According to a report by the Wall Street Journal, the privately owned rocket company raked in a $55 million profit during the January-to-March period. That’s a big turnaround from the previous year when the company lost $968 million. The significant change in financial fortunes results from surging revenue, which has allowed the company to reduce costs.
Much revenue comes from contracts with clients who pay for SpaceX to deploy satellites in orbit and carry cargo to the International Space Station. It also operates an internet-from-space service called Starlink, which requires regular space flights to deploy multiple batches of satellites quickly.
Those services require SpaceX to have a large fleet of rockets that it can use to send payloads into space. That’s why the company is constantly working on new vehicles, such as its reusable Falcon 9 booster and the Starship. This heavy-lift launch vehicle will allow it to carry crew and cargo to Mars and other destinations.
Last year, SpaceX spent about $5.2 billion compared to $3.3 billion in revenue, with most of the additional spending going toward developing Starship. The company aims to have the spacecraft ready for a test flight in 2024 and later use it to transport cargo and passengers to the moon and Mars destinations.
The latest profits will allow the company to reinvest in other projects and even fund some of its ambitious plans for the future. It will be able to expand its Starlink internet-from-space constellation more rapidly, for example, as well as launch more commercial rockets in the coming years.
However, it needs to be clarified if the profit is sustainable or if the company will return to losses in the long run. That could be a problem for Musk, who is already facing scrutiny over his takeover of Twitter Inc (TWTR.N). The self-described free-speech absolutist has pushed the social media platform to allow more controversial content.
Founded more than two decades ago, SpaceX has become one of the most dominant forces in the US space industry. It has a strong reputation for innovation and success, which has helped it attract top talent. The company has built a robust business model that includes rockets, satellites, reusable boosters, and an impressive backlog of missions. Its rapid growth recently boosted the company’s valuation to around $150 billion during an employee stock sale, putting it on par with companies like Intel and Disney. This article has been updated. It initially cited the Wall Street Journal’s incorrect valuation of the company. We regret the error. The Motley Fool has no position in any stocks mentioned. The Motley Fool recommends Apple Inc. and Tesla Motors Inc. The Motley Fool has a disclosure policy.