SpaceX launches a lot of rockets.
From its humble beginnings launching experimental Falcon 1 rockets from an island is the Pacific Ocean nearly 20 years ago, Elon Musk's space company has grown into an industry behemoth, launching more rockets than anyone else on the planet (the entire nation of China included) last year. But more than just launching a lot of rockets, SpaceX also launches a lot of different kinds of rockets -- or at least different kinds of rocket missions.
And not all of them make the same kind of money for SpaceX.
Image source: Getty Images.
One first stage, many stages of success
Almost all SpaceX rockets have one thing in common -- a reusable first stage that forms the basis of every Falcon 9 rocket the company launches, and in triplicate, the first stage and both rocket "boosters" on a Falcon Heavy rocket. (The new SpaceX Starship will be an entirely different beast, not using the Falcon 9 first stage at all.)
Last year, SpaceX launched more than 100 such first stages (91 powering Falcon 9 rockets, and 15 more across five Falcon Heavy missions), reusing the majority of them multiple times. And yet, while the rockets may all be basically the same, the prices SpaceX charges for launching them vary widely. In a January report on SpaceX's profits and losses, space research firm Payload Space estimates that SpaceX charged:
- $260 million per mission for three manned Commercial Crew launches to the International Space Station (ISS) for NASA.
- $145 million per flight for three Commercial Resupply launches -- also to ISS, and also for NASA.
- $150 million per flight for three U.S. government Falcon Heavy launches.
- $130 million per flight for two Falcon Heavy launches for commercial customers.
- $100 million per flight for six government Falcon 9 missions.
- $67 million per flight for each of a dozen commercial Falcon 9 flights.
- $45 million per Falcon 9 flight that SpaceX advertises as a "Transporter" mission (bundling large numbers of small satellites, for multiple customers, on individual rocket launches).
- And... $0 per flight across 63 separate launches of Starlink satellites that SpaceX flew for itself.
(Note that there's a bit of guesswork involved in all of these numbers. But they seem very close to accurate.)
Same rocket, different price
And so you see, depending on the mission and the customer, any single SpaceX launch could cost anywhere from $0 to $260 million. Generally speaking, government launches tend to carry higher price tags -- not just because the U.S. government can afford to pay more (it can literally print money to pay its bills, after all), but also because NASA and other government launches simply tend to involve more red tape and regulatory requirements that drive the cost higher. Also generally speaking, flights carrying astronauts fetch higher prices than flights that don't.
Conversely, launches of Starlink satellites (now being launched in batches of 23 satellites per launch) bring in zero revenue for SpaceX's launch division.
The big reveal: $0 is big money for SpaceX
And that's OK. Because perhaps the biggest revelation from Payload's report on SpaceX's 2023 sales and earnings is also the worst-kept secret in space. Despite reaping $3.5 billion in revenue from space launch in 2023, space launch is now SpaceX's smallest business.
Turns out, SpaceX now makes most of its money from Starlink.
Payload declared 2023 "the year of Starlink," and for good reason: As Starlink expanded around the globe to cover more than 70 countries today, with more than 2.2 million paying satellite internet subscribers, Starlink has become SpaceX's biggest business, with 2023 revenue approaching $4.2 billion.
And that's not all. Up until now, SpaceX's biggest claim to fame has been the ultra-low cost of its rocket launches. Big as the multimillion-dollar prices shown above may sound high to me and you, they're in fact much lower than rival space companies are used to charging -- so low that European rivals are complaining that SpaceX is driving them out of business, while American rival United Launch Alliance has had to cut its prices dramatically to compete.
This is both good and bad news for SpaceX, though. Good, because it means SpaceX is winning market share. Bad, because it means profit margins at SpaceX's launch business are razor thin.
The best news of all for SpaceX, though, is that it's entirely capable of enduring thin profit margins on space launch, because its new Starlink satellite internet business is growing fast, already cash-flow positive (according to Payload), and on course to earn 60% operating profit margins in time (according to SpaceX).
Starlink is now officially the place SpaceX makes most of its money. And with margins like those, investors in the upcoming Starlink initial public offering stand a good chance of making some money of their own.
