How much money does SpaceX make? Although Elon Musk's space company is currently private, and not easy for investors to invest in, this is still not an idle question. For one thing, there are potential ways to directly invest in SpaceX -- in the private stock market, for example. And if one assumes that where there's a will, there's a way, and that some investors will find a way to invest in SpaceX, it makes sense they know what they are investing in, financially speaking, beforehand. It can be difficult, but let's dive in.
Image source: Getty Images.
Space math is hard
Take revenue, for example. Last week I pointed out how some of the folks who are most knowledgeable about SpaceX estimated that the company would do only about $2.3 billion in launch revenue this year. Around about the same time, however, The Wall Street Journal got hold of another cache of SpaceX internal documents that seemed to show the company generating much more revenue.
As WSJ reported, SpaceX revenue was in fact $2.3 billion in 2021. In 2022, however, revenue had doubled to $4.6 billion. What's more, with approximately $1.5 billion in revenue recorded in Q1 2023, SpaceX seems on course to do $6 billion in revenue this year -- about 160% more than what inquiring minds figured it was bringing in just a week ago.
But note the caveats and provisos: $2.3 billion is how much revenue investors thought SpaceX was getting from launching rockets, whereas $4.6 billion and $6 billion are the amounts of total revenue SpaceX is believed to be generating from all sources: launching rockets, building satellites for the military, charging consumers for Starlink internet access, and so on.
It's a big pot of money, and we're not 100% certain which revenue streams are pouring into it right now -- nor how big each particular stream might be.
Profits and losses
Or consider the profit that SpaceX makes from its revenue -- or the losses it more often incurs. According to the materials WSJ reviewed, SpaceX lost $968 million in 2021, and $559 million in 2022. SpaceX earned a tiny profit of $55 million in Q1 2023 -- but that was just one quarter in a very long year. Moreover, $55 million profit on $1.5 billion in quarterly revenue makes for a tiny net profit margin of just 3.7%.
That's better than Boeing, which according to S&P Global Market Intelligence data is still losing money on its space business. But it's much worse than the 8.8% operating profit margin that Lockheed Martin Space earned last year, or the 9.4% operating profit margin at Northrop Grumman Space Systems. Yet it was a profit.
SpaceX space math is hardest
So what's different about SpaceX now? What changed between 2022 and Q1 2023 to flip this space company from an operating loss to an operating profit, no matter how briefly?
Unless and until SpaceX decides to IPO -- or at least IPO its Starlink division, as it has promised to do -- and begins releasing its financial data publicly and in full, it's going to be very hard to know how exactly SpaceX accomplished this turnaround or how long the turnaround might last.
But we can guess. And if I had to guess, I'd guess it's Starlink that's making the difference between SpaceX's profitability or lack thereof. Consider: Less than one year ago, Elon Musk himself admitted that his company was losing money on its Starlink satellite internet service.
The hell with it ... even though Starlink is still losing money & other companies are getting billions of taxpayer $, we'll just keep funding Ukraine govt for free
-- Elon Musk (@elonmusk) October 15, 2022
Losing as much as $240 million a year, in fact!
No money from DoD, but several other countries, orgs & individuals are paying for ~11k/25k terminals (thanks!).
-- Elon Musk (@elonmusk) October 19, 2022
SpaceX is losing ~$20M/month due to unpaid service & costs related to enhanced security measures for cyberwar defense, but we'll keep doing it (sigh).
But if SpaceX lost $559 million last year, and $240 million of that loss came from Starlink, then eliminating losses at Starlink would go a long way to stanching the flow of red ink at SpaceX as a whole.
Recall, too, that Starlink's user base has seen explosive growth in 2023, roughly tripling in size between late 2022 and mid-2023. And according to other SpaceX documents, previously uncovered by the Journal, Elon Musk hopes to eventually earn as much as a 60% operating profit from Starlink as it grows.
If that has already started to happen, and Starlink has flipped from losing money to making money, then it could quickly cover the rest of the company's losses from space launch, and it may even explain the aforementioned $55 million Q1 2023 profit.
Ultimately, any parsing of SpaceX's few published numbers is an exercise in guesswork. Until the company IPOs in whole or in part, it will remain so. But from the little that is visible to us today, it does appear that Elon Musk's plan for Starlink is playing out as he planned it.
SpaceX may be still mostly unprofitable today. But it's on the right track -- and Starlink is the key to getting it the rest of the way to where it's going.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
