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    Elon Musk – Part 2 SpaceX

    Elon Musk’s SpaceX was all over the news back in May when the company launched two NASA astronauts into space. The whole world stopped to watch the ambitious launch which has created a new milestone in the domain of space exploration. But are you aware of what the company has been doing all this while to generate revenues?

    Space Exploration Technologies Corporation, stylized as SpaceX is an American Private aerospace manufacturer and space transportation services company headquartered in California. One glance at its ultimate objective and you’ll feel that the company is living in an entirely different century. But wait, isn’t that how seemingly impossible ideas take a real shape?

    The objective of the company is to build technologies that will enable it to colonize Mars. Back in 2001, the idea of establishing a smaller than usual nursery on Mars, to monitor the growth of plants there made Musk travel all the way to Russia to buy a spacecraft for sending the nursery into space. But the excessive price of the spacecraft made him start his own manufacturing. Today it is able to reuse and relaunch many spacecraft components and is working towards building completely reusable spacecraft. This has given it an edge over competitors because the overall cost of its launches stands reduced as a result of the reusability aspect.

    The company is currently working in 3 major domains-

    Cargo Transportation

    Under a contract with NASA, SpaceX has been transporting cargo to and fro the International Space Station located in the Earth’s orbit since 2012. The cargo is generally scientific research equipment and other critical supplies. Recently it has also been awarded a contract to transport cargo to the Lunar Gateway which is to be placed in the Moon’s orbit for NASA’s 2024 Lunar exploration mission.

    National Security Missions

    SpaceX also carries out US national security missions on directions from The Department of Defence. Recently it has been awarded a fresh military launch contract to carry out more such missions over a course of 5 years.

    Satellite Dispatch

    SpaceX has also been building a constellation of satellites named Starlink that can provide internet connectivity to almost any corner of the world. The company plans to put as many as 12000 satellites into the orbit and has already sent 700 satellites. The current set to satellites has been able to achieve a speed of 100 mbps. It will soon start with public testing of the speed and latency for which it will give preference to certain rural areas of the US.

    Apart from this the company is involved in commercial satellite launches as well. Corporations planning to send satellites can do that through SpaceX’s launches. It has announced a Rideshare Program under which numerous small satellites of different corporations will be sent out in a single launch. The company has the largest market share in the commercial satellite launch industry.

    These 3 sources of revenue mean that the company has to maintain consistency in successful launches because the number of launches scheduled in a year fall drastically when any accident happens. Client confidence is negatively impacted and the company has to work to resolve the issue which caused the accident before it can resume launches. 2015 and 2016 saw a reduced number of launches for the same reason.

    Lower launch price also means lower margin for SpaceX. But the relatively lower price enables it to bag more launch contracts. More launches further mean more chances to develop expertise and try out new technologies to reduce overall costs. Also, this strategy keeps cash flows positive which keeps the company in a position to constantly fund its research and development.

    The company’s 3 rockets- Falcon 9, Falcon Heavy and Dragon which are used as per the payload requirements of the client. It charges about $150 million for a Falcon Heavy launch and about $60 million for a Falcon 9 launch. Currently valued at $46 billion it occupies the 3rd position on the list of Unicorns which are privately held startups topping $1 billion in valuation. This is not the end of the story. As per Morgan Stanley analysts, SpaceX’s valuation could go as high as $200 billion if its Starlink project is a success. Clearly, investors are betting big on the Starlink which may be taken public as a separate company in future. A lot depends upon the speed, affordability and reliability of its internet service.

    The company also plans to start high-speed point-to-point travel services and start competing with airlines. The high-speed rocket-based system will take off with passengers from one location, reach the Earth’s low orbit and then land at the destination. Virgin Galactic is also working on a similar technology which can fly at a speed of Mach-3 i.e. 3 times the speed of sound. Also, it will start providing trips to the ISS in the near future.

    SpaceX is a brand. What makes it even more appealing is the presence of the witty entrepreneur- Elon Reeve Musk. The company has achieved numerous firsts during its 18-year journey. It was the first private company to launch, orbit and recover a spacecraft; send a spacecraft to the ISS; send a satellite into high earth orbit and launch commercial manned spaceflight. Why won’t The US Defence Department, NASA and other private companies bet on SpaceX for their missions and launches. Let’s see how long it is before the company is able to put a human on Mars. Taking into account the company’s past record of success, that time doesn’t seem very far away.

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