Musk Speaks out on SpaceX Finances [PEHub.com]

by

SpaceX founder and Chief Executive Elon Musk believes more than half of the nearly $6 billion NASA is seeking for its commercial crew initiative will go to Boeing or Lockheed Martin, with the second largest share “hopefully” going to SpaceX.

Musk made that prediction in a statement sent to Thomson Reuters PEHub.com, an online forum and blog for the private equity community, to set the record straight following an article in the June 7 Wall Street Journal under the headline “Rocky Years at SpaceX Illustrate Risk of Privatization.”

Among the more interesting details in that piece were quotes attributed to Musk saying he never intended to seek outside financing for SpaceX but he “simply didn’t have the money to put in” and the assertion that SpaceX now estimates it will need $1 billion to develop and deploy a launch abort system for a crewed version of the Dragon capsule.

“Andy Pasztor’s article in the Journal was, I’m sorry to say, rife with errors,” Musk said in a statement published in its entirety on PEHub.com. “He was off by a factor of ten on what it would cost SpaceX to develop a launch escape system.  Also, under no circumstances would SpaceX be seeking a financing round from the taxpayers.  That doesn’t make any sense.”

As for the state of SpaceX’s finances, Musk says the company “has over $2.5B in revenue under contract.  Accounting rules require that revenue for long term contracts (over 2 years) be recognized as costs are incurred or milestones passed.  For the past three years, revenue has exceeded cost on that basis and we expect that to continue into the future.

“The reason for SpaceX raising money last year from outside investors was for working capital and to provide a financial cushion in the event of a Falcon 9 launch failure.  We don’t anticipate needing to bring on additional investors and will not be conducting any equity financing rounds, although it is possible we may accept investment for strategic reasons.”

READ IT AT: [PEHub.com]