Last month, we broke the story that SpaceX is no longer profitable and cash-flow positive. Last week, The Wall Street Journal cracked this story the rest of the way open -- and spilled the beans on how much money Elon Musk's pioneering space venture is losing.
In an expose compiled from "exclusive ... internal documents" -- probably obtained from the "former SpaceX employees" that it interviewed -- the Journal confirms that SpaceX has in fact been losing money since at least the beginning of 2015. Says the Journal, not only did SpaceX rack up losses of $260 million in 2015, but it actually incurred "an operating loss every quarter, and also negative cash flow of roughly $15 million."
For the record, this means SpaceX was losing money nearly one year before the company removed the famous "profitable and cash-flow positive" assertion from its website.
Factoring in a low $62 million price for commercial launches, higher prices for military and science launches, and adjusting for the fact that SpaceX does more commercial work than government work, SpaceX averages a launch price of about $72 million on its rocket launches. To cover the company's $800 million to $900 million annual operating budget, therefore, SpaceX must conduct a minimum of about a dozen launches per year in order to be profitable.
Unfortunately, because SpaceX has spent about 12 of the past 21 months grounded and unable to fly, it's been unable to launch enough rockets to keep its business in the black. What WSJ did is take this logical conclusion, and back it up with cold, hard facts from SpaceX's internal documents.
These documents show that the June 2015 SpaceXplosion blew up SpaceX's vaunted record of profitability and positive cash flow, which erupted into "a geyser of red ink."
Not only did SpaceX lose a rocket in that explosion, but its space fleet was grounded for six straight months, unable to launch or generate revenue for the company while SpaceX worked to determine what went wrong, and fix it. SpaceX did eventually fix the problem, returning to space in December 2015. Regardless, SpaceX ended up launching only six times that year -- not frequently enough to prevent it from incurring a $260 million operating loss.
In 2016, SpaceX continued launching up until its September "anomaly," when a mishap during rocket fueling exploded another Falcon rocket on its launch pad. That explosion cut short launches for 2016 at just eight successful missions -- two more than SpaceX managed in 2015, but probably still not enough to keep the company in the black.
Result: In back-to-back years, SpaceX's own documents either confirm, or strongly hint, that SpaceX has lost money. So what does this imply for 2017?
Can SpaceX survive?
Two rocket explosions in two years are hardly the kinds of headlines that SpaceX wants to be writing -- especially not with rival launcher and Airbus (OTC:EADSY) subsidiary Arianespace boasting 76 straight successful launches -- and definitely not with Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT) joint venture United Launch Alliance (ULA) boasting of 116 successful launches in a row.
Already, SpaceX's spotty record has convinced two of its key customers, Inmarsat PLC (NASDAQOTH: IMASF) and ViaSat Inc. (NASDAQ:VSAT) to shift one launch each to Ariane. At the same time, Boeing and Lockheed are making moves to compete better with SpaceX on marketing. Late last year, the companies' ULA set up a new website for ordering rocket launches online, setting -- as the companies put it -- "a new standard for pricing transparency" to better compete with SpaceX in the commercial market.
But SpaceX is not out of this race yet. Just two weeks into the New Year, SpaceX returned to space with the successful launch of 10 Iridium satellites last week. The company has a second mission tentatively scheduled to go up as soon as Jan. 30. At the pace it's setting, SpaceX could conceivably launch a couple dozen rockets -- or more -- this year, which would be plenty to get the company back operating in the black. Meanwhile, SpaceX CFO Bret Johnson confirms that the company's balance sheet remains in tact despite two money-losing years.
With over $1 billion of cash in the bank, no debt, and rockets rising into space at a pace that should more than offset costs, 2017 could be the year that SpaceX turns "profitable and cash-flow positive" once again.