When SpaceX's newest rocket, Starship, lifted off last month, employees cheered as they watched the video feed. They kept cheering as it pulverized the concrete slab under its launch pad, as one of its engines appeared to explode a few seconds into flight, and even when it somersaulted out of control, before disintegrating over the Gulf of Mexico.
None of that was in the original flight plan for Starship, which was supposed to splash down in the Pacific Ocean. But nobody seemed to care that the rocket made it just 40 miles or so from the company's launch facility in Boca Chica, Texas.
"Everybody here is absolutely pumped to get off the pad and make it this far into the test flight," a SpaceX announcer said shortly after the rocket broke apart.
Starship is a radically different kind of rocket, and as such nobody really expected it to work perfectly on the first try, says Jonathan McDowell, an astronomer at the Center for Astrophysics Harvard & Smithsonian who tracks the space business.
"Starship overall is just a huge design departure from the things that have been done before," he says.
But that also means SpaceX will likely have to launch multiple prototypes at great cost in order to get it to work. Speaking on Twitter late last week, SpaceX founder Elon Musk said the company would spend around $2 billion this year alone developing the rocket.
McDowell and other analysts who closely watch the space industry say that the ship's success will come down to whether SpaceX has the cash to keep development going: "It depends how many of them you can afford to throw away," he says. "It's all about the money."
Fly me to the moon
Starship is a stainless steel beast of a machine. At nearly 400 feet tall, it's bigger than the Saturn V rocket that carried Apollo astronauts to the moon. The 33 engines in its first stage put out more thrust than any other rocket. It uses unconventional materials and fuel with the goal of becoming a cheap, fully reusable launch vehicle that could one day carry people to other worlds.
Given all that, the outcome of the first test was "roughly what I expected," Elon Musk said during the Twitter event on April 29.
Musk's ambitions for Starship are enormous. He has long said he wants to take humans to Mars, and Starship is the vehicle he believes will ultimately allow him to reach that goal. "We're going to solve the issues that are remaining, we'll get it to orbit, we'll make it reusable, and that means that we have a real path here to get humanity to Mars," he says.
But making humans an interplanetary species is a lot for SpaceX to take on in an era when many tech companies are laying off employees. And it's not the company's only costly project. SpaceX is also building an expensive satellite internet service called Starlink. Starlink requires thousands of satellites zipping around the Earth to keep its internet service speedy. Roughly half of the company's launches in 2022 carried hundreds of Starlink satellites into orbit.
SpaceX is a private company, so its finances aren't public, but most analysts agree: Between building the Starlink network and preparing for a visit to Mars, it's currently losing money.
"It's hard to imagine how they could be generating cash with those level investments," says Chris Quilty, the founder of Quilty Space, a company that tracks the space industry.
SpaceX makes money launching commercial and government satellites on its existing rockets, and it's starting to generate income from Starlink. But Quilty and other analysts believe Starship and Starlink will keep the company in the red for a while.
Interplanetary economics
"Until Starship is flying and the development costs are down and it's generating revenue instead of consuming cash, and until they start getting new Starlink satellites on orbit, I think it'll be a challenge for them," he says.
That would be a problem for most space launch companies, but SpaceX is different. It's valued at close to $140 billion, making it one of the biggest private companies in the country. And investors have been lining up to plow money into its bold vision and big projects.
"SpaceX has consistently raised money – and even in this more constrained environment seems to be able to raise substantial amounts," says Carissa Christensen, the CEO of BryceTech, an analytics and engineering firm.
In addition to private investment, SpaceX has won around $4 billion in contracts from NASA to develop Starship into a lander that can put astronauts on the moon. That funding should help keep the project going.
"They have a lot of money now from the government specifically to do this," says Lori Garver, former NASA deputy administrator and author of the forthcoming book Escaping Gravity, about NASA's relationship with commercial space companies. "I think those deep pockets will serve them well through a test program."
Once Starship is built, SpaceX will still need to find other companies that are willing to buy rides on the mega-rocket, Christensen adds. It will be able to lift over 100 tons into orbit, but most satellites are far smaller. Many companies might rather have a smaller rocket carry their payload into a desired orbit – as opposed to sharing a ride on Starship with other payloads.
"Who is Starship going to serve? I think that's a question," she says.
Others have a more optimistic view. If Starship can work, it will allow SpaceX to launch Starlink satellites cheaply, and will likely enable many more companies to develop new space business models, says Brendan Rosseau, a research associate at Harvard Business School who tracks space. "I think it'll take some time," he says, but he believes companies will find ways to use Starship's enormous launch capacity. Already, he says, some startups are planning giant satellites and other projects that would require Starship's huge cargo bay. "I think we're seeing the market start to adapt."
SpaceX did not respond to NPR's request for comment about how it's planning to finance Starship, but Elon Musk told listeners at his briefing that, for now, the company's existing investments and government contracts should be enough to keep the program going. "We do not anticipate needing to raise funding," he said in response to a question from Reuters.
But Starship will take multiple years to bring to market, and it likely will need additional money, says analyst Chris Quilty. Given the troubles in the tech sector, it makes sense that SpaceX would try and stretch its existing cash for now. "SpaceX is probably betting that market conditions will be better next year," he says. But that strategy carries risks: If the economy slips into a prolonged recession, Quilty warns, "they could find themselves out of cash and out of runway."
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