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The annals of science fiction have been filled with stories about humanity expanding their horizon and exploring the depths of space. Some companies aim to make these stories a reality. One of the frontrunners in this field is SpaceX, headed by the entrepreneur Elon Musk. The company which has a valuation of about $74 billion, raised 1.16 billion in April 2021 alone, proving once again that investors see it as one of the most innovative companies of our time, after all, who doesn’t want to go to space? The question then arises, who invests in these space exploration companies? Turns out, their biggest investors are private equity firms, for example, Fidelity investment, which has invested heavily in SpaceX. Tech companies may sometimes want a piece of the cake as well and also rank among the multitude of investors who have SpaceX in their portfolio.
The next question that deserves our attention is how do companies like SpaceX earn, and does the amount they earn warrant the eye-watering amount of money they get from investors? The primary consumers of the rockets produced by SpaceX are governmental agencies who wish to send their satellites up into space (primarily to the International Space Station). An example is the $75 million contract given by NASA to SpaceX to help them design a new crew transportation system. Moreover, to commercialize moon travel someday, NASA has given another $2.9 billion contract to SpaceX to build a commercial moon lander. Another very important source of income for space exploration companies is commercial contracts. By March 2018, SpaceX had a hundred commercial launches to their name and these launches had earned the company about $12 billion in contract revenue. Additionally, SpaceX has launched the world’s largest satellite constellation, called Starlink, with the promise of making cheap, high-speed internet available for the general populace. Starlink is another potential cash cow for the company, with them already servicing the internet needs of behemoths such as Microsoft Azure and Google Cloud Platform.
The good times don’t always roll in like this though, making rockets is not a very pleasant business because sometimes they explode leaving a very fiery (and expensive) mess behind. On June 25, 2018, SpaceX launched a self-landing Falcon 9 rocket that exploded, leaving behind its debris in the Atlantic Ocean. This cost an exorbitant $112 million and not to mention millions lost by Elon Musk. Another tremendous loss was suffered on September 1, 2016, when a Falcon 9 exploded during a routine Launchpad test. SpaceX had to then put off the remaining launches to perform damage control on the rocket and this cost them $740 million as a result. Being a space company is expensive and the leaders of such ventures often have to stomach enormous losses, as did SpaceX in its early days, where the plethora of crashes had almost driven it to bankruptcy but a single NASA contract worth $2.9 billion kept it afloat. Talk about a close call!
In conclusion, the business of space companies is pretty simple, they make satellites and launch them, and just doing this one task nets them most of their money because governmental agencies and commercial players have no means of their own to do this job. Their main source of loss is the explosion of these rockets because they don’t just have to bear the loss of the rocket, which alone costs $62 million. The primary use of the money SpaceX has, is to invest in R and D and make better rockets that preferably don’t fail and hence protect the company from sizable future losses. To navigate the new frontiers of human exploration is a glamorous job but the amount it can cost is enough to drive away from it for most people. With SpaceX currently at the helm for this mission, we are confident that we will go down a path (with its fair share of fiery explosions) of wonder.
