SpaceX: The Future Among Major Investors and Promises

On what and why the high-profile investors of Elon Musk’s space company are betting (among which Intesa Sanpaolo has also joined)

BY EMILIO COZZI

SpaceX: a mirage or a timed safe?
Excluding the collective hallucination, the number and quality of Elon Musk’s company’s investors increasingly lean towards the latter hypothesis, that of a safe and long-term investment. The most recent one came from Intesa Sanpaolo and was made official on October 9th.
The growing enthusiasm can be attributed to the results of the most prominent activities – space launches and transportation services for NASA, to and from the International Space Station – which, besides being an almost ordinary success, are an outstanding branding operation.
Then there are the finances, which are not public – since SpaceX is not listed on the stock exchange -, but the Wall Street Journal managed to sneak a peek a few weeks ago. By the numbers, SpaceX’s situation might seem less rosy, but only if limited to a mere numerical assessment, whose partiality we’ll attempt to explain in the following lines.

The Race of Funds
Despite the finances, investments in SpaceX have made it the largest unlisted aerospace company in America and the Western world.
There are no official indications about the investment amount by Intesa Sanpaolo, which places it below the disclosure threshold of significant participations. Nevertheless, Intesa Sanpaolo has joined the high-profile financiers of the space company.
For the largest Italian banking group, the commitment is speculated to be less than a hundred million euros, a significant sum but marginal compared to SpaceX’s usual investment rounds.
Consider the case of the Public Investment Fund, the Saudi sovereign investment fund, which, along with a company from Abu Dhabi, according to Reuters, has poured more than a billion dollars into SpaceX’s coffers. Earlier in the year, there were also the 750 million from Andreessen Horowitz, Sequoia Capital, Founders Fund, and Gigafund. In 2022, SpaceX itself stated that investments exceeded two billion. Speaking of giants, U.S. groups Fidelity Investments and Alphabet – the holding company to which Google belongs – have also invested in Musk’s space activities. In the end, NASA was the first to bet on it (and win).

Few Profits, Big Investments…
As anticipated, the few known numbers from its finances were revealed by the Wall Street Journal in August. With two scoops: one revealed that in the opening quarter of 2023 SpaceX recorded its first profit, just 55 million (on a turnover of 1.5 billion), after two years of “significant losses”. Nearly a billion (968 million) in 2021 and 559 million in 2022. Not an exciting margin, one might say, especially given the undeniable successes: in 2020 the start of commercial astronaut transportation to the ISS. Then the launch of the Starlink service. The revenues, according to the WSJ, doubled from 2021 to 2022. From share issuance, two billion came in.
The figures revealed by the Wall Street Journal might seem meager, but one should wonder how a company that invests so much is profitable. According to the American newspaper, in 2021 and 2022, SpaceX invested 5.4 billion dollars (more than double the entire 2021 turnover) in infrastructure acquisition, equipment, and research and development. Hence the scoop only partly surprises. Because while it’s true that SpaceX’s valuation is around 150 billion dollars (like Intel or Disney) and that Musk has announced a revenue of eight billion for 2023, the development of Starship and the Starlink constellation require nine-figure investments.

For this reason, among major investors, there’s trust. In the records and the reliability of the technology. It’s no coincidence that Intesa’s press release cites the many achievements: the development of a launcher capable of returning to Earth and being reused, and that of the Dragon shuttle, utilized by NASA (and by Axiom, a private company) for supply to and from the ISS and for crew transport.
There’s no lack of mention of upcoming objectives, like Starship, whose test last April 20, ending literally in smoke, hasn’t at all undermined Musk’s confidence in his endeavor, nor that of the world ready to bet on it. “Fully reusable launch spacecrafts, the most powerful ever built, capable of transporting people to Mars and other destinations in the solar system” confirms Intesa Sanpaolo’s press release.
This too is significant, the way SpaceX is perceived. The reality is that Musk has always thought (and made others think) he was much bigger than he was. Only to then actually become it. This was the case when he began launching the Falcons, then started returning them to Earth for reuse, sometimes even a few hours later.
The same was true for Starlink, the mega constellation for ubiquitous and broadband satellite internet: according to the other WSJ scoop, in 2015 it still had no name, but was already being presented to potential investors with estimates projecting the business at 12 billion in revenues (and seven in profits) thanks to the 20 million subscribers expected by the end of 2022. In 2023, subscribers are around two million, but even in this case, the delay doesn’t seem to alarm anyone.

… and Many Promises

Again, why?
Firstly, because today SpaceX dominates, de facto, the global launch market: this year it aims to achieve a hundred, improving the 2022 record, when it reached 61, equivalent to the entire Chinese space sector.
Then because, to its carriers, SpaceX adds Starlink, a system proven useful in the recent emergency in Emilia Romagna, and even decisive in the war in Ukraine, where its extraordinary strategic value (also disconcerting for a private asset) was highlighted. It’s significant that SpaceX is already assembling a military version for the U.S. Department of Defense, called Starshield.
War scenarios aside, it’s still certain that private constellation customers subscribe to a monthly subscription for about a hundred dollars, while the figures for institutional customers, for telcos, airlines, or cruise ships are much higher. It’s plausible that the source of earnings is, and will be, traced back to this segment, a testament to SpaceX’s long-term approach, aimed at making the company a service provider, rather than a space hardware supplier.

All good then?
To be precise, no, because although promising a new and profitable future for space services, the success of Starlink is still to come. As is Starship: it’s expected the rocket and spaceship will bring humanity back to the Moon, deliver hundreds of satellites with a single launch, take tourists around the Solar System, and pioneers to colonize other planets. In this case too, these are programs, or if you prefer, promises not yet kept.
It will take time; to get into orbit, to land and reuse rockets dozens of times, to bring fast internet to the desert and open sea. And also to go to Mars.
A time that investors are determined to consider as in a safe. For now.