Morgan Stanley analysts see SpaceX value growing to $50 billion


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Capitalism in space: A report from Morgan Stanley on Friday said that the value of SpaceX could grow to $50 billion, more than doubling its present value, if it successfully launches its proposed broadband satellite constellation.

I like this quote from the article:

Reducing the cost to launch a satellite to about $60 million, from the $200 million that United Launch Alliance charged through most of the last decade, was a monumental breakthrough. SpaceX is trying to reduce its cost to $5 million per mission, and Morgan Stanley says the launch business “generates limited operating income.”

As they say, the proof is in the pudding, and you might say that SpaceX in the past five years has launched a lot of pudding.

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9 comments

  • LocalFluff

    Nonsense!
    Columbus didn’t discover oversea lands because he had developed a better ship. There is not too much relation between making better tools and the effort to put them to good use. It can at least not be taken for granted that ability leads to action. Chinese history is an example of that. They invented paper and gun powder and what not. Centuries later the Europeans suddenly colonized them, using those same technologies in practice. Because the Chinese lacked the societal mechanism (i.e. individual freedom for the very brains that figure everything out) to turn knowledge into use.

    The investment bankers divide SPX current cash flow with a figure which represents their risk adjusted alternative cost for all future. They don’t consider that everything is in space and that space is worth more than everything else. Nor that SpaceX isn’t for sale and hasn’t profit maximization as its aim. Wall Street just doesn’t get it. 5, 50, 500, 5000? Just pick a number for your bottom line, their boss says.

    One cannot buy SpaceX stocks on the daily market, but one can bet on them. I suppose it is illegal in the US to emit stocks without any voting rights that are only dividend shares. (You should copy the association laws of Liechtenstein, they are excellent).

  • wodun

    SpaceX is trying to reduce its cost to $5 million per mission

    I don’t know if they are confusing cost and price or not. The problem with dropping price so much is that SpaceX still needs money to fund activities that don’t turn a profit yet. Making it up on volume might not work out either as that will also increase some of their costs. I guess we will see. It really all depends on how much profit SpaceX wants to make and how they group activities to determine that profit.

    For example, for a Mars mission would they want $40 million profit off each launch or $40 million profit off the launches bundled together?

  • wodun

    @LocalFluff

    Determining the value isn’t just for selling stock but for raising investment capital. The value of the company helps determine how much money can be raised and what kind of return the investors can expect to get. SpaceX has a lot of investors even though they don’t have publicly traded stock.

  • ken anthony

    Let me light the conspiracy. SpaceX will go public only after Elon is gone along with its fantastic growth. Then it will become just another Boeing.

  • SCoop

    LocalFluff
    Columbus discovered America because he was an idiot who got lucky. Don’t entirely disagree about the Chinese. They were too big for central rule at the time. Also, central rule makes an obvious target and weakpoint.

    The US does have non-voting stock, it is called common stock. Most stock is common.

  • wayne

    This headline would be more accurate, if it said
    “Morgan Stanley Sees SpaceX Market Capitalization Growing to $50 billion.”
    Market Capitalization, is the correct term.

    SCoop–
    As has been noted, SpaceX is a private company. Musk completely controls the Class of Shares that can actually Vote.
    SpaceX , Tesla, and Solar City, all have various classes of shares, and Musk controls those classes that can vote.

    SCoop–

    ken–
    interesting take! (It might depend on whether Musk is taking his medication, at any given time, for his Bi-polar condition.)

    -Tesla makes no profit on production of their electric cars– they burn through cash at an incredible rate, although they do generate substantial revenue selling their CAFE credits to other internal-combustion car producers. And US taxpayers subsidize Tesla car owners to the tune of $17.5 K per Unit.
    Solar City makes no profit, although they generate huge cash flow, and are dependent on government subsidies that are scheduled to cease over the next 1-3 years.
    SpaceX, as Stanley Morgan notes, only generates limited operating income, but it is income off their operations.

  • Michael

    Ken- I think that you are pretty much right but that is probably the cycle of things; at one time Boeing was the cat’s meow.

    Hopefully by the time Elon leaves there will be a thriving society on Mars, SLS will be only a few years from its first manned flight, and there will be a new maverick taking up the cause – standing on Elon’s shoulders so to speak.

  • Michael

    SCoop

    Actually Columbus knew about America. What he did not know about was South America. He figured on sliding south and making a bee-line for China and India. Before his voyage he spent some time in Northern Europe where the existence of the American continent was an open secret – for example fishing off the Grand Banks.

    Since I researched the matter in high school back in the 60’s I have always maintained the Columbus is famous not for “discovering” America but rather for being the “last” guy to “discover America”

  • Edward

    wodun wrote: “I don’t know if they are confusing cost and price or not.

    From context, it looks to me like they mean the price tag on the launch, because they mentioned the recent $60 million price tag as a cost. That is a pretty low number, considering the cost to SpaceX to build the rocket, to build or rent the infrastructure, and for operations, but that sounds like one heck of a goal for them to strive for. I would call it yet another stretch goal. SpaceX seems to thrive on stretch goals.

    With access to space at such a low price to the customer, I expect that for SpaceX and any other company will have more business than launch pads to conduct it.

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