SpaceX

All research on startup and the whole investment memo has been done for personal use of Akim Arhipov.

SpaceX, founded by Elon Musk in 2002, has redefined the space exploration landscape. It is the first private company to achieve revolutionary advancements, including reusable rocket technology and cost-effective space logistics, positioning itself as the dominant player in the aerospace sector. SpaceX operates its own launch facilities in Texas and commands a significant share of the global launch services market, driving innovation in satellite internet and interplanetary exploration.

Key milestones include

Becoming NASA’s primary partner for critical missions like the Artemis program;
Deploying reusable rockets, drastically reducing costs for orbital payloads;
Achieving over 384 successful launches, with an average cadence of one every four days;
Launching Starlink, a satellite internet service, which has transformed global connectivity, especially for underserved areas.

SpaceX’s consistent focus on innovation and scalability has made it one of the most valuable private companies in the world, with a valuation of over $200 billion as of 2024.

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fff.club was approached with an offer to buy SpaceX shares in a secondary transaction. Since the company is privately held with limited access to the information, this memo is based on publicly available sources and some of the materials shared with us by funds who have done secondary transactions before.

The mission of SpaceX is to make life multiplanetary. Including human exploration of space, establishing sustainable settlements on Mars, and making space travel accessible and economically viable for governments, businesses, and individuals.

Key objectives:

Reusable rockets: revolutionizing space logistics with reusable systems like Falcon 9 and Starship, aiming to reduce payload costs from $28,000/kg to $100/kg;
Interplanetary exploration: enabling sustainable human life on Mars, with a crewed mission planned by 2029;
Satellite connectivity: expanding global internet access through Starlink, particularly for remote and underserved regions;
Democratizing space access: supporting commercial, scientific, and government missions with affordable, frequent launches and emerging space tourism.

SpaceX addresses the high costs and inefficiencies of traditional aerospace systems with groundbreaking innovations, such as:

Reusable rockets

Starship

SpaceX pioneered reusable rocket technology, enabling multiple uses of rocket stages, which previously required costly rebuilding process. The Falcon 9 rocket has reduced payload costs to $2,000/kg—a 90% reduction—with the Starship system expected to achieve $100/kg, making space logistics comparable to earthly transportation. Successfully conducted over 384 rocket launches since inception.

In June 2024, SpaceX achieved the first successful launch of Starship, the world’s heaviest rocket. This fully reusable rocket can carry 150 tons to orbit, a historic record, at $100M per launch—20 times cheaper than NASA’s Space Launch System. With further advancements, Elon Musk predicts Starship's costs could drop to $15M per launch, revolutionizing space travel and interplanetary missions.

Starlink

Launched in 2019, Starlink has rapidly become the leader in satellite internet, serving 3 million subscribers across 75 countries. By 2024, Starlink is projected to generate $6.6B in revenue (+80% YoY), surpassing SES and Intelsat by 60%. Starlink has consolidated the market with a $3.8B EBITDA (58% margin) and plans for an IPO in 2025–2026 at an estimated valuation of $150–200B.

Space Tourism

SpaceX has introduced space tourism opportunities with ticket prices starting at $300,000, offering both private individuals and organizations access to low Earth orbit for exploration and research.

Vertical Integration

Producing 70% of components in-house, SpaceX significantly reduces costs, such as manufacturing radio systems at $5,000 versus competitors’ $100,000. This efficiency fuels a sustainable business model and supports rapid R&D.

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SpaceX has cemented its position as NASA’s primary partner, serving as the sole provider for astronaut transportation to the ISS and delivering 80% of the global orbital payload in 2023 with a launch frequency of every four days.

As the first to achieve reusable rocket stages for orbital delivery, SpaceX has drastically reduced launch costs while building an advanced fleet that includes Falcon 9, Falcon Heavy, and the Dragon spacecraft.

In March 2024, SpaceX's Starship—the largest launch system ever built—reached orbit, and by October 2024, its Super Heavy booster was successfully caught mid-air by the "Mechazilla" launch tower, marking a groundbreaking leap in reusable rocket technology and paving the way for missions to the Moon and Mars.

Competitive Advantages

Cost optimisation:

Reusable rockets reduce the cost of sending 1 kg to orbit from $28,000 to $1,400.
Starship promises further reduction to $100/kg, revolutionizing space logistics.

Technology and innovation:

First private company to achieve successful reusable rocket stages.
Pioneering the Starship program, which is set to enable interplanetary travel by 2029.

Strategic market position:

Dominates the U.S. market with 91% of orbital launches in 2023 and 43% globally.

Starlink’s market leadership:

Rapid growth has positioned Starlink as the leader in satellite internet, surpassing traditional players like SES and Intelsat.

Ability to win:

SpaceX has outperformed major aerospace competitors, including Boeing and Blue Origin, to become NASA's primary partner for critical missions, such as the Artemis Moon program. It is currently the only company capable of delivering NASA astronauts to space stations, solidifying its leadership in the industry.

Market Size and Dynamics

The global space launch services market was valued at $16.9B in 2022 and is projected to grow to $29.6B by 2027. SpaceX leads with a 58% share of global launches in H1 2024, propelled by the increasing demand for satellite deployment, government contracts, and emerging applications like space tourism.

Key growth drivers

Market challenges

Rising deployment of small satellites.
Technological advancements in reusable launch vehicles.
Growing investments in commercial and government space programs.

Competitive landscape

Arianespace (France)
Northrop Grumman (US)
Rocket Lab (US)
China Aerospace Science and Technology Corporation (China)

Limited availability of dedicated launch vehicles for small satellites.
Reliance on secondary payload opportunities restricts flexibility.

Risks

Potential delays in Starship development or increase of unsuccessful launches.
Dependence on a successful Starlink IPO and overall public market conditions.
Geopolitical risks and economic downturns could impact NASA missions and SpaceX’s growth.
Heavy reliance on Elon Musk’s leadership and reputation.

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More info on the market can be found HERE and HERE

Elon Musk: CEO, renowned innovator behind Tesla, Neuralink, and more.

Gwynne Shotwell: President and COO, recognized as one of the most influential women globally by Forbes.

Tim Hughes: Senior VP, former legal advisor to the US House of Representatives Science Committee.

Performance Highlights

2024 Revenue: projected at $13.3B (+43% YoY);

Starlink revenue: expected to generate $6.6B in 2024, with a $3.8B EBITDA (58% margin);

Launch frequency: achieving an average of one rocket launch every four days;

Valuation growth: increased by 445% since 2019, reaching $208B as of 2024.

Revenue Streams

Launch Services (~50% of Revenue)

SpaceX generates significant revenue from launching cargo and astronauts to low Earth orbit and space stations.
Minimum launch cost for the Falcon 9 is $49M, with the gross margin for Falcon 9 and Falcon Heavy around 40%.
75% of launch expenses are tied to the first rocket stage; reusing it multiple times reduces launch costs by $25.7M, increasing gross margins to 77%.
Key customers include NASA and satellite internet operators like SES.
SpaceX also offers space tourism services, with tickets starting at $300,000 per person.

Starlink (~50% of Revenue)

Revenue primarily comes from subscription services for both B2C and B2B customers, starting at $120/month, as well as hardware sales for user terminals.
Approximately 75% of Starlink’s revenue is generated from subscriptions.
Partnerships with major telecom operators, such as T-Mobile, expand the network’s accessibility. Starlink satellites equipped with Direct to Cell technology allow direct internet connectivity for telecom clients.

Worth to mention

There are also several factors that play in hand of SpaceX to support their revenue growth and general company economy

Vertical Integration

Flywheel effect

SpaceX and Starlink produce up to 70% of their components in-house, eliminating third-party markup and achieving substantial cost savings.
For example, SpaceX manufactures a radio system for $5,000, whereas competitors like ULA spend over $100,000 for similar equipment.
This approach not only reduces production costs but also boosts profitability and operational efficiency.

Revenue from rocket launches finances the development of more advanced, reusable spacecraft.
Continuous technological improvements lower launch costs, attracting new contracts and increasing profitability.
The recurring revenue from launches and contracts creates a self-sustaining ecosystem, driving innovation and ensuring consistent R&D investment.