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SpaceX Valuation: Why Elon Musk’s Aerospace Co. Needs Starship to Stop Blowing Up Despite Starlink’s Success

Last Updated November 22, 2023 11:32 AM
Giuseppe Ciccomascolo
Last Updated November 22, 2023 11:32 AM
Key Takeaways
  • SpaceX’s success with Starlink is driving the company’s growth and valuation.
  • The success of SpaceX’s Starship program is crucial to the company’s long-term plans for space travel.
  • But Elon Musk’s aerospace company faces challenges in raising funds for the Starship program.
  • Also, finding customers willing to purchase rides on the mega-rocket proves to be a daunting task.

SpaceX has been on a tear in recent years, successfully launching countless rockets and satellites into orbit. The company’s Starlink satellite internet constellation is now providing service to millions of customers around the world.

However, despite these successes, SpaceX’s valuation has been under pressure due to a string of recent rocket failures.

Recent news on a possible initial public offer (IPO) for Starlink – immediately labeled as “false” by Elon Musk – put SpaceX under investors spotlight again: how much is it worth?

Does it need Starship – more than Starlink – to be profitable to deliver strong results in the future?

The Importance Of Starship

Starship  is SpaceX’s next-generation rocket system, and it is crucial to the company’s future.

Starship is designed to be fully reusable, which would allow SpaceX to dramatically reduce the cost of space travel. This would make it possible for SpaceX to launch more satellites, send humans to the Moon and Mars, and even start mining asteroids.

However, developing Starship has been a long and difficult process. The rocket has suffered several high-profile failures, and it is still not clear when it will be ready for its first orbital flight.

These delays and setbacks have raised concerns among investors about SpaceX’s future.

SpaceX needs Starship to be successful in order to justify its sky-high valuation.

The company is currently burning through cash at an alarming rate, and it is unclear how long it can continue to do so without generating more revenue. Starship could be the key to SpaceX’s long-term success, but it is also the company’s biggest gamble.

How Much Is SpaceX Worth?

Elon Musk‘s SpaceX is on track for a massive valuation of $500 billion by 2030, according  to billionaire investor Ron Baron. Baron, who owns more than $1 billion worth of shares in the rocket company, made the bullish prediction in an interview with CNBC on Friday.

SpaceX is currently valued at around $150 billion, making it one of the most valuable private companies in the world.

The company’s recent success with its Starlink satellite internet business is a major driver of its growth. Starlink has achieved cash flow breakeven and now boasts a network of about 5,000 low-Earth orbit satellites.

Baron believes that SpaceX’s valuation could reach $250 billion to $300 billion within the next three years.

However, he also acknowledges that the company’s future hinges on the success of its Starship program. Starship is SpaceX’s next-generation rocket system, and it is crucial to the company’s long-term plans for space travel.

Despite the risks, Baron believes that SpaceX is worth investing in. He sees the company as a leader in the space industry and is confident that it will overcome the challenges it faces.

Only time will tell whether Baron’s prediction will come true. However, one thing is for sure: SpaceX is a company to watch.

Starship Is Quite Expensive

SpaceX has consistently demonstrated a remarkable ability to secure funding, even in the current economic climate,” notes Carissa Christensen , CEO of BryceTech, an analytics and engineering firm. Despite facing financial constraints, the company continues to attract substantial investment.

Looking ahead to the completion of Starship, Christensen emphasizes the challenge of finding companies willing to purchase rides on this mega-rocket.

While Starship boasts a payload capacity exceeding 100 tons, the majority of satellites are considerably smaller. Consequently, some companies may prefer smaller rockets to carry their payloads individually rather than sharing a ride on Starship.

Christensen raises a pivotal question: “Who is Starship going to serve?”

This uncertainty underscores the complexity of the commercial landscape for such a powerful launch vehicle.

On a more optimistic note, Brendan Rosseau, a research associate at Harvard Business School specializing in space, envisions Starship as a game-changer for SpaceX. If successfully deployed, Starship could revolutionize the cost-effective launch of Starlink satellites and pave the way for innovative space business models.

While acknowledging a time-consuming adoption process, Rosseau predicts that companies will find creative ways to leverage Starship’s substantial launch capacity. Some startups are already planning ambitious projects, such as giant satellites, that align with Starship’s capabilities.

But Elon Knows Where To Find Money

Addressing concerns about funding, Elon Musk expressed confidence during a briefing, stating that existing investments and government contracts should sustain the program. Musk asserted, “We do not anticipate needing to raise funding” in response to a Reuters inquiry.

However, analyst Chris Quilty highlights  the prolonged timeline and the likelihood of requiring additional funds for the Starship project. Given the uncertainties in the tech sector, SpaceX’s current strategy of maximizing existing cash resources aligns with a bet on improved market conditions in the coming years.

Nevertheless, Quilty cautions that if the economy experiences a protracted recession, SpaceX could face challenges with cash flow and project continuation.

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