2022 was a great year for SpaceX, but 2023 is already even better. In 2022, SpaceX launched a record-topping 61 space rockets, which was more than any other company or country on Earth accomplished. This year, with a plan to schedule 60 launches, China is hoping to approach last year’s SpaceX record.
But SpaceX itself has already beaten that record. On Friday last week, it launched its 66th mission of the year.
According to website SpaceExplored, which keeps a running tally of SpaceX’s launches, SpaceX has so far launched 62 Falcon 9 missions to orbit (mostly carrying internet satellites for SpaceX’s own Starlink system), as well as three Falcon Heavy missions and a single test flight of its Starship megarocket. Even if you don’t count that test flight, or the Falcon Heavy missions either, it turns out that a single SpaceX model (the reusable Falcon 9 workhorse) has already launched more often than all of SpaceX’s launches last year — and more than China even hopes to launch through the end of this year.
Now why does this matter to investors?
Obviously, the fact that SpaceX has built a space program bigger than the space programs of the United States, Europe, and China gives SpaceX significant bragging rights. At this point, when a potential customer is looking for a company to put its satellites in orbit, SpaceX is clearly going to be the first company it thinks of calling.
For investors still hoping to invest in a hypothetical SpaceX initial public offering (IPO), that should translate into less spending on advertising to sell SpaceX launches (i.e., lower marketing costs), as well as probably higher spending on marketing for SpaceX rivals, such as United Launch Alliance (ULA) and Arianespace. Combined with SpaceX’s already lower cost of a space launch (the advertised cost of a Falcon 9 launch is still just $67 million versus $109 million for a ULA Atlas V launch, for example), this gives SpaceX a durable economic advantage over competing space companies.
Advantages piled on advantages
But this story gets even better for SpaceX (and conversely, worse for Boeing and Lockheed Martin, the two companies that co-own ULA, and for Airbus, too, which according to data from S&P Global Market Intelligence is the biggest shareholder of Arianespace.
Consider that each time ULA launches an Atlas V rocket, the $109 million cost of that rocket launch is entirely expended on the launcher, which burns up in the atmosphere after use.
In contrast, in most SpaceX Falcon 9 and Falcon Heavy launches, the first-stage boosters land back on Earth so that they can be refueled and reused for subsequent launches. Being reusable, they don’t have to be rebuilt, which saves SpaceX money. And in fact, being reusable multiple times, the initial cost of each Falcon 9 can be amortized across the totality of the number of times it flies.
How does that work in practice? Here’s the math:
According to SpaceX, the first stage makes up approximately 60% of the total cost of a Falcon 9 rocket. Times $67 million, that means a first stage costs about $40.2 million. And here’s the thing:
In July 2023, one of SpaceX’s Falcon 9s set a new record of 15 reuses, or 16 total flights. Let’s say that’s the upper limit on how many times SpaceX can reuse a first-stage booster. (It probably isn’t. In fact, SpaceX is reported to be aiming for 20 reuses per first stage). But even if it were the case, then $40.2 million divided by 16 means that each first stage effectively costs SpaceX only $2.5 million per mission.
Add back the remaining 40% of a Falcon 9 cost (so $26.8 million) not attributable to its first stage, and the effective cost of each Falcon 9 launch becomes just $29.3 million — or about $80 million cheaper than a disposable ULA Atlas V launch.
What it means for investors
The U.S. government’s desire to keep multiple space companies in business and competing against each other for government launch work means that, even if ULA rockets are more expensive than SpaceX rockets, the government will probably continue awarding some launches to SpaceX’s competitors — for now. But as government budgets get increasingly squeezed over time, I’d expect more and more space work to go to SpaceX over and above the company’s commercial contracts and its own Starlink launches.
Plus, at some point in the future, other space companies are going to come online with rockets of their own. Indeed, Blue Origin, Firefly, and Relativity Space are all in the running to do just that. These new space companies may not yet be able to beat SpaceX prices. But there’s a good chance one or more of them will be able to beat ULA prices.
If I were an investor in Boeing or Lockheed Martin right now, I don’t think I’d be betting on their space businesses producing a whole lot of profits from rocket launches 10 years down the line.