
Why SpaceX desperately needs a government bailout - dankohn1
http://tmfassociates.com/blog/2020/03/21/why-spacex-desperately-needs-a-government-bailout/
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azernik
I'm unclear why the author sees the collapse of OneWeb as a bearish sign for
SpaceX; this is a competitor falling away, leaving Starlink with only Amazon's
recently-founded Kuiper as competition. COVID-19 is indeed a challenge, as it
is for the rest of the economy, but it's not particularly _more_ affected than
any other business.

In terms of cash flow, it may be somewhat insulated by the advance deposits
that the article describes as a kind of numerical gimmick; SpaceX can and is
still landing contracts for future activity, even while some launches have
been delayed, meaning there's still some cash flow even if it goes partially
idle for a few months.

This resilience, of course, requires the customers who put down money for
future launches to have healthy cash flow themselves. Since those customers
are mostly telecommunications corps and governments, I don't foresee them
running into cash flow issues. They'll still be awarding contracts based on
long-term prospects.

~~~
new_realist
SpaceX is wasting resources questing for Mars, and satellite launches are the
ultimate in discretionary spending—not popular in these uncertain times.

~~~
azernik
Let's look at the SpaceX launch manifest for the next year (not counting
Starlink), to get a look at what their cash flow comes from:

\- 6 military (US, South Korea, Germany)

\- 6 commercial telecommunications

\- 4 ISS cargo and crew transport

\- 1 astrophysics

\- 1 scientific earth observation

\- 1 tech demonstration

\- 1 rideshare of a bunch of cubesats

Only those last four would I classify as "discretionary spending" \- military
spending is quite immune to the present crisis, telecoms is if anything more
important than ever, and the ISS support is necessary to maintain an enormous
capital investment.

I think you have a mental image of the launch market looking mostly like those
last four, when in fact that's a small minority of the market. (And of those
four, two are of the institutional research category that gets budgeted and
contracted years in advance; a 1-year crisis isn't going to have much effect
on budgeting decisions for 2022 and onward.)

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toomuchtodo
I'm not so sure the author's thesis holds water.

During SpaceX's funding round last month, they raised $500M [1], $250M more
than they were seeking (raise when you can!). Also, while the author disagrees
with StarLink's expectation of access to the FCC’s Rural Digital Opportunity
Fund auction funds, I would hazard a guess that the FCC's business friendly
modus operandi under the current administration would not require such a
strict interpretation that only a terrestrial network would be eligible for
access to those funds (even if StarLink can reallocate capacity across the
globe on the fly). NASA and the DOD also seem fond of the work SpaceX is doing
(ISS CRS [2], recent Lunar Gateway contract win [3], and the DoD funding a
StarLink proof of concept [4] for high bandwidth low latency comms for fighter
aircraft); the government dollars are likely to continue to flow.

Elon is no stranger to cutting fast and deep when necessary (see: Tesla,
multiple times). If SpaceX was in peril, I very much doubt Musk would be
unable to raise (again from CNBC: “It’s one of the most valuable private
companies in the world and, with consistently oversubscribed capital raises,
SpaceX shares rank among the most in demand of any pre-IPO companies.”), even
accounting for the market's recent high volatility and turmoil. I also don't
see the OneWeb bankruptcy as reducing SpaceX's $36B valuation; it leaves one
less global comms competitor in the race.

Sidenote: The FCC _should_ require ground station telemetry reporting to the
FCC on a frequent cadence to ensure end users are receiving the throughput and
capacity StarLink is committing to by obtaining FCC RDOF funds, but that's a
discussion for another thread.

[1] [https://www.cnbc.com/2020/03/09/spacex-
raising-500-million-i...](https://www.cnbc.com/2020/03/09/spacex-
raising-500-million-in-new-funding-for-elon-musks-company.html)

[2]
[https://en.wikipedia.org/wiki/Commercial_Resupply_Services](https://en.wikipedia.org/wiki/Commercial_Resupply_Services)

[3] [https://www.engadget.com/2020-03-28-nasa-spacex-lunar-
gatewa...](https://www.engadget.com/2020-03-28-nasa-spacex-lunar-gateway-
cargo.html)

[4] [https://spacenews.com/air-force-enthusiastic-about-
commercia...](https://spacenews.com/air-force-enthusiastic-about-commercial-
leo-broadband-after-successful-tests/)

~~~
cjhopman
> During SpaceX's funding round last month, they raised $500M [1], $250M more
> than they were seeking (raise when you can!).

This was addressed in the article. While they initially claimed they wanted
only $250M, they actually approved and tried to raise $500M. I don't know
where you got the idea that they actually raised that much, they failed to hit
their goal and were only able to raise $221M.

~~~
toomuchtodo
Thanks for correcting me on the latest round information ($221M raised versus
$500M authorized)! I believe the rest of my comment still stands as it relates
to their business prospects.

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areoform
I am slightly surprised by this story, mostly because I've heard that Luke
Nosek quit his job at Founder's Fund to start a fund, Gigafund
[http://www.gigafund.com](http://www.gigafund.com) , with just one company in
mind - SpaceX. They've led their rounds since their formation. However, my
information might be out of date or wrong.

Nosek's Gigafund is one of the more interesting funds out there with their
incredibly focused thesis and the amount of money they're looking to put into
one single company.

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xkjkls
As long as they don't save the equity holders or bondholders in the process,
I'm fine with that. The company is a financial disaster, but is currently
contracted for some essential work.

