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SpaceX's Valuation Climbs to $25B with New Funding Round
- jMyles 9y agoTell me this isn't because the vision is defense contracting. Are people banking on Space Force here?
- pacala 9y agoCrickets
- examancer 9y agoPretty sure the are just banking on SpaceX dominating the global space launch services market for the next few years. Signs increasingly point to this being a safe bet. The valuation is higher than the annual global launch market, but below what it's projected to reach in the next few years. If SpaceX can maintain their current share of the global market for a few years the valuation may be conservative.
- steve_musk 9y agoI think the main thing is their Starlink satellite internet constellation, which I recently saw was estimated to bring in $30 billion/year once it’s fully operational. They also have basically taken over the satellite launch market, and I think their recent progress on the BFR isn’t hurting.
- Robotbeat 9y agoCould be more like hundreds of billions in the very long-term, as they plan to just keep growing it in size, capability, and per-satellite mass. Enabled by BFR. That’d put SpaceX in league with other telecommunications giants. That’s, of course, not the only possible outcome, but that’s why the valuation is so high.
- planteen 9y agoMaybe... but I see the system being bandwidth constrained. If each spacecraft is 20 Gbps and how many will be visible over the USA at a time? 50 or so? So 1 Tbps for the entire country? That's less than the capacity of a single neighborhood in Denver on gigabit fiber. Not to mention the capacity of 4G networks across the country. Some of this smells like the first round of Iridium to me.
- ethbro 9y agoThe key point is that, if the satellites are cheap enough, they're a safety valve for surplus rocket supply. Or padding if schedules don't make for full payloads. Essentially seeding their own demand in a market that didn't previously exist (cheaper launch on reused rockets). As a side benefit, they get the ability to put a constellation in orbit (and continue adding to it) at a fraction of the cost of their telecom competitors.
- Robotbeat 9y agoYeah, if Starlink merely breaks even (and continues to grow), they will have pushed the commercial launch market potentially one or two orders of magnitude larger (in terms of mass) than it is today. It'll help pay for BFR, their Mars rocket. Therefore, if Starlink suffers the same fate as Iridium (but without damaging the rest of SpaceX), that would actually be a big net win. Iridium emerged from bankruptcy, turned a profit and launched replacement satellites and is now in the process of a huge constellation refresh, using SpaceX's reusable rockets. If that happens with Starlink, that would be a complete success for creating launch demand.
- Robotbeat 9y agoThat's just the initial system, and they'll be selling globally, not just in the US. It's still about 10 times the aggregate bandwidth of their nearest competitor (OneWeb) plus the later constellation is going to be much larger and more capable. Additionally, there should be about 150-200 satellites above the US in the initial deployment. They also plan to upgrade the satellites themselves (according to SpaceX's Mueller) so they're much larger. That should, in principle, allow them to exceed the per-satellite throughput of GSO birds like Viasat's which are over 1Tbps per bird. They aren't competing with fiber in Denver. They're competing with high-latency and expensive satellite internet in rural areas. It's possible they may eventually dip into the cities a bit if they sell out their capacity and then build out their VLEO constellation (total of 12,000 or so satellites, but in much lower orbits enabling yet lower latency and higher bandwidth). But Iridium's problem wasn't a lack of capacity, it was slow customer acquisition combined with very high interest rates and launch prices. If SpaceX fills up their network with customers to its capacity, they will be just fine.
- scottie_m 9y agoIt’s probably less about fighting in space, and more about rapid transport, and cheaper (and therefore more) sattelites for a number of purposes. It’s hard to imagine that intelligence and military agencies aren’t thrilled with the idea of being able to lift more mass for less money. That’s true for everyone other than defense and espionage though; cheaper launches raise all boats. Fortunately with our level of technological advancement, actually fighting in space is just dumb. Fighting from space could be useful, but would break treaty obligations with other spacefaring, nuclear powers.
- ben_w 9y agoI thought the only treaties affecting weapons in space were specific to nuclear explosives?
- ChuckMcM 9y agoNo. I think this is people thinking that SpaceX is going to capture more market share from ULA and Ariannespace.
- azernik 9y agotl;dr No. Commercial launch is a big market, and SpaceX is eating it alive. SpaceX is finally following through on its promises and has put a lot of the technical risk of its strategy in the past. All that risk was priced into old valuations, so with a now-reliable and frequently-launched vehicle in Falcon 9, and successful follow-through on Falcon Heavy (less of a big deal economically than the media brouhaha makes it out to be), that risk has gone down and so the valuation is going up. The launch business is a big [1] (but not enormous) one, and SpaceX has gone from around ~15% to ~45% market share in two years [2]. In my understanding, US DoD launches are a small, but particularly-high-margin subset of that market. [1] $8.8B annually, according to https://www.businesswire.com/news/home/20180116005923/en/Global-Space-Launch-Services-Market-2017-2025-27.18 https://www.businesswire.com/news/home/20180116005923/en/Glo... [2] 2015-2017, according to SpaceX testimony to a Congressional committee: https://www.popularmechanics.com/space/rockets/a27290/one-chart-spacex-dominate-rocket-launches/ https://www.popularmechanics.com/space/rockets/a27290/one-ch...
- sunstone 9y agoAnd then there's the SpaceX space based global internet service coming soon to an orbit near you. They are predicting over 20 billion in revenue by 2025 if I recall correctly. https://www.cringely.com/2018/04/06/the-space-race-is-over-and-spacex-won/ https://www.cringely.com/2018/04/06/the-space-race-is-over-a...
- chrispeel 9y agoI'm in the wireless broadband industry, and no one I know thinks this space-based internet is a good idea. The rest of the world is going to small cells and they are going for a cell the size of a large city? I'm a big fan of SpaceX, I'd prefer they stick to flying tourists and satellites. Railroads and airplanes got their start giving joyrides, why not do the same with space.
- vincentleeuwen 9y agoI don't think SpaceX ever flew tourists. That would be Virgin Galactic.
- asdsa5325 9y agoYes and no. SpaceX's main revenue generator at the moment is sending satellites (government and non-government) into space. They will likely always get revenue with this, but it's not their end goal for profitability.
- bmc7505 9y agoIt’s called Space Fleet dammit!
- vasili111 9y agoIs there anything bad to be defense contractor of your country?
- jlangenauer 9y agoA purely "defense" contractor, protecting the country itself? No, nothing wrong with that. But what is euphemistically called "defense" is far more often about offense - attacking those countries and people who displease or are inconvenient to you, making sure the world is structure to suit your* interests, usually at the expense of the interests, and often the lives of people elsewhere in the world. * - In reality, the interests of the elite of your country.
- vasili111 9y agoWhat about protecting yourself and allies?
- imtringued 9y agoBy actively seeking conflict you are increasing the risk of retaliation. That's the opposite of protecting yourself.
- jononor 9y agoBut good for business!
- pierre 9y agoAs a defense contractor, you build stuff that end up killing people. Especially if your country is aggressive toward others / have imperialist view.
- vasili111 9y agoWhat about if that country especially helps other countries to fight for there freedom and protects them from imperialist view countries and with that saves lives in that countries?
- richardknop 9y agoThis might also be another way how Elon can keep financing Tesla. SpaceX has in the past bought bonds of SolarCity, with this new cash perhaps SpaceX can buy some Tesla bonds to save it from running out of cash this year.
- jcfrei 9y agoPlease no. SpaceX is too important to be pulled into the financial mess of Tesla and Solarcity.
- newnewpdro 9y agoSpaceX is the only reason I see Tesla not going bankrupt. Not necessarily by directly funding Tesla, but Musk can certainly prop up Tesla by leveraging SpaceX's success in various ways. Anyone who saw the SpaceX falcon heavy launch should have got the message that SpaceX and Tesla are BFFs.
- lifeformed 9y agoIIRC Musk said that Tesla was supposed to be the cash crop that eventually funds SpaceX.
- otalp 9y agoIt's far more likely to be the opposite, at least for the next 4-5 years.
- agildehaus 9y agoCan you point to the source? I've been a SpaceX fan for a long time and never heard him say that. Starlink, SpaceX's satellite constellation, is the cash crop.
- marvin 9y agoDon’t remember the source, but I’ve heard Musk say this between the lines in an interview. I.e. something along the lines of «you need a lot of money to get humanity to Mars» on questions of Tesla’s long-term profitability.
- pasbesoin 9y agoMy mind warps a little when I look at today's valuations. A company that can go to space, at one tenth or less that of companies that live off of social communication and advertising. I'm not saying its wrong. Just, personally, cause for pause.
- qaq 9y agoWell Space X is private if it was public I bet it would have higher valuation. (I would gladly invest some money not for ROI but just to help fund what they are trying to accomplish)
- mkempe 9y agoYep, I'd switch a large share of my family portfolio to SpaceX if --and as soon as-- it were possible.
- mkempe 9y agoOh, yeah, downvoted without an argument. I've been investing in advanced-technology stocks for the last two decades, with happiness. Because that's where the future and growth are located.
- justrobert 9y agoI don't know why others downvoted you, but buying a post-IPO stock is not directly funding the company the majority of the time.
- mkempe 9y agoIf you examine advanced tech companies over the last several decades, it is clear that reasonably investing in them as a portfolio is a highly profitable adventure.
- emiliobumachar 9y ago
- nontechdude1 9y agogoogle is supposedly worth 800 billion. hasnt paid a dividend and probably never will. valuations are as much measurements of cult-ness as actual sustainable monetary gain. I'm suspicious of founder-led, constantly "reinvesting" companies or companies that stay private for too many years. Seems Bernie Madoff-y.
- Pyxl101 9y agoInvestors do not demand that companies pay a dividend, and prefer companies do not issue a dividend, when the company is growing rapidly. Investors would prefer to keep that cash in the business, to use as fuel for further growth. Recently, Alphabet and Google revenue growth has been around or above 20% per year. Take a look at their Q4 2017 earnings statement [1]. Here is a table based on figures in Item 6: 2013 $55,519,000 2014 $66,001,000 2015 $74,989,000 (+14% YoY) 2016 $90,272,000 (+20% YoY) 2017 $110,855,000 (+23% YoY) Compare to the net operating revenue of a company like Coca-Cola [2], which pays about $1.50 dividend per share per year on a price of about $0-47 per share: 2013 $46,854,000 2014 $45,998,000 2015 $44,294,000 2016 $41,863,000 Most investors in companies like Google expect to get more return by keeping cash within the business to use for growth, resulting in share appreciation, than they would get by receiving a dividend. If growth slows or stops then investor sentiment will change. There are other figures to consider, but these figures represent significant growth for a company of Google's size. Madoff's business was a scam and pyramid scheme that depended on a steady stream of new investors to pay off his old investors. Google and Coca-cola operate real businesses that collect revenue from paying customers; Google's is growing rapidly while Coke is holding steady or declining. There's no similarity to Madoff. [1] https://abc.xyz/investor/ https://abc.xyz/investor/ [2] https://s22.q4cdn.com/984101753/files/doc_financials/annual_2017/2017-annual-report-on-form-10k.pdf https://s22.q4cdn.com/984101753/files/doc_financials/annual_...
- nontechdude1 9y agofair enough. that is quite impressive growth. i've been listening to too many peter thiel talks.
- brisance 9y ago
- goatherders 9y agoIf you guys think social media and advertising is big business, wait until commercial space flight clicks.
- z3t4 9y agoIt's kinda sad that social media and advertising is the most lucrative businesses and so many bright minds work on that instead of for example ...
- fashionrob 9y agoJust needs a little time. It wasn't that long ago when only a few people had Twitter and FB accounts. IG even took a while to gain main stream traction.
- icc97 9y agoPlus unfortunately Musk is fairly well known for underpaying his staff. So you have to choose to take a paycut to switch from Google / Facebook. To be fair all of Apple/Amazon/Microsoft do at least sell actual products. Perhaps this is why Google / Facebook open source so much of what they do, so that talented engineers don't just have to say 'I get paid to make people click'.
- Denzel 9y agoUnderpaying what baseline? A recently hired software engineer at Tesla, while not giving specific figures, said that the base comp was competitive and the options were $100k+ over the standard 4-year vesting schedule. I've heard similarly from a handful of others; I'd expect the comp to be inline at SpaceX. Not to mention the growth potential for your stock options between SpaceX and Tesla may be higher than comparable companies.
- icc97 9y ago> Underpaying what baseline? Facebook / Google
- foota 9y agoHonestly, I think this might be one of the only companies I know of recently where I've gone "huh, that seems like a low valuation". Is this a hype factor or do knowledgeable others feel similarly?
- InTheArena 9y agoThe addressable market for space flight isn't as large as it will be yet. However, unlike software where coporations get a bye on this problem because the capital expense for consumers or others to adopt a given technology is low, the cost to companies to adopt technology like SpaceXs is really really high. So far, we are not seeing a ton of new types of traffic that just would not be feasible where it not due to SpaceX's lower launch cost. I think that will come, but it will come with the LEO based communication satellite fleet, and that is still a ways out.
- bluGill 9y agoTo be fair, it takes time and money to build the new traffic SpaceX has not been low cost for long enough to enable the new markets. I would suggest if all the new markets had the correct foresight and built their satellites for launch starting now SpaceX would be forced to refuse a lot of customers (probably by raising prices until they are not low cost) since they can't make/reuse rockets fast enough yet. Note that I specified correct foresight above. I'm confident that some things will be launch on the now cheaper rockets over the next 20 years that turn our to be commercial failures. I don't know which they are though, just that they are. If you have an idea that might work with a cheaper launch you should start building it, but you should start small to prove it can work.
- chrischen 9y agoI think given the popular culture status of sci fi and space fantasies, the exploitation of space travel is probably overhyped. It may seem to be on the cusp of our technological grasp due to the Star Treks and Star Wars, but it could be much farther than one may think. It’s going to tend more towards deploying satellites rather than exploring Mars.
- 9y ago
- varjag 9y agoA long shot, but is there any way for small fish to invest in a private company like that without knowing the right people?
- Arnt 9y agoNo. There are rules against that, intended to protect small fish against being ripped off by strangers. Small fish are assumed able to judge their family and friends, and big fish to be able to take care of themselves.
- varjag 9y agoThanks. Figures that's the reason for public companies and stock exchanges in the first place. However where lies the boundary? I assume all institutional middlemen are prohibited? You mention family and friends. While family is a legal category, friends is extremely vague. Would a sale between unrelated persons be regulated? For example between a stranger and a confirmed ex-employee with stock? Does one have to be an "accredited individual" for any outside stock transaction?
- Arnt 9y agoYes, exhanges is where you can buy companies that meet certain criteria, such as publishing earnings forecasts and many other things to the public and not to anyone ahead of time. Devices to protect small fish against being ripped off by company insiders. A sale isn't forbidden, but soliciting is. SpaceX cannot solicit the general public. If they can explain that they reached you because you're Elon's former secretary's cousin and you met Elon at a birthday party, they may choose to include you in a financing round. Otherwise, they'll just say no, because you're not worth the risk/cost of having to answer pointed questions from the regulator. (The regulator might not punish them, but just having to answer questions quickly eats up expensive lawyer hours. And then there's the whole question of who you are. If you're a shareholder you're entitled to answers, so pedants owning a single share can be a real bother.)
- dreit1 9y agoWelcome to why the cryptocurrency market exists. Can't wait till the accredited investor rule dies
- tqi 9y agoLet's be real - humanity is going to die out before we regularly visit other planets.
- erikpukinskis 9y agoWhat do you mean “die out”... like total extinction?
- metavrsl 9y agoThere's a chance it will die out, nuclear war or a meteor is always a possibility. Don't think it's anywhere close to being certain. There's a good chance we'll survive and regularly visit other planets.
- icc97 9y ago> Let's be real I think what you mean is "let's speculate on what's going to happen over the next 100 years" From Musk's various interviews it's a race between getting ~1M people living on Mars vs WWIII There is the common knowledge amongst major powers that the next World War will probably be an extinction level event, so where as it's probably inevitable there's a reasonable chance that it won't happen for 100 years. Musk estimates that it would take ~50 years (2070) to get a self-sustaining Mars base. Where as lots of his Tesla predictions have been off, his Space X predictions have been pretty good (e.g. re-usable rockets, expected launches per year).
- ben_w 9y agoI don’t trust to common knowledge. Consider how many people thought “nobody could possibly vote for Trump”? Or pretty much any opinion on Brexit, for or against. Then there’s the question of dead man switches starting, instead of responding to, a nuclear war. Only the people in charge of them even know for sure they exist, so how can we even estimate the chances they’ll be triggered by something short of an attack on their host nations?
- icc97 9y agoFair enough. The world has managed to not blow itself up for 60 years, we can speculate on whether that will hold long enough to build a self-sustaining base on Mars.
- acd10j 9y agoDoes anybody else worry about having Wall-E kind of situation, Commercial space launch being cheap, We might end up having lots of space junk. At least with the previous price point, this was less probable.
- gnclmorais 9y agoThat will probably create another industry sector, so I’m not worried.
- stedaniels 9y agoThere are already companies our there that track all this junk (a percentage of it at the moment) and even companies proposing ways to clean it up.
- Denzel 9y agoSpace is vast... far bigger than you're imagining. Probably the best analogy, that I've heard, to put your mind at ease: think about how many cars are on the road today. There are about 1 billion cars. Is the surface of Earth crowded? Well, not only is the surface area of a single sphere in low-earth orbit (LEO) bigger than the surface area of Earth, you have to remember we're dealing with volume. We can move in three dimensions and thus there are many "surfaces". There's an order of magnitude more space for things in space. ;) We're not even going to get close to delivering 1 billion objects to orbit anytime soon. And even then, it wouldn't be crowded.
- jessriedel 9y agoThis is true, but the very high orbital speeds means there can be a surprisingly high frequency of collisions even at extremely low density.
- Denzel 9y agoThat's also true. Do you have any material I could read on how this frequency increases with the rate of spacecrafts deployed?
- YTGRK 9y agohttps://youtu.be/I2l8xkjTUh4 https://youtu.be/I2l8xkjTUh4
- kmonsen 9y agoI wonder if SpaceX valuation is being accounted for the fact that they might bail out Tesla like Tesla did with SolarCity.
- WillReplyfFood 9y agoI wonder what historic paralles can be drawn from the discovery of the "new world" to the expansion. Obviously we are currently in the shift of affairs, away from king sponsored exploration ships- towards merchants, with the problem of the known goods of space not beeing automatically interesting on earth. There needs to be a economically viable example- collecting sunlight with foil- mirrors to send to solar facilitys - or similar endavours. Something without shipping and stripping, so that the gol-rush over the atlantic can resume. I wonder how a huge construction endavour like a beanstalk or launch loop could be financed. It seems to me such endavours would end up like the panama canal, eating early investors alive, while the last generation of investors reap the spoils. https://en.wikipedia.org/wiki/Panama_Canal#French_construction_attempts,_1881%E2%80%931894 https://en.wikipedia.org/wiki/Panama_Canal#French_constructi...