpaceX has developed and launched its own satellite network called StarLink. This is intended to generate revenue as a global internet services provider. SpaceX can also deploy satellites for government or commercial organizations.
#4. Missions in National Defense
Additionally, the Department of Defense and the United States Air Force Space and Missile Systems Center have contracts with SpaceX. This is for defense-related projects.
Since SpaceX is a privately held business. Its valuation is based on its most recent stock issuance to accredited investors.
Also, It was disclosed in October 2021 that SpaceX had made stock available to both new and current shareholders. This was at a price of $420 per share. This gave the business a valuation of more than $100 billion. This made it the most valuable private corporation in the world.
Furthermore, the new stock sale raised the valuation over the existing valuation set in February 2021. It raised it by more than 30% while not providing the company with fresh investment cash.
However, while unquestionably a noteworthy accomplishment, it’s challenging to get a clear understanding of the valuation’s measures in relation to the firm’s financials. This is because the company is not publicly traded. And does not, as a result, disclose all of its financial information to the SEC or the media.
However, outsiders can only put together a limited picture of the company’s costs, revenues, and future expectations.
Due to its more narrowly focused company, its technology, and its manufacturing capacity, SpaceX enjoys advantages over the few competitors it has.
However, a large portion of its future possibilities will come from sizable government and commercial contracts. This makes the revenue picture extremely dependent on the conclusion and extension of such contracts.
We have discussed and given answers to the question, ‘how does SpaceX make money?’
However, SpaceX is a distinctive and innovative enterprise that is breaking entirely new ground in both business and science.
It has proven to be an invaluable resource for NASA. Also it has to be resourceful to the Defense Department and private companies. It has also proven to be resourceful to people hoping for a once-in-a-lifetime chance to travel to space.
Finally, individual investors are currently unable to invest in SpaceX because it is a private firm. But they may possibly invest a million dollars in the experience of a lifetime.
FAQs on How Does SpaceX Make Money
NASA extends SpaceX’s Commercial Crew contract by three missions for $900 million. NASA announced that it has officially awarded SpaceX the Crew-7, Crew-8 and Crew-9 missions to the International Space Station. Bringing SpaceX’s total Commercial Crew Transportation Capability (CCtCap) contract to $3.49 billion.
Tesla and SpaceX have received more than $7 billion in government contracts alone. And billions more in tax breaks, loans and other subsidies, an analysis by Grid found.
In recent years, Tesla has sold at least $6 billion worth of government-backed electric vehicle credits, Grid found.
The two successful companies in NASA’s latest round of commercial contracts — SpaceX (Dragon) and Boeing (CST-100) — are each receiving government money. This is to develop their private space taxis. The companies are responsible for meeting certain milestones to receive funds.
Elon Musk said Tesla, SpaceX, Neuralink, and The Boring Company “are philanthropy.” “If you say philanthropy is love of humanity, they are philanthropy,” said Musk of the companies he leads. It’s an unconventional take, since all four are for-profit enterprises.