Skip to navigationSkip to content

What does Elon Musk’s Twitter purchase mean for SpaceX?

The rocketmaker is spending billions on satellites and Starship and could need more capital soon

SpaceX founder and chief engineer Elon Musk looks at his mobile phone.
This story was published on our Space Business newsletter, A glimpse at the economic possibilities of space.
  • Tim Fernholz
By Tim Fernholz

Senior reporter

Published

Dear readers,

Welcome to Quartz’s newsletter on the economic possibilities of the extraterrestrial sphere. Please forward widely, and let me know what you think. This week: Elon bought Twitter, a new director of Space Commerce, and China’s plans for a lunar satellite network.

In case you missed it, we’ve dropped our paywall. You can support our work by becoming a member—and take 50% off with the code TIM50.

🚀 🚀 🚀

Yes, of course, we have to talk about Elon Musk’s attempt to acquire Twitter this week, and what it means for SpaceX.

Walter Isaacson, penning a biography of America’s most (?) polarizing billionaire, reassured us that after the deal was inked, Musk was in Boca Chica for “his regular 10 pm meeting on Raptor engine design, where he spent more than an hour working on valve leak solutions. No one mentioned Twitter. He can multitask.”

Can you imagine a SpaceX engineer getting into M&A small talk when they are already working past 11 pm?

No, distraction isn’t the question for Musk, who would be on Twitter whether or not he owns it. The concern for SpaceX is what happens if that Raptor engine doesn’t work out. Just six months ago,Musk sent his staff a warning of potential bankruptcy if that engine couldn’t launch SpaceX’s Starship rocket twice a week in 2022, something that isn’t going to happen as long as the company’s launch site remains in regulatory limbo.

That means, as Musk admitted, SpaceX will need more capital. So will his purchase of Twitter affect his ability to find it?

Shareholders at Tesla, Musk’s publicly traded electric car firm, are clearly concerned about the transaction: Its share price fell more than 10% after the deal. Musk has put up his stock in the automaker as collateral for Twitter. Investors may be worried that he could lose control of Tesla if he faces a margin call on that loan. Right now, the stock is trading at $900, but if hits $740 or below, where it traded in August 2021, Musk may not be able to finance his loans and could find himself scrambling for cash.

SpaceX, meanwhile, is privately held. Investors I’ve spoken to say one reason it has been able to raise so much cash—in the neighborhood of $7 billion since 2002—has been confidence that Musk is the ultimate backstop for his beloved rocket company. If Musk’s fortune is stressed by his need to finance Twitter and maintain his Tesla ownership, it could prove more difficult to fundraise for SpaceX.

One potential consequence could be a faster-than-expected spin-out of Starlink, SpaceX’s satellite internet network. It’s Musk’s most marketable corporate asset, and likely to be generating hundreds of millions of dollars in annual revenue. What isn’t clear is if the operation is in the black, due to significant losses on user terminals.

Does SpaceX offer any insight for how Musk will lead Twitter? When I was first reporting on SpaceX’s early history, I was struck by Musk’s humility. He borrowed college textbooks to read, buttonholed mid-level engineers with wonky questions, and hired advisors with deep experience in space. Even people who later fell out with Musk acknowledged his desire to understand this complex new business.

Then, when people at United Launch Alliance or Boeing said that a reusable rocket would never be cost-effective, Musk could reply with knowledge gained from the test stand and speak the language of the business.

Right now, it doesn’t seem like he is cracking open texts on free speech, seeking advice from people who have thought hard about content moderation, or sitting down with Twitter’s trust and safety team to burn the midnight oil (though he is tweeting disparagingly about them, in apparent contradiction of the merger agreement.)

As Musk adds “social media” to the list of industries he’s seeking to conquer, it’s fair to say he’s not engaging with the conversations around how the medium works or why moderation polices are what they are. Yishan Wong,  the former CEO of Reddit, makes a persuasive case that Musk doesn’t understand the terms of the problem he’s facing, which is not a political one.

The $44 billion deal isn’t expected to close for another six months.

Imagery interlude

Explaining how remote-sensing satellites “see” different bands of the electromagnetic spectrum isn’t always easy, so I was struck by this visualization, which depicts improvements in the US government’s Landsat series of satellites and what they can show us.

Image copyright: NASA

The Landsat program, begun in 1972, collects a large amount of publicly available data, including this incredible image of a wildfire in Mongolia last week.

Image copyright: NASA Landsat

🎧🎧🎧

A little debt goes a long way. National debt isn’t a mark for or against a country—it’s a litmus test for that country’s resources, influence, values, and economic philosophy. That makes now a fascinating time to think about it. Learn more with this week’s episode of the Quartz Obsession podcast.

Listen on: Apple Podcasts | Spotify | Google | Stitcher

🛰🛰🛰

SPACE DEBRIS

Exciting bureaucracy news. President Joe Biden has tapped Richard DalBello, a former Virgin Galactic exec and Obama administration space adviser, to lead the Department of Commerce’s Office of Space Commerce. Among other duties, he’ll be charged with modernizing the way the government tracks and shares information about spacecraft and debris in orbit; a lack of leadership and funding left the project in limbo for several years.

Dragon spotting. On Tuesday, the four private astronauts flown to the International Space Station by Axiom Space returned safely to Earth onboard a SpaceX crew Dragon spacecraft, and today, four NASA astronauts departed Cape Canaveral for the ISS on a different SpaceX Dragon. If you’re keeping count at home, that’s a remarkable five completed human spaceflight missions, along with two more in progress at ISS, in less than two years.

Money for space radar. Capella Space, the first US commercial operator of space radar satellites, announced the completion of a $97 million fundraising round this week. Capella has been among the private satellite operators whose images have influenced the world’s understanding of Russia’s invasion of Ukraine.

China plans a satellite network around the Moon. The China National Space Administration said it will launch satellites to provide communication and navigation services at Earth’s biggest satellite starting in 2023 or 2024 and suggested other countries could partner in the program. The European Space Agency launched a similar effort, called Project Moonlight, expected to launch in 2025. Both projects are designed to support a major expansion in Moon exploration in the coming years.

They are still fighting over Ligado. A plan to use frequencies formerly reserved for satellite operators here on Earth, approved by the Trump administration nearly two years ago after a decade-long fight, is still attracting opposition from more than ninety organizations (and the US military) that say Ligado’s business will disrupt the GPS system.

your pal,

Tim

This was issue 130 of our newsletter. Hope your week is out of this world! Please send your thoughts on DalBello’s new job, Ligado conspiracy theories, tips, and informed opinions to tim@qz.com.

📬 Discover the innovators behind growing investment in space.

By providing your email, you agree to the Quartz Privacy Policy.