PrivCo Confirms SpaceX is "Cash-Flow Positive"; Elon Musk's 65% Stake in SpaceX Worth Estimated $1.6 Billon
SpaceX's Dragon capsule is the first ever private commercial spacecraft to dock onto the International Space Station.
June 7, 2012 8:00am EST New York, NY – President Obama sent a congratulatory call, and a U.S. Representative from the NASA Committee praised the mission as “a change in the trajectory of how we think of space exploration.” Privately-held Space Exploration Technologies Corporation (PrivCo Private Company Ticker: SPACEXP), a designer, manufacturer, and launcher of rockets and outer space vehicles, had that kind of week.
Better known as SpaceX, the company’s Dragon capsule became the first ever private commercial spacecraft to dock onto the $100 billion, 16-nation International Space Station. After a setback delayed the May 19th launch of Dragon and the Falcon 9 rocket, SpaceX not only fixed the problem but also successfully completed the entire mission – a half ton cargo delivery to the ISS – with a successful Pacific splashdown on Thursday, May 31.
Founded in 2002, SpaceX is headed by Silicon Valley veteran Elon Musk, whose previous ventures include co-founding PayPal and Tesla Motors (NASDAQ: TSLA). According to Musk, SpaceX's ultimate mission is for humanity to become a “multi-planet species," and he has thus far invested $100 million of his own money to accomplish that. While Musk's ultimate goal has an indefinite timeline, last week's success proves that private enterprise is currently capable of President Obama’s initiative to commercialize low orbit space transportation.
In an exclusive interview with PrivCo this week, SpaceX Spokeswoman Kirstin Brost Grantham described last week’s mission as “an important step in the right direction” but was quick to note, “There is a lot more work to be done.” SpaceX's next major milestone would be gaining a lucrative NASA contract to ferry astronauts to the International Space Station with a target date of 2015.
With such lofty goals, Grantham describes Musk’s Silicon Valley pedigree as SpaceX’s driving innovative impetus. “He [Musk] is asking us not to be held by what has been done before but instead by what is possible,” Grantham told PrivCo. Furthermore, SpaceX's private status gives it the freedom to closely follow Elon Musk’s vision. Grantham explained to PrivCo that SpaceX's private status allows it “to focus energy on making radical improvements to space flight our primary goal, not being highly profitable.”
That said, Grantham confirmed exclusively with PrivCo that SpaceX has been "cash-flow positive" and growing "steadily" for the past 5 years. The aerospace industry is notoriously difficult to enter as many contracts and procedures can be marred by government red tape. However, SpaceX has diversified itself with a manifest of 40 launches through 2017 that are over 60% commercial satellite launches using SpaceX’s Falcon 9 or Falcon Heavy rockets.
Following the success of last week’s cargo test mission, SpaceX can also begin cashing in on its $1.6 billion NASA contract for 12 re-supply flights using Falcon 9 and Dragon ($133 million per flight) to the International Space Station through 2015. This contract has an option for additional supply flights that if exercised bring the total value of the contract to $3.1 billion for SpaceX.
According to Grantham, SpaceX has already entered into over $4 billion of combined commercial and government launch contracts through 2017 using its Falcon 9, Dragon, and Falcon Heavy vehicles. Falcon 9 and Falcon Heavy cost $54-$59.5 million and $80-$125 million respectively per launch. PrivCo estimates a Falcon 9/Dragon mission costs approximately $133 million based on the NASA contract.
Given these price points, a busy launch manifest, and a few pre-priced legacy contracts with pending launches (including ORBCOMM’s 18-satellite, approximately 6-launch $46.6 million Falcon 9 contract in 2009, and Iridium’s 8-launch $492 million Falcon 9 contract in 2010, both confirmed by SpaceX's flight manifest, and a 3-year $396 million NASA contract ending in 2012), PrivCo analysis forecasts rapidly increasing revenues for SpaceX:
Furthermore, SpaceX’s last valuation on secondary markets of $10/share or $1.2 billion is dated to April 2012 before its historic mission. PrivCo estimates that given the mission’s success, new contracts the company stands to gain, and its rapid growth, SpaceX’s share price has now doubled in value to a PrivCo-estimated $20/share with a valuation of $2.4 billion. In an additional valuation data point, PrivCo confirms a recent $18.50/share ask price from secondary markets, up 85% from its last trade in April.
Furthermore based on VC rounds, PrivCo estimates that Elon Musk owns approximately 65% of SpaceX. At the $2.4 billion valuation, Musk's SpaceX stake is worth about $1.6 billion (a healthy addition to his most recent Forbes estimate of $2 billion before SpaceX's recent mission success).
“SpaceX’s successfully completed space cargo mission can be analogized to a biotech company that just had its new drug successfully pass Phase 3 clinical trials,” said PrivCo CEO & Founder Sam Hamadeh in a statement. “The impact on the company's valuation after proof of success is dramatically positive.”
"SpaceX also shows private secondary markets working at their best," added Hamadeh. "Prior to this binary event (success or failure) occurring, both buyers and sellers in SpaceX private stock were able to benefit: buyers were able to place bets on the company at just $10/share, roughly half of the company's value after the success of its launch; while an inside seller was able to take some chips off the table ahead of the launch in case it failed. With SpaceX's valuation on secondary markets still in the low-billions, this is precisely the profile of a private company that makes for ideal secondary market trading," Hamadeh explained.
As Silicon Valley continues to lose steam following the Facebook (NASDAQ: FB) debacle, investors may soon be lining up to invest in aerospace names like SpaceX or privately-held competitors like Sierra Nevada (PrivCo Ticker: SIEEP). Grantham explained to PrivCo that SpaceX would go public only when the time is right. In a public statement, Musk said that before an IPO, SpaceX would first need to establish a reliable rhythm of launches for NASA and other customers, a process which could take years.
Given last week’s success, SpaceX could be well en route to a busy launch pad for years to come. President Obama’s privatization initiative has clearly created a space race with the difference being that modern competitors like SpaceX are shooting for lucrative NASA contracts rather than the moon…for now.