... if it pays for the launches, it has negative margins. I'm not sure what's hard to understand here.
It might be the case that once you get enough satellites up and replace them consistently enough that margins go positive, and then you can start paying back the cost of "the rocket business" (i.e. more than the marginal cost of launch) but... it's not at all clear that's even theoretically possible. At least not without launch costs coming down significantly from where they are today, which Starship is not clearly en route to achieving.
Unless I’m misunderstanding something OP is saying that the only reason Starlink is profitable is because they don’t pay for the rocket launches. But the rocket launches still cost money, it’s just that SpaceX pays for it. But given they’re part of the same overall organization it just seems like an accounting trick.
This is correct. I’m not an accountant so not qualified to say the degree to which it’s tricky, but it does add an addendum to “Starlink is profitable [if you completely exclude the primary source of variable cost by burying it into a different business segment].”
The entire "space launch" segment in the red by $1.1bn. Primary driver being the $3.2bn spent on Starship R&D.
How are they "burying it into a different business segment", pray tell me?
If you remove Starship, Falcon launches and Starlink are both independently profitable. And Starship wasn't even used for Starlink until the one test launch this year.
I account for the ingredients as depreciating assets over a 100 year lifespan
It now costs me $5 in labor and $0.20 in ingredients
My margin is now ~75%
For SpaceX, we know they are accounting for Starlink launch as depreciation. We do not know the numerator (the $20) or the depreciation period (the 100 years). Accordingly neither of us know whether Starlink is a viable business.
You are inventing more and more elaborate ways for "this is how Starlink is secretly unprofitable" while we knew it was printing money since 2024.
You can drop SpaceX's launch revenue to zero, fund all of it with Starlink revenue, and the sum is still profitable.
We know "whether Starlink is a viable business": it is. End of story. You better start pivoting towards "but what if future competition" or "the revenue growth is uncertain", because your attempts to wiggle your way out of admitting that Starlink is a money printer now are weak at best.
I have literally been describing the exact same mechanism, which is the actual mechanism that you can actually read about in their financial statements, since this conversation started.
And what is that "mechanism", pray tell? I don't think you have one. Or ever had one, for that matter.
You can't just say "they're hiding the launch costs" and expect it to magically make Starlink unprofitable. Starlink has been bearing launch costs for its entire existence, and if anything, the advent of Starship is likely to make them lower, not higher.
Are you serious? Good lord. Take this article. Go take SpaceX's filings. Ask an LLM to explain how Starlink is accounted for and what the effects of that accounting method are.
It's the "we've got a bunch of rockets lying around... sometimes other folks in the company use them when they're not working for space lift clients..." view.
The fuel would have to be expensed, but generally speaking its impossible to say how unprofitable Starlink is because they don't account for it that way or break those costs out.
When they swallow Tesla it'll be more of the same, and thats the point. Musk is trying to obfuscate the (poor) performance of his businesses so he can maintain delusional market valuations based of vague promises.
It might be the case that once you get enough satellites up and replace them consistently enough that margins go positive, and then you can start paying back the cost of "the rocket business" (i.e. more than the marginal cost of launch) but... it's not at all clear that's even theoretically possible. At least not without launch costs coming down significantly from where they are today, which Starship is not clearly en route to achieving.