18 January 2017

The Wall Street Journal: “Exclusive Peek at SpaceX Data shows Loss in 2015”

One hundred and thirty nine seconds is all it took for an unmanned rocket to explode after blastoff and turn Elon Musk’s booming Space Exploration Technologies Corp. into a geyser of red ink.

That June 2015 disaster, followed by months of launch delays, contributed to a quarter-billion dollar annual loss and a 6% drop in revenue, after several years of surging sales and small profits.

Internal financial documents reviewed by The Wall Street Journal and interviews with former SpaceX employees depict robust growth in new rocket-launch contracts and a thin bottom line that is vulnerable when things go awry. They also show the company putting steep revenue expectations on a nascent satellite-internet business it hopes will eventually dwarf the rocket division and help finance its goal of manned missions to Mars.

Rolfe Winkler & Andy Pasztor

Fascinating report! Nobody said building a reusable space launching system from scratch was going to be easy, but I feel Elon Musk’s megalomania is standing in the way of realistic plans for the future. In 2016 a single failed launch forced the company to cancel two thirds of the planned launches for the year – as it should be, to thoroughly investigate the causes. What if that happens again this year or the next? The company should at least have a projection for the ‘worst-case-scenario’ with a greatly reduced number of launches, and see if the business can be sustainable under that assumption.

SpaceX revenue projections for the next 10 years
SpaceX projects soaring revenue from planned satellite-internet business

More red flags: a satellite-internet business still in the early planning stages (I have to wonder who would sign a contract with SpaceX under these circumstances) and an unreliable launch system compared to competitors. Worse still, putting an estimated 4000 communication satellites in orbit depends on having a fast, efficient and reliable launch system ready in the next two years, so any setback in the current business will negatively impact the schedule for the new business line…

SpaceX projected the satellite-internet business would have over 40 million subscribers and bring in more than $30 billion in revenue by 2025, according to the documents. The internet service is currently in planning stages without a factory or a full-fledged team of engineers, according to industry officials and earlier comments by company President Gwynne Shotwell.

SpaceX’s rocket business hasn’t pulled off consistent launches. From 2010 to June 2015, it managed 18 successful launches in a row before its first accident, versus more than 100 straight so far by its main U.S. rival, a joint venture between Boeing Co. and Lockheed Martin Corp., and more than 75 successful consecutive liftoffs for Europe’s Arianespace SA.

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