SpaceX (Space Exploration Technologies) has never been your average startup. They appeal to the dreamer and explorer that’s been a constant of the human experience. The company’s lofty goals of affordable space travel and a colony on Mars are based on sound science and a business plan. The business has had heart-thumping, exhilarating successes and catastrophic failures. Both of them are displayed before the eyes of the world. Should you invest in SpaceX?
This article is an overview on one of the most fascinating companies of the world. Let’s read more on its financial potential!
SpaceX – Brief History
SpaceX has revolutionized space technology since being founded in 2002 by the visionary entrepreneur Elon Musk. He is also the founder of Tesla Motors and PayPal. With SpaceX, Elon Musk had had two primary goals:
- Reducing the monumental costs of space transport so that it becomes affordable;
- Making it possible to establish a colony on Mars.
No one could accuse Elon Musk of dreaming small. Before SpaceX, space exploration and technology had belonged almost exclusively to governments, primarily the U.S. and Russia. NASA had focused on the development of rockets and manned space flight, culminating in the historic moon landing. However, NASA’s Space Shuttle Program finally came to an end in 2011, highlighting the need for a non-governmental approach to space transportation. American astronauts had to buy seats on a Russian spacecraft in order to travel to and from the International Space Station.
SpaceX, a privately-funded company, has achieved many historic milestones in only 15 years. The company’s more than 5,000 committed and enthusiastic employees are proud of their many achievements and optimistic about the future.
- 2008: Falcon 1 attained orbit as the first privately-funded liquid-propellant rocket;
- 2010: Dragon was successfully launched and recovered from low-Earth orbit. SpaceX is the only private company to accomplish this feat;
- 2011: NASA contract to develop a Dragon to transport astronauts to and from the International Space Station;
- 2012: The first flight to the International Space Station by a private company;
- 2012-2017: Multiple NASA-contracted cargo resupply flights to the International Space Station;
- March, 2017: Falcon 9 lands successfully, demonstrating the successful reuse of a Falcon rocket.
Along with their many successes, there have of course been failures. While some companies can hide their disappointments in a note on a balance sheet, SpaceX’s high-profile launch failures go viral. Space travel is undeniably a dangerous enterprise. However, each miss teaches valuable lessons needed for the next success.
Answering the Debate: Should You Invest in SpaceX?
SpaceX founder Elon Musk has lofty goals. But he knows how to make money and take a business public, as happened with Tesla and PayPal. Should you invest in Spacex? Unfortunately, SpaceX is not yet publicly traded, to the disappointment of many potential investors.
Buying SpaceX Stock
There has been speculation about an IPO (initial public offering) for several years. Will this finally come to pass in 2017, making it easy to invest in Spacex? Elon Musk has commented in the past that he will take SpaceX public after he establishes a colony on Mars. Moreover, the company is working steadily toward that goal. The founder has no need of money and access to ample capital sources.
Because SpaceX isn’t publicly traded, stock is only available on the secondary market. Usually, this means buying stock from employees. Unless you are fortunate enough to learn about an individual with stock for sale, EquityZen offers a platform for private investors and sellers conduct stock transactions. This could make it possible to invest in Spacex today.
SpaceX Revenue Sources
Musk’s focus on a significant reduction of the costs of space travel has resulted in a vertically integrated manufacturing system. This results in the company having a reduced reliance on expensive contractors and vendors. SpaceX develops just about everything related to its rockets, including the engines, rocket stages, avionics systems, and software.
One of the advantages of remaining private, of course, is keeping internal financials confidential. However, the Wall Street Journal obtained internal documents and printed an expose on SpaceX.
- Launches are prepaid, resulting in a good year for SpaceX in 2014 of about $1 billion in revenue.
- The failure of two space launces actually caused a revenue decline in 2015 to about $945 million. The company only had six launches that year.
- The financials indicated that these substantial revenues were not generating much profit. Operating profit may have been as low as 0.02%. A positive operating margin would be about 3%.
- The documents obtained by the WSJ did not include 2016 numbers.
Future of SpaceX
The recent successful landing of the Falcon 9 has been a hugely positive vindication of SpaceX’s drive toward affordable and reusable space craft. SpaceX may launch for Mars in 2018. Is the funding available for that historic flight? Elon Musk has a history of funding his projects. So there’s no real reason to believe SpaceX would be an exception. It’s likely that a successful SpaceX flight to Mars would trigger many other companies into their own space transportation ventures. SpaceX, however, has a huge head start. They have the technology, a trained and dedicated workforce and a track record.
So, should you invest in Spacex? Well, unless you’re lucky enough to locate someone with stock to sell, you can’t buy any of that coveted stock today.
Breaking the Boundaries
Should you invest in Spacex when there is finally an IPO for SpaceX? There will be a huge degree of interest in the stock. Some will feel that investing in SpaceX will be an opportunity like investing in Apple or Amazon when the stock was first available. Others will simply want to be part of such an exciting company.
It would probably be a fairly volatile stock, responding dramatically to each monumental success and failure. Each investor will ultimately make their own decision. But SpaceX should provide a heart-thumping ride.
The images are from pixabay.com.