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| 3 minutes read

3 minutes read

Here’s How SpaceX By Elon Musk Makes Money

| Published on December 16, 2019

Ever wondered what SpaceX is and how does it make money? Why is it so popular and why are so many people interested in investing money in it? How is it earning profits even though the Space industry is an expensive racket?

Background check!

SpaceX found by serial entrepreneur Elon Musk is the first privately funded team to put a payload in the Earth’s orbit in the year 2008 and to return it to the Earth intact. It designs, launches and manufactures advanced rockets. It was officially launched in May 2002 and has its headquarters in California. The company has been successful in launching unmanned cargo vehicles to the International Space Station (ISS) and has also won several contracts from NASA to fly astronauts also. At present, it has more than seven thousand employees.

Earning with satellites

The main source through which SpaceX makes money is by engaging mainly in one activity i.e. by launching satellites into the orbit. The company charges high rates to the commercial customers every launch, reaching upto $62 million per launch for its services.

An extra $20 million is charged when the launch is complicated such as resupplying the International Space Station, putting a satellite into orbit or launching a GPS satellite on behalf of the Air Force. It operates at a lower cost than its operators and thus easily earns sufficient gross profit to recover its development costs and also helps in developing future launchers such as StarShip Super Heavy and StarLink.

Price to sales ratio

SpaceX is expected to have a 9.2 or lower ratio which is the ballpark. It sets up a huge contrast with the space-launch providers such as Lockheed Martin and Boring. Looking into the data provided by S&P Global Market Intelligence, Lockheed Martin stock sells for 1.5 times sales, while Boeing less than 0.9. In the year 2018 SpaceX has been launched over six times and is scheduled to conduct more launches till the next year, making a revenue of $1.3 billion a year.

Price to earnings ratio

Elon Musk presented at the Code Conference at Rancho Palos Verdes where is proposed the first stage launch of Falcon 9 rockets which has an estimated cost between $30- $35 million. Per launch charges range up to $12 million. It earned a gross profit of around 19% percent in the year 2018 which is comparatively more compared to its rival companies. It is comparatively growing and profitable than its competitors.

SpaceX has helped in making significant advancements in space technology. Its books are privately held and hence are not allowed to be inspected. But according to a research it is expected to make more than $4.2 billion with its contracts from NASA. It launches satellites for about a third of the cost than older companies do, that ultimately craete room for more profit. But there are a lot of risks involved in space technology and thus there is no guarantee as to whether SpaceX will be a huge moneymaker in the long term or not.

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