In September 1962, John F. Kennedy gave a speech announcing the United States of America's goal of sending people to the moon:

Though space exploration is still frequently criticized as a misuse of resources,58% of Americans in 2015 believed it was “essential” that the US continues to be a world leader in space exploration. Historically, space exploration has led to a wide variety of innovations like GPS and weather prediction, not to mention advances in biomedical research. Despite this, NASA hasn't launched a manned space flight mission since 2011.

SpaceX was built to address high launch costs, a problem that contributed to the deceleration of NASA and other government space exploration projects around the world. Launch costs have been the biggest barrier to increasing access to space. With products including rockets capable of reflight such as the Falcon 9, SpaceX has re-invented the economics of exiting Earth's atmosphere. This has made it possible to launch rockets more frequently for purposes like restocking the International Space Station (ISS) or launching Starlink satellites; in fact, the rapid increase in satellite fleets enabled by SpaceX has led to a new satellite renaissance.

SpaceX's long-term mandate is more ambitious, with founder Elon Musk's ultimate vision for the company including the establishment of a permanent settlement on Mars so that humanity will become a multi-planetary species. In the meantime, SpaceX has become a backbone of the newly burgeoning space economy as it has grown to dominate rocket flights, with about two thirds of NASA's launches being handled by SpaceX by 2020.

SpaceX was founded in 2002 by Elon Musk (CEO). Musk is a serial entrepreneur who has also founded a number of other companies, including The Boring Company and OpenAI (which he co-founded with Sam Altman). In his youth, he was inspired by books he read to want to contribute towards clean energy technology and building spaceships. Among these books, a particularly powerful influence was Isaac Asimov's Foundation series. As he said in a 2017 interview:

He would later tweet that the Foundation series was "fundamental to the creation of SpaceX'. But there were other more proximate influences as well. In mid-2001, Musk got involved in the Mars Society, a society of enthusiasts for colonizing Mars, to which he donated $100K to fund a research station in the desert. Mars Society member Dr. Robert Zubrin has claimed that he was "among those who helped convinced him [Musk] to make Mars his calling."

Having been successfully convinced of the importance of Mars colonization, Musk's first idea was to propose a mission to send a greenhouse to Mars. In late 2001, Musk went to Moscow with Jim Cantrell and his best college friend Adeo Ressi to attempt to buy an intercontinental ballistic missile (ICBM) to be used as a rocket to send the greenhouse into space. Despite repeated attempts to purchase ICBMs, the Russians would not sell him a rocket. He therefore decided to build one himself.

In 2002, eBay acquired PayPal for $1.5 billion. Musk was PayPal's largest shareholder with ~11.7% ownership and therefore received $175.8 million from the sale. This helped give Musk the capital to found SpaceX, which he founded with $100 million of his own money as startup capital. Early employees he brought on included Gwynne Shotwell (COO, later President) a business development executive with years of experience in engineering at Chrysler, and Chris Thompson (former VP of Operations).

Starlink, meanwhile, was publicly announced in January 2015 during a press conference held by Elon Musk at SpaceX’s Seattle office. The decision to enter the satellite production business was motivated by the belief in the large financial potential tied to satellite internet services compared to space-launched services. Musk stated that the goal of the venture was to generate a significant revenue stream to fund a city on Mars, underpinning SpaceX’s ambition to make humanity an interplanetary species by creating a self-sustaining colony on Mars.

Beyond proving global internet coverage on Earth, SpaceX has long-term plans to develop and deploy an internet constellation around Mars. In 2016, the company filed with the FCC to operationalize the new satellite system and trademarked the name “Starlink”, a name inspired by John Green's novel, The Fault In Our Stars (itself a reference to a famous line in Shakespeare's play, Julius Caesar).

In 2018, SpaceX successfully launched its first two Starlink test satellites. A month later, the FCC approved SpaceX’s application permitting it to provide broadband internet services domestically and worldwide. The launch of the first 60 Starlink satellites occurred in May 2019, initiating a rapid deployment schedule that would continue in the following years. By February 2021, SpaceX started accepting pre-orders from the public, bringing Starlink's promise of global internet coverage closer to realization. As of July 2023, there were over 4.5K Starlink satellites in orbit.

Source: Visual Capitalist

Falcon 1

SpaceX’s first launch vehicle was the Falcon 1. The Falcon 1 completed its first launch in 2006, funded by private investment. Its first few launches failed, leading to skepticism about the company’s capabilities and a slowdown in funding. In 2008, the Falcon 1 carried a dummy payload into orbit and became the first privately funded and developed launch vehicle to go into orbit. In 2009, SpaceX completed its first successful launch of a commercial satellite which helped solidify SpaceX’s presence in the commercial launch market. The Falcon 1 was then retired later in 2009.

Falcon 9

In 2009, SpaceX shifted its resources to the Falcon 9 rocket after retiring the Falcon 1. The company developed the Falcon 9 after winning a contract from NASA in 2006 to send cargo and crew to the ISS. SpaceX describes the Falcon 9 as "the first orbital class rocket capable of reflight".

The Falcon 9's reusability presented the opportunity to help lower the previously exorbitant costs of rocket launches. As of August 2023, there have been 257 launches of rockets from the Falcon 9 family; of these, all were successful launches except two (one partial failure and one total loss)

The success of Falcon 9 marked a significant technological milestone in the space industry. SpaceX proved the development costs of rockets could be amortized across multiple missions. Reusability made funding the rocket more attractive to investors. SpaceX charged $62 million per launch of the Falcon 9 as of April 2022, or $1.2K per pound of payload reaching orbit. This is much cheaper in comparison to NASA's space shuttle program which retired in 2011, and which cost $1.6 billion per flight (~$30K per pound of payload).

Source: SpaceX

Falcon Heavy

The Falcon Heavy is a more robust rocket than the Falcon 9 and is meant to lift heavier payloads. It has three useable Falcon 9 engine cores powered by a total of 27 Merlin engines (a family of SpaceX rocket engines used in the Falcon 1, Falcon 9, and Falcon Heavy). Together, these engines generate a combined 5 million pounds of liftoff thrust, giving the Falcon Heavy the capacity to lift nearly 64 metric tons (141K lbs) into orbit, which SpaceX says is the equivalent of a fully loaded 737.

In 2018, SpaceX held its first launch of the Falcon Heavy. The Falcon Heavy’s payload capacity is the highest of any operational launch vehicle (as of August 2023) and the third highest of any launch vehicle ever to reach orbit. In July 2023, the Falcon Heavy successfully launched the Jupiter 3 satellite, the largest and heaviest communications satellite ever built, weighing in at over 20K lbs.

Source: SpaceX

Dragon

SpaceX’s first foray beyond launch rockets was the Dragon spacecraft. According to SpaceX, the Dragon can carry up to seven passengers to and from Earth orbit and "is the only spacecraft currently [as of August 2023] flying that is capable of returning significant amounts of cargo to Earth".

In 2012, the Dragon became the first commercial spacecraft to dock with the ISS and deliver cargo. SpaceX’s May 2020 Dragon flight was not only the first time the US had been able to deliver astronauts to the ISS since 2011 but also the first a private company launched astronauts into orbit. The Dragon was also the first spacecraft to bring tourists to the International Space Station in April 2022 (each of the passengers paid $55 million for the trip).

As of October 2022, SpaceX had successfully sent 30 humans to space since it began doing so in May 2020 – more than China’s entire space program. The Dragon has had 42 total launches, 37 visits to the ISS, and 19 total reflights as of August 2023.

Source: SpaceX

Starship

SpaceX's Starship system is comprised of its Starship spacecraft and Super Heavy rocket. According to SpaceX, Starship is designed to be a "fully reusable transportation system designed to carry both crew and cargo to Earth orbit, the Moon, Mars and beyond" and will be the "most powerful launch vehicle ever developed", with the ability to carry 150 metric tons (for the reusable version) and 250 metric tons (for the expendable version) into space.

The Starship system is designed to carry 100 people on interplanetary flights. It is intended to serve multiple purposes, including satellite delivery, the establishment of a base on the Moon, and point-to-point transport on Earth. With regards to payload delivery, Starship is designed to deliver payloads "farther and at a lower marginal cost per launch" than Falcon vehicles. Since the establishment of bases on the Moon and beyond will take a large amount of cargo, Starship's lower marginal costs will be extremely valuable. Some estimates predict costs could decline to $200/kg or even lower with reusability.

Thus, Starship is the launch system SpaceX plans to use to send humans to the Moon and Mars. Once SpaceX finishes developing and testing Starship, it likely intends to replace Falcon 9 or Falcon Heavy in future launches. In addition, the company intends Starship to be used for fast Earth transport; by enabling travelers to leave orbit, most international trips could take place in under 30 minutes.

The first test flight of the Starship took place in Austin, TX on April 20, 2023. The rockets rose about 24 miles from the ground before falling six miles and self-destructing due to the loss of multiple engines. The data collected from the flight has allowed the team to make over 1K changes to the next rocket which was expected to launch "soon" as of August 2023. Musk reported that he believes the chances of a successful orbit will be much higher for this next mission, maybe somewhere around 60%. The team is focused on building the vehicle and repairing the launchpad which was left in ruins due to the high-powered thrust of the engines.

One of the first scheduled missions on the Starship is to take Japanese billionaire Yusaku Maezawa and a small crew on a trip around the moon. Transporting Maezawa around the moon would be quite different from SpaceX’s previous missions, which revolved around sending payloads and a few astronauts to the ISS. Including more manned flights will continue to push SpaceX toward its goal of sending humans to Mars.

Source: SpaceX

Starlink

Starlink is a satellite constellation system developed by SpaceX. The goal of Starlink is to democratize internet access for all of Earth, but most importantly, to provide high-speed, low-cost internet to locations where internet access has been restricted by traditional ground infrastructure. This includes rural and remote areas, the oceans and the skies, and anywhere it has often been economically and logistically challenging to implement internet infrastructure. As of July 2023, there were over 4.5K Starlink satellites in orbit. Starlink had more than 1.5 million active users across 54 countries as of May 2023.

Unlike traditional internet services that depend on ground cables, Starlink satellites communicate through space by beaming information between its satellites and user-installed dishes on Earth. This system allows for the provision of internet access virtually anywhere on Earth. Traditional satellite services use large geostationary satellites that are located 22.3K miles from Earth. These satellites are large and able to service a large area of the globe. However, the connection is often spotty and slow. The far distance that they are placed at produces significant time delays in sending and receiving data due to the time it takes for the signal to travel that distance.

Starlink’s satellites offer an alternative to this. Starlink's goal is to launch a fleet totaling over 42K satellites much closer to Earth, at Low Earth Orbit (LEO) at about 342 miles above the Earth. This proximity is intended to reduce latency and improve the speed and quality of connectivity. On the ground, users interact with Starlink through a phased-array dish antenna and modem setup. The dish automatically aligns with satellites in orbit ensuring a stable and reliable connection.

Customer

SpaceX's earliest source of external funding was NASA, which awarded SpaceX a $396 million contract to develop its Dragon spacecraft to fly resupply missions for the ISS in 2006. NASA was also SpaceX's first customer for the Falcon 9 after its initial flight in 2010 and has continued to be one of SpaceX's largest sources of funding throughout the company's life.

In August 2022, for instance, NASA awarded SpaceX a contract worth $1.4 billion under its Commercial Crew program to deliver astronauts and cargo to and from the ISS. In November 2022, it also awarded a contract modification worth ~$1.2 billion to SpaceX for Starship under its lunar landing program Artemis. This was following an initial $2.9 billion contract NASA awarded to SpaceX in August 2021 to use Starship to take astronauts to the surface of the moon from orbit. Additionally, in February 2023, SpaceX was included in a $100 million NASA payload contract.

Other SpaceX customers include commercial satellite operators such as SES, which began a contract to use the Falcon 9 to launch its satellites in 2016. Satellite operator Telesat made a launch agreement with SpaceX in the same year. Another operator that uses SpaceX is Intelsat, which SpaceX was launching satellites for in August 2023 as part of a push by the FCC for a "fleet-wide refresh" to clear the way for 5G networks.

SpaceX is also a major customer for private spaceflight companies, such as Axiom Space, which signed a deal with SpaceX in 2021 for three private Dragon flights to the ISS, including a successful flight in April 2022 where three multimillionaires visited the ISS aboard a Dragon capsule for $55 million each. Space Adventures is another customer; it signed a contract with SpaceX for a Dragon mission in February 2020.

Starlink

An estimated 37% of the world’s population lacks access to the internet, amounting to 2.9 billion people who are offline. Of the 2.9 billion, 96% of them live in developing countries where internet infrastructure is severely limited. Starlink is primarily aiming to serve people in these areas and in remote or rural locations where internet connectivity poses a challenge. Globally, about 3.4 billion people, approximately 43% of the total global population, live in rural locations. In addition to individual consumers, small businesses operating in these rural or remote regions can significantly benefit from Starlink's service.

Starlink’s offering extends to government and emergency services. In natural disasters or situations where internet services are disrupted, Starlink is able to provide resilient connectivity. This was highlighted in the example of Ukraine during its crisis marked by conflict with Russia. Starlink stepped in to ensure reliable internet connectivity and helped the country withstand attacks on its electrical and communication infrastructure. SpaceX was also able to secure a contract with the US Department of Defense in June 2023 to provide Starlink internet for Ukraine's military.

The travel industry, including cruise ships, RVs, airplanes, and boats, is a growing sector within Starlink's customer base. Starlink's ability to provide internet connectivity virtually anywhere on Earth has made it an attractive solution for industries and customers that require mobility and remote connectivity. Hawaiian Airlines, Royal Caribbean, and Carnival Corporation are among its customers.

Market Size

Space is a large and fast-growing industry. In January 2023, it was valued at $447 billion, up from $280 billion in 2010; it is projected to grow to a $1 trillion market size by 2030 and could reach as much as $1 trillion in revenue by 2040. SpaceX is both a pioneer in private space and a leading player, with a well-established market position in satellite and payload launch services, satellite internet, and space tourism.

Launch and Payload Delivery

One of SpaceX's initial focuses was on serving the launch industry. SpaceX had 65% of the global satellite launch market by 2018 Its customers include private companies, military agencies, and government-sponsored projects. Many of its contracts are from NASA to deliver cargo and astronauts to the ISS. The satellite launch vehicle market size alone was valued at $14.4 billion in 2022 and is expected to grow at a CAGR of more than 12.5% over the ensuing decade.

The launch industry is capital-intensive with long lead times. There are only a few companies in the space industry with the resources to compete with SpaceX. Notable competitors include Blue Origin and United Launch Alliance (ULA).

Source: Arstechnica

One of the critical enablers for a low-cost competitor such as SpaceX to enter the space industry was NASA’s switch to a fixed-price contracting program called COTS (Commercial Orbital Transportation System) in the 2000s. COTS incentivizes lower-cost structures and innovations. NASA estimated it would have cost it ~$1.4 billion to develop the Falcon 9 under its typical cost-plus contract. By contrast, SpaceX’s development costs for Falcon 9 would be $443 million under a fixed-price model.

Internet

In 2019, SpaceX began operating in the satellite internet market with the launch of its Starlink satellites. Starlink serves private sector and military customers in remote locations looking for reliable internet access.

The global market for internet service providers is enormous. It was estimated to be valued at around $419.4 billion in 2022 and was expected to grow at a 9.7% compound annual growth rate until 2030. However, Starlink will likely remain slower than other internet options such as fiber. Starlink’s market will be constrained to more remote areas without fiber connections.

Starlink’s subscriber base stood at roughly 400K as of May 2022 and surpassed the milestone of 1 million subscribers in February 2023. In 2017 it was reported that SpaceX's goal was to reach 40 million subscribers and more than $30 billion in revenue by 2025, which would require considerable acceleration in Starlink's growth.

Space Tourism

SpaceX also operates in the space tourism market as it works toward its goal of enabling humans to colonize Mars. Its customer base will likely be limited to high-net-worth individuals in the near term, such as those who completed a trip to the ISS in April 2022. The space tourism market size was estimated at $869.2 million in 2022 and is projected to grow at a 16.2% CAGR for the ensuing decade to reach $3.9 billion by 2032.

Additional Markets

In the future, if the Starship program proves successful, SpaceX may also be able to enter existing markets such as travel (competing with the airline industry as a faster form of international travel) or become a category creator for markets such as Lunar transport or Mars colonization. Reaching commercial scale in those industries will take some time, however.

Blue Origin: Founded in 2000 by Jeff Bezos, Blue Origin is one of SpaceX's primary competitors across launch services and space tourism. In May 2023, for example, Blue Origin won a NASA contract to develop a crewed lunar lander worth more than $3.4 billion, after having previously been beaten out by SpaceX for a lunar lander contract worth $2.9 billion in 2021.

Its products include a reusable suborbital rocket system (New Shepard), a reusable first-stage heavy launch vehicle (New Glenn), and a lunar lander (Blue Moon). Blue Origin offers people a seat to space aboard the New Shepard for $200K. The New Glenn is expected to launch by late 2024 and will serve both crewed and non-crewed missions. Its lunar lander, which competes with SpaceX’s, is scheduled for a test mission to the moon in 2024.

United Launch Alliance (ULA): Before SpaceX’s first successful launches, Boeing and Lockheed Martin held a duopoly on US launches through their joint venture, ULA, which was founded in 2006. In 2016, one ULA executive openly acknowledged that the company can’t compete with SpaceX on costs. The company provides launch services with its expendable Delta IV Heavy and Atlas V systems, which are set to be replaced by its forthcoming Vulcan Centaur which is planned to have its maiden flight in late 2023 following a test failure earlier that year in March.

The company has successfully delivered non-reusable rockets for more than 150 missions. ULA has also sent a crew member to the ISS with Boeing’s Starliner capsule attached to ULA’s Atlas V rocket. Atlas V can carry up to 18K kg to LEO at $109 million per launch. ULA customers include the DoD and NASA. The Vulcan Centaur is designed to be partly reusable, like SpaceX's Falcon Heavy rocket. The Vulcan will be able to take a payload of 10K kg to LEO.

Relativity Space: Founded in 2015, Relativity Space is a California-based company that provides an expendable two-stage rocket, the Terran 1. The Terran 1, which the company described as "the world's largest 3D printed object", was successfully launched into space in March 2023. It intends to launch the Terran 1's successor, a reusable 3D-printed rocket called the Terran R, in 2026. Relativity Space has raised $1.3 billion in total funding from investors including Mark Cuban, Tiger Global, Lux Capital, Fidelity, and Y Combinator. It raised a $650 million Series E in June 2021 which brought its valuation to $4.2 billion.

Rocket Lab: Rocket Lab is a company founded in 2006 by Peter Beck. The company went public via SPAC in August 2021 and has a market cap of $3.1 billion as of August 2023. The company provides launch services for satellites with its Photon spacecraft and its small, reusable launch vehicle, the Electron. In August 2023, it was awarded a contract by NASA to launch a pair of two small climate satellites "the size of a bread loaf".

Boeing: Boeing's Starliner capsule competes with the Dragon for NASA's Commercial Crew program contracts. Both SpaceX and Boeing had been awarded almost $5 billion for their capsule products as of August 2022, however, Boeing had only won six missions versus SpaceX which has won 14 missions.

Starlink Competitors

Amazon: Initiated in 2018, Amazon’s Project Kuiper is planning to deploy a constellation of 3.2K satellites in low Earth orbit to increase global broadband access. The Federal Communications Commission (FCC) granted Amazon the license to operate these satellites in July 2020. As of July 2023, more than 1.4K people are involved in the development of Project Kuiper across the US. Amazon has arranged for 77 heavy lift launches through commercial providers, with potential additional options with Blue Origin, to send these satellites into space. The first two prototype satellites are expected to be launched by mid-2023, and the company aims to start providing service to early customers by the end of 2024.

OneWeb: Founded in 2012 by Greg Wyler, OneWeb, formerly known as WorldVu Satellites Ltd, aims to build broadband satellite internet services through a constellation of satellites in low earth orbit, similar to Starlink’s ambitions. OneWeb differentiates itself by primarily targeting businesses, governments, and airlines, partnering with local ISPs and mobile network operators to reach consumers. In 2020, OneWeb faced bankruptcy but was saved by investments from the UK government and the Indian conglomerate which collectively invested $1 billion into the project. Since then, OneWeb has reemerged as a strong player in the race to create a satellite internet constellation with global coverage sending over 634 satellites satellites into space as of July 2023.

Astra: Astra is a low-cost launch service company founded in 2016. It provides orbital launches for small satellites of up to 600 kg. Its product is the Rocket 4.0, which costs ~$4 million per launch. Astra also builds electric propulsion systems for in-space navigation for satellites. In 2021, Astra went public through a SPAC deal at a $2.1 billion valuation. Its market cap as of August 2023 was $71.8 million.

SpaceX has several different revenue streams including satellite launch contracts and other payload contracts with NASA, Starlink subscriptions, and space tourism. Launches provide long-term contracts from organizations such as NASA. For example, in April 2021, NASA awarded SpaceX a $2.9 billion contract to transport astronauts to the moon in 2024. Winning large, long-term contracts allows SpaceX to dedicate resources to execute its vision of multi-planetary life.

Starlink also generates revenue through individual subscriptions to the Starlink internet service. This a capital-intensive business on the front end, as SpaceX has had to launch thousands of satellites into orbit. However, the satellites will reach a saturation point where Starlink becomes self-sustaining and can earn subscription revenue without the need to launch new satellites. Several components of SpaceX’s business model contributed to its ability to scale, such as reusability, cost-efficient reliability, and vertical integration.

Reusability

SpaceX builds its rockets with reusability in mind. The marginal cost to launch a newly built Falcon 9 is around $50 million. Musk claimed In May 2020 that the marginal cost to launch a reused Falcon 9 was $15 million. Each reused Falcon 9 might save around $30-40 million while charging $10 million less for a reused Falcon 9 compared to a new one. The Falcon 9 reusability amortizes a rocket’s cost across multiple launches and creates better overall profitability. The Falcon 9 is credited with a large reduction in launch costs, as it is able to provide a payload cost per kilogram of ~$2.7K; by comparison, the Space Shuttle program which preceded it cost almost $55K per kilogram.

Cost Efficiency

SpaceX’s early strategy on reliability contributed to its cost efficiency. Musk made a comparison between a Honda and a Ferrari to illustrate that a cheaper rocket does not necessarily need to be less reliable:

Vertical Integration

SpaceX has continued to pursue vertical integration in order to bring costs down through economies of scale. The status quo for launch companies such as ULA has been to source components from disaggregated supplier networks, limiting their ability to reach economies of scale. SpaceX’s vertical integration, however, allows it to eliminate transaction costs with suppliers while spreading its fixed costs over a more extensive production base.

The combination of reusability, cost efficiency, and vertical integration leads to a virtuous cycle capable of producing cheaper launches. Cheaper launches increase the demand for launches, giving SpaceX more opportunities to improve its technology. Starlink’s business experiences a similar virtuous cycle — economies of scale drive down the cost of launching Starlink satellites, improving the economics of Starlink. That in turn enables the launch of even more Starlink satellites until they reach a saturation point.

Starlink Subscriptions

Starlink’s business model includes a subscription-based internet service and hardware sales. For residential customers, Starlink offers the 'Standard' plan, which provides unlimited data designed for fixed, land-based locations like homes. The plan costs $130/month in most locations and $90/month for high-availability locations including a $599 one-time hardware cost for the satellite dish.

For higher-demand users, such as businesses, governments, and institutions, the 'Priority' (aka Business) plan offers 1TB, 2TB, and 6TB Priority Data plans with a $2.5K one-time hardware cost. Priority data users experience faster and more consistent download and upload speeds, especially during peak times. Additional Priority data can be purchased on a per GB basis or the service plan can be upgraded. The 'Mobile' (aka Roam) plan offers unlimited mobile data and it is designed for portable, land-based use such as for camping or RVs.

The 'Mobile Priority' offers data in 50Gb, 1Tb, and 5Tb plans. The plan is designed for high-demand, maritime, and in-motion users needing global access across land and oceans such as cruises, cargo ships, sailing, emergency responders, and mobile businesses. This plan is given network precedence over the Standard and Mobile data plans, giving users faster and more consistent speeds. Since October 2022, Starlink has offered ‘aviation’ internet ranging from $12.5K-$25K a month with a one-time hardware cost of $150K.

SpaceX saw significant traction in its Falcon launch products starting in the early 2010s. It went from only two launches in 2012 to 61 launches launches in 2022. SpaceX had 65% of the global satellite launch market by 2018. Given estimates that SpaceX’s revenue per Falcon 9 launch is $60 million (or $50 million for a reused booster), the company may have grown from around $120 million in revenue in 2012 to over $1.5 billion in 2021.

The relationship between SpaceX, NASA, and the US military has improved over dozens of launches. Trusting SpaceX to launch astronauts also indicates continued trust in SpaceX. In an industry where human lives are on the line, trust and reliability are critical factors in deciding who receives a contract. SpaceX has also continued to attract high-quality talent as the most ambitious platform for engineers, rocket scientists, and physicists. In 2021, the company was the most desirable company to work at for engineering students.

Starlink Traction

In under three years, since Starlink released its beta service to the public, it has garnered over 1.5 million subscribers. Since its debut, Starlink has experienced rapid growth in members rising from an initial base of 10K subscribers in 2021 to 145K at the start of 2022 to 1 million in December 2022 to 1.5 million by May of 2023. In its aim to provide global internet coverage, Starlink has deployed nearly 5K satellites into orbit, covering more than 60 countries worldwide. In March 2023, it was reported that over half of all active satellites in orbit belong to Starlink’s constellation.

Starlink gained more traction in 2022, reporting 145K users in January 2022, growing to 250K in March 2022, and 400K in May 2022. Starlink reported 1 million users as of February 2023, 5x the number of subscribers than the same time the year before. However, some of Starlink’s customer growth in 2022 is due to Starlink's support of Ukraine during its conflict with Russia.

SpaceX raised a $1.7 billion funding round at a $127 billion valuation in May 2022 and achieved a nearly $150 billion valuation in July 2023 following a share sale by existing investors. Its total funding across grants, secondary sales, and private equity financing lies at $9.8 billion as of August 2023. SpaceX’s revenue of $1.6 billion in 2021 implies a revenue multiple of ~80x at its May 2022 valuation of $127 billion. Since then, SpaceX has inked another contract with NASA related to the Artemis moon landing worth ~$1.2 billion. Payload, a space news site, estimated SpaceX’s 2022 total revenue from launches and Starlink combined to be about $3.3 billion.

Much of SpaceX’s valuation likely comes from assumptions about Starlink. Starlink has low variable costs and enormous revenue potential. Even with the announcement in May 2023 that Starlink reached 1.5 million subscribers, Starlink’s basic plan of $130/month implies an ARR of over $2.3 billion. If SpaceX and Starlink can reach the goal of 40 million subscribers by 2025, Starlink could reach over $62 billion in ARR, which alone implies a much larger valuation than it currently has.

Starlink

Starlink presents a sizable opportunity for SpaceX to grow its top line. The small number of Starlink satellites in orbit may limit internet coverage and speed, but as SpaceX launches more satellites into orbit, the performance will increase. As Starlink’s entire constellation of satellites becomes operational, the marginal cost to add a new subscriber is negligible. New subscription revenue will fall almost directly to the bottom line, turning Starlink into a profit engine for SpaceX.

Talent

SpaceX has a robust talent pipeline taking advantage of great branding given the company’s grand vision to make life multi-planetary. The company attracts some of the brightest rocket scientists and engineers from the best schools in the world. SpaceX needs to attract and retain top talent to continue its grand vision.

Cost Efficiency

Cost efficiency is one of SpaceX’s core strengths. If the Starship launch system is fully reusable, some estimate the cost per launch could decline to $200/kg or lower. Starship could have a launch cost of less than 2% of SpaceX’s first launch vehicle, Falcon 1, in the mid-2000s. With such substantial reductions in cost, SpaceX could unlock even more launch demand. In an industry with high barriers to entry, due in part to the high upfront investment requirements, economies of scale can lead to a sustainable competitive advantage against new entrants.

Balancing Vision and Business

The company's vision and its foundational mission to colonize Mars and make life interplanetary are a likely source of inspiration and direction for SpaceX employees. Projects such as Starlink or space tourism could start to feel like a diversion from the core vision. Continuing to balance ambitious projects with sustainable business performance will be important.

Space Debris

Space debris, the remnants of defunct space objects like old satellites still orbiting the earth, is an ongoing issue for space companies. There are several notable examples of space debris destroying functional satellites. When objects collide in space, they create even more space debris – often thousands of new pieces. As the amount of space debris grows, the risk of satellite damage grows exponentially.

Geopolitical Issues

The geopolitical implication of Starlink, which can extend internet access across large parts of the globe, could put SpaceX in risky situations where it runs across the competing interests of various state actors. Heightened tensions could escalate dramatically over time for SpaceX, especially given SpaceX's use of Starlink to support Ukraine during its conflict with Russia. In August 2023, it was reported that Starlink restricted the Ukrainian military's access with ramifications for its military operations. In the same month, a group of hackers, ostensibly from the Sudan, attacked Starlink causing it to go offline in "more than a dozen countries" as part of a bid to pressure SpaceX to extend Starlink service to the Sudan.

On the launch provision and space side of the business, tensions between the US, China, and Russia create additional risks. Ever since the early days of space exploration, geopolitical competition has been a large impetus (initially between the US and the Soviet Union. This continues to be a factor in humanity's space effort in the post-Cold War period. For example, in late 2021, Russia destroyed its own defunct satellite with a missile to prove its anti-satellite capabilities.

SpaceX was founded by Elon Musk after he became convinced in 2001 of the importance of colonizing Mars and making life interplanetary. After it became clear that using existing rocket technology was not viable for this purpose, Musk decided to start a company to create his own rockets for this purpose. The company has seen success with its reusable Falcon rockets series which have significantly lowered the cost of launching into orbit, and its next big milestone is the planned rollout of the Starship product, which is due to begin operation in lunar landing missions in late 2025. Its future success will hinge on its ability to maintain cost efficiency, attract and retain technical talent, and build Starlink into a profitable business.