5 ms·
Probably cap ex which means they can use depreciation to improve their bottom line numbers.
by BaseballPhysics 3y ago
Probably cap ex which means they can use depreciation to improve their bottom line numbers.
- loandbehold 3y agoWouldn't depreciation reduce their bottom line as opposed to improve it?
- deleted 3y ago[deleted]
- foota 3y agoDepreciation happens over several years, whereas other expenses are immediate, right?
- loandbehold 3y agooh i see what you are saying. so depreciation vs expensing all at once.
- foota 3y agoIt's more than just a one time thing though, if you assume capex increases over time then it's a permanent reduction in expenses.
- el_nahual 3y agoBy definition, spending on something that is consumable (like a rocket launch) is not a capital expenditure. A capital expenditure is when you buy something whose value slowly decreases with time. If a factory buys a building for $10MM, it isn't any poorer. Yes, it has $10MM less in the bank, but it also has a building worth $10MM. As the building loses value with time the factory gets poorer: it's that loss of value which can be depreciated.
- jjoonathan 3y agoTheir whole deal is not (entirely) consuming rockets, but yeah I get what you mean. It's cool that a tech change can also change the accounting.
- space_fountain 3y agoA starlink launch takes lots of money but results in dozens of new satellites in orbit that in theory could be sold to some other company looking to create an internet constellation. That doesn’t seem that different from a factory where it takes money to build the factory, but then the factory can, in theory be sold. Yes the launch disappears, but the thing the launch did doesn’t.
- loandbehold 3y agoExactly. Those satellites is an income-generating asset.
- BaseballPhysics 3y ago> By definition, spending on something that is consumable (like a rocket launch) is not a capital expenditure. Uh, I was talking about the Starlink satellites which SpaceX owns, not the rockets. I am not, in fact, an idiot. But thanks for assuming so and giving me capex 101. Much appreciated.
- firesteelrain 3y agoNot Capital Expenditure, more like an Operating Expenditure.
- BaseballPhysics 3y agoIt's both. The Starlink satellite construction is cap ex (maaaaybe arguably part of the launch, which is required to make the satellite operational? Not sure...) while the launch and operating the network is ongoing op ex.