SpaceX Bankruptcy: Confirmed? Will It Disturb the Market? CNBC received a copy of a letter addressed to SpaceX workers the day after Thanksgiving by CEO Elon Musk, in which the billionaire stated that the rocket business faces a “real danger of bankruptcy” unless it can speed up manufacturing of the Raptor engines that power its Starship rockets.
Will SpaceX Fall?
Each rocket flight might need the use of up to 39 Raptor engines. “If we do not reach a Starship flight rate of at least once every two weeks next year, we face a true risk of bankruptcy,” Musk said. “We need all hands on deck to recover from what, to be honest, is a calamity.”
Musk responded to a tweet about his statements on Tuesday with some further background, adding that while bankruptcy for SpaceX is “unlikely,” it is also “not impossible,” especially if the global economy experiences a slump before the business can launch its Starship program.
If a severe global recession were to dry up capital availability / liquidity while SpaceX was losing billions on Starlink & Starship, then bankruptcy, while still unlikely, is not impossible.
GM & Chrysler went BK last recession.
“Only the paranoid survive.” – Grove
— Elon Musk (@elonmusk) November 30, 2021
Elon Musk stated that if the Raptor engine difficulties were not resolved, SpaceX might face bankruptcy. He just answered with a ‘yes’ to a tweet regarding the Raptor manufacturing issue being the largest possible bottleneck while the corporation is investing heavily in Starship and Starlink.
What Risks Did Elon Took?
It’s not SpaceX’s first brush with major financial risk: Musk has frequently discussed how dangerous it was to begin the firm in 2002, and how it almost collapsed just a few years later. Musk tweeted last year that “in the early days” of starting both Tesla and SpaceX, he had very little trust in either venture’s success.
“I felt there was a better than 90% probability that both SpaceX and Tesla would be worth nothing,” he wrote.
Musk talked at a Google for Startups event in 2013 about how SpaceX nearly went bankrupt after its first three rocket flights failed between 2006 and 2008. The problem was straightforward: he’d spent around $100 million of his own money to establish SpaceX, which only covered three tries to send a rocket into space.
The first three attempts all failed, with the first failure due to a fire and the following two failing to enter orbit. “I told myself, ‘OK, we can afford three launches.'” “Then the third one failed,” Musk explained. “It was a really uncomfortable workout.” We were simply too ignorant to know how to launch a rocket into orbit.”
Current Position of Musk
Today, SpaceX isn’t quite as young — and it recently surpassed a $100 billion value, making it difficult to think that the firm might genuinely be on the verge of bankruptcy. According to a Morgan Stanley study conducted in October, the majority of “institutional investors and industry experts” believe SpaceX would someday be more valuable than Tesla, which has a market value of more than $1.1 trillion.
This is the sort of risk that has driven Musk to his present position as the world’s wealthiest person, with a net worth of $310 billion, according to Bloomberg.
Elon Musk has stated that a SpaceX bankruptcy due to a significant global downturn is “unlikely,” but not unimaginable. This was said by SpaceX’s CEO (Chief Executive Officer) on Tuesday in response to a report regarding a memo he wrote to a SpaceX employee.
“If you were to make a risk-adjusted rate of return calculation on various sector prospects, I would place manufacturing rockets and [electric] automobiles fairly near to the bottom of the list,” Musk stated in 2018 during a South by Southwest panel. “They’d have to be the stupidest things to do.”
