SpaceX has been on a roll lately with the successful launch and return of two American astronauts in a test flight of its Crew Dragon and the launch of more than 100 of its Starlink satellites in August alone. It has also recently signed yet another contract with satellite television, broadband, and Internet service provider SES for the deployment of eleven O3b mPower satellites in a series of launches to begin in 2021.
Now SpaceX has reportedly landed $1.9 billion in a new funding round that includes a group of investors known as Space Angels. This new deal places SpaceX at a valuation of $46 billion. This puts SpaceX at the third highest valuation among “unicorn” companies and some analysts say that the company is still undervalued at that.
Ability to Take the Long View Required
Investing in an aerospace company like SpaceX appears to require an ability to take the long view as entrepreneurs like Elon Musk pump money into research and development. SpaceX has not yet turned a profit mostly because it invests a considerable amount of money in ventures like the Internet-providing Starlink satellite constellation and the development of new rockets like Starship. The company plans for Starship to be capable of sending payloads and, eventually, human crews to Mars.
Elon Musk has hesitated to make the company a publicly traded one out of fears that shareholders will become too focused on quarterly reports. SpaceX was once nearly bankrupt, although the landing of several government contracts helped it turn things around. Stockholders’ insistence on quarterly profits above the long-term good of the company is also believed to be a factor in Boeing’s current problems.
Venture capitalists may be more patient than those who trade stocks in publicly held companies if the potential payoff is greater in the long haul, however. According to analysts at Morgan-Stanley, if SpaceX can keep promises like bringing its Starlink constellation’s Internet speed up to 1 Gbps and make it affordable for millions of potential subscribers, it could easily reach a valuation of up to $200 billion.
Rise to Mars!
Elon Musk has made the prospect of future Martian colonies a major part of branding for SpaceX. As he put it, “I would like to die on Mars. Just not on impact.” While moving to Mars might not be much of a retirement plan yet, the size of Facebook groups like the Aspiring Martians and Space Hipsters indicates that there may be a greater interest in the future of space travel than most people think. Virgin Galactic has also already sold tickets for its suborbital flights at $250,000 apiece.
That’s something that entrepreneurs like Musk can cash in on. Although the cost per “ticket” for a flight to Mars is likely to be high, his focus has been on developing reusable hardware that could bring the price down compared to more “traditional” payload launch services. SpaceX has already reused the first stage of its Falcon rockets as many as six times, caught a payload fairing in a huge net, and is currently refurbishing the Dragon spacecraft that it used for the crewed Demo-2 mission. Musk has said that all this could bring the cost of spaceflight per person down to about the cost of a good house in a modestly sized city.
Would you go to Mars or at least subscribe to satellite Internet services if it could be made better than many ground-based ISPs? Venture capitalists are betting on it with this new investment round in SpaceX.