SpaceX is a privately funded rocket manufacturer and transport services company based in Hawthorne, California. Also known as Space Exploration Technologies, Elon Musk founded the company in 2002. SpaceX is developing a reusable rocket and launch system to significantly reduce the cost of space flight. A loftier goal is to crew a space mission to Mars by 2024.

Key Takeaways

  • Investors hoping for another Tesla are eagerly awaiting an IPO for SpaceX, the privately-owned rocket company launched by Elon Musk.
  • The superstar CEO doesn't plan to take SpaceX public, as the short-term demands of shareholders conflict with his long-term ambitions.
  • Reports suggest SpaceX could spin-off its Starlink satellite business, but Musk has said he has given no thought to the possibility.

NASA Relationship

SpaceX initially received funding from Founders Fund, Draper Fisher Jurvetson and Valor Equity Partners. In January 2015, Google and Fidelity invested $1 billion for a stake of just under 10%.

SpaceX has launched dozens of missions from facilities in California, Texas and Florida.  In 2008, NASA awarded SpaceX a $1.6 billion contract to deliver cargo to the International Space Station (ISS). In May 2012, its Dragon spacecraft visited the ISS, which marked the first time a craft developed by a private company had done so. In September 2014, NASA awarded SpaceX a $2.6 billion contract to transport NASA astronauts into space. NASA is increasingly relying on private companies for services, to the benefit of SpaceX, Lockheed Martin, Boeing and Blue Origin, among others.

A key innovation is the company's reusable booster rockets, which can be flown as many as ten times, though none have been flown more than three times. The company's Falcon 9 spacecraft costs $62 million to book, while a mission using the the Falcon Heavy costs $90 million.

Musk's Lofty Projects

By pursuing a goal of creating reusable rockets rather than the industry standard of one-time use rockets, the company is looking to save large sums on manufacturing, thus decreasing the cost of entering space. This is not Musk's first lofty project, but with interplanetary goals in mind, it is the most exalted.

The serial entrepreneur is perhaps best known for co-founding electric car manufacturer Tesla in 2003. He also co-founded the online payment services company that later became PayPal. Other notable projects include The Boring Company, which aims to burrow tunnels underneath cities to relieve traffic congestion, and Neuralink, which is developing interfaces to connect the human brain to computers.

PayPal went public in 2002, was quickly snapped up by eBay, and then returned to the public markets in 2015. Tesla's shares debuted in 2010. With Musk's track record, it would not be surprising if SpaceX also went public. According to information given to the Federal Communications Commission, Musk owns 54 percent of SpaceX and controls voting rights for 78% of the shares.

SpaceX Manufacturing Expediency

SpaceX can launch a rocket for $90 million, compared to $380 million for rivals. The lower cost is due partly to an emphasis on in-house manufacturing. For example, instead of spending $50,000 to $100,000 to purchase radio equipment and other communications gear, SpaceX was able to develop gear in-house for $5,000.

As a private company, SpaceX is freed from the restrictions associated with a government bureaucracy that tend to plague organizations such as NASA. This has allowed Musk to move with surprising speed, rapidly creating parts and equipment, securing launchpad sites, and hiring employees from competing companies and universities.

An IPO Is as Far Away as a SpaceX Mars Landing

In 2018, SpaceX logged an estimated $2 billion in launch revenue, compared with an industry-wide total of $8 billion. A recent note from Morgan Stanley valued SpaceX at $52 billion, based on its Starlink satellite broadband business. The company's chief operating officer said Starlink could be a candidate for a spin-off IPO, but Musk said he had given no thought to such a move.

Unique in the story of SpaceX is the company's government contracts, which Musk is likely to want to keep. A public offering for the broader company could deter the security of future government contracts, though the necessity of NASA outsourcing may override a decision to turn away from SpaceX due to a public offering.

By operating privately, SpaceX is free from the burdens of transparency and shareholder claims. He can do as he wants, when he wants, to promote the company's goals. The presence of Boeing as a publicly-traded company has not prevented the U.S. government from making use of the company's technologies and services.

The company has said SpaceX will not go public until regular flights to Mars have been achieved.

Musk has suggested SpaceX will remain private, as the company's long-term goals conflict with the short-term demands of public markets and stockholders. SpaceX President and COO Gwynne Shotwell has said SpaceX could not go public until the company was flying regularly to Mars. SpaceX hopes to send its first cargo mission to Mars in 2022, followed by a crewed mission in 2024.

The argument remains: opening SpaceX to the public could change its fundamental mission to Mars into a mission for profits. Musk is not likely to tap the public markets soon for an IPO unless funding from the U.S. government or institutional investors such as Google unexpectedly drops.

SpaceX remains a young space company, one that is not immune from financial pressures. In January 2019, it cut 10 percent of its workforce, bringing total headcount to 6,400 employees. Nevertheless, if the company reaches its ultimate goal of an historic crewed mission to Mars, Musk will have crafted yet another amazing success story. In the meantime, the company is more concerned with attaining more government contracts and successful launches.