Elon Musk's SpaceX is probably the most famous space company on Earth that almost no one knows anything for certain about, financially speaking. Although the dominant launcher of space rockets in the U.S., with 64 launches year to date, SpaceX remains a private company. As such, it is not required to publicly disclose its financials to investors.
But we do get hints.
In 2017 for example, The Wall Street Journal came into possession of a veritable treasure trove of SpaceX internal documents detailing the company's financial plans through 2025. Through this, we learned, for example, that SpaceX, which began exclusively as a space-launch company, expects to eventually derive the bulk of its revenues and profits from operating the commercial satellite internet business known as Starlink.
By 2025, SpaceX hoped to collect $36 billion in annual revenue -- 85% of which would come from Starlink -- and earn as much as $22 billion in operating profit -- almost all of which would come from Starlink.
And yet, things are not working out quite as Elon Musk planned.
Image source: Getty Images.
Two years behind schedule
Earlier this week, news broke that SpaceX is preparing another round of fundraising (its second this year). Preparatory to that, the company disclosed limited information about the state of its finances. Specifically, SpaceX confirmed that after doubling its 2021 revenue to $4.6 billion in revenue in 2022, the company is on track to nearly double its revenue again in 2023, to $8 billion.
That sounds pretty good. But here's the thing: When you compare SpaceX's latest projections to numbers it projected back in 2015, it turns out that SpaceX is actually at least two years behind schedule. You see, according to the financial data obtained by the Journal in 2017, SpaceX originally hoped to reach $8 billion in annual revenue by 2021, not 2023.
By 2023, SpaceX was supposed to be closer to $23 billion in revenue -- and to be earning $13 billion in operating profits, to boot.
Two years behind schedule...and gaining
Fact is, when it comes to profits, SpaceX is even further behind schedule than it is on revenues. As recently as last year, the company was in fact still losing money. And while SpaceX did turn profitable in the first quarter of 2023, its $55 million quarterly profit implies it's on course to earn only about $220 million this year.
For context, SpaceX's original target date for earning such minimal profits was 2018 -- five years ago.
And yet, things could have been worse. Take SpaceX's $4.6 billion in 2022 revenue for example. That's only a little better than what management was projecting to collect in 2019. From that perspective, you could say that as recently as last year, SpaceX was still three years behind schedule. As of today, it's only two years behind schedule.
Looked at that way, it actually appears that SpaceX may be making up for lost time and starting to close the gap between its expectations (in 2015) and its reality (today).
What it means for SpaceX and for Starlink's IPO
Curiously, Starlink seems to be the biggest reason why SpaceX seems to have fallen short of its expectations. On the one hand, by most objective measures Starlink has proven wildly successful, growing 10 times in size over the last three years from a constellation of just a few hundred satellites in 2020 to more than 4,700 satellites today -- and from zero-paying customers to more than 1.5 million.
Problem is, as the WSJ noted in an article earlier this week, the company had been betting on Starlink being even more successful than it has been, with predictions of 20 million paying customers being signed up through the end of 2022. Had SpaceX achieved this goal, then the service revenues from so many customers (roughly $1,200 per customer, per year) would have easily generated the $23 billion or more in annual revenue that Musk was betting on.
In contrast, 1.5 million customers probably only generate a bit more than $2 billion or so per year at the current standard rate of $110 per month. (Various premium Starlink accounts -- for users who put Starlinks on their RVs and for government, military, and business customers -- charge more for service but are smaller in number.) And until that number gets closer to where SpaceX originally envisioned it being by this point in time, it's unlikely we'll see SpaceX's promised IPO of Starlink.
All this being said, while Starlink and SpaceX are a bit behind schedule today, they do at least seem to be following the track that Elon Musk originally laid out back in 2015. So long as Starlink keeps growing -- in numbers of satellites and in numbers of subscribers, too -- you can't rule out the possibility that SpaceX will eventually hit its goal of $36 billion in annual revenues and $22 billion in annual profits.
It's just going to take a bit longer than we'd hoped it would.
