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Elon Musk says SpaceX could soon face bankruptcy – here’s why that’s unlikely
In a new leaked email, SpaceX CEO Elon Musk says that the company could go bankrupt if, by the end of 2022, it can’t achieve Starship and Starlink milestones that are by all practical appearances out of reach.
The news – first broken by SpaceExplored – comes about a week after CNBC reported that Musk was “shaking up” SpaceX’s leadership by effectively firing its vice president of propulsion due to “a lack of progress” in the development of Starship’s Raptor engine. Now, apparently after taking his first good look ‘under the hood’ in a while, Musk says that “the Raptor production crisis is much worse than it seemed a few weeks ago.” Worse, the CEO has implied that if it “can’t get enough reliable Raptors made [by the end of 2022]…[SpaceX will] face a genuine risk of bankruptcy.”
The email raises both skepticism and several major questions.
First and foremost, can there be any truth to Musk’s claim that SpaceX could go bankrupt because of an unspecified “Raptor production crisis [and disaster]?” Put simply, not really. Musk’s argument is simple enough. According to his estimations, the first-generation (V1) Starlink satellite internet constellation is “financially weak by itself,” which has led SpaceX to develop a much larger, more advanced second-generation (V2) Starlink satellite and constellation that the company’s existing “Falcon [rockets have] neither the [payload] volume nor mass to orbit” to launch. To efficiently launch the Starlink V2 constellation, then, Musk says SpaceX needs Starship to be operational.
Up to that point, nothing in Musk’s email implies that a “Raptor production crisis” could pose any serious harm to SpaceX beyond annoying delays. More than two years ago, Musk believed that Raptor V1.0 already cost less than $1M to produce. As of 2021, SpaceX (again per Musk) is completing an average of one Raptor engine every two days and currently has 35 functional engines installed on Starship and Super Heavy booster prototypes in Boca Chica, Texas. Already, at a rate of one engine every 48 hours, SpaceX’s Raptor production capabilities are theoretically strong enough to fully outfit a significant Starship fleet.
Both stages of Starship are designed to be rapidly and fully reusable and absolutely need to be to efficiently and rapidly launch SpaceX’s Starlink V2 constellation. In theory, a production capacity of ~180 Raptors per year should allow SpaceX to outfit a fleet of three Super Heavies (99 engines) and 13 Starships (72 engines). Even if Super Heavy booster reuse is initially no faster than Falcon (~1 launch per month) and Starship reuse is no faster than Dragon (~3 launches per year), that fleet would be able to launch at least 36 times per years. Even if SpaceX’s former propulsion executives somehow pulled the wool over Musk’s eyes, tricking him into seeing engines that just weren’t there and hiding hundreds of millions of dollars in secret cost overruns from the company’s own accountants, an annual run rate of 100 Raptor engines at a cost of $5 million each would still be able to power a fleet of six reusable ships and two boosters capable of ~20 launches per year.
Musk says that SpaceX will only face the risk of bankruptcy if it “cannot achieve a Starship flight rate of at least once every two weeks next year” – equivalent to 26 launches annually. Again, being deceived for years would be a terrible look but nothing described above appears to have any chance of bankrupting SpaceX. However, the CEO also says that SpaceX “is spooling up” one or several factories to produce “several million” Starlink user terminals (dishes) per year in a process that “will consume massive capital [and assumes] that [Starlink V2 satellites] will be on orbit to handle the bandwidth demand.” He even goes as far as to say that those millions of terminals “will be useless otherwise.”
Once again, while what he describes is an undeniable hurdle for SpaceX, the company is making a choice to “consume massive capital” to “spool up” Starlink dish factories before the constellation capacity needed to take advantage of those dishes has been secured. SpaceX doesn’t need to make such a massive investment so quickly when it could instead split that money with Starship, ensure that Starship and Raptor and Starlink V2.0 satellites are ready or close to ready for routine launches, and then invest heavily in dish production.
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For example, just this month, SpaceX raised almost $350M from investors that have a practically bottomless appetite for SpaceX investments. Combined, by the end of the year, SpaceX will have likely raised more than $2.3B in 2021 alone. Valued at more than $100 billion, the company could – as a last resort – feasibly raise double-digit billions in one fell swoop with an IPO. Put simply, the only way SpaceX could ever go bankrupt in the near term would be by consciously letting itself drown in a sea of life preservers.
This is not to say that SpaceX doesn’t have numerous massive challenges ahead of it, nor is it to say that its fundraising potential is truly limitless. Investors could eventually become disillusioned. It’s entirely possible that it will take SpaceX years longer than Musk expects to begin routine Starlink V2.0 launches with Starship. Environmental approvals alone could easily preclude more than five orbital Starship launches in 2022 and potentially prevent regular (i.e. biweekly) launches well into 2023. But the fact of the matter is that unless Elon Musk is telegraphing signs that the rest of the company’s finances are a house of cards, the odds of SpaceX actually going bankrupt anytime soon are vanishingly small. In reality, he’s likely just attempting to (for better or worse) instill some amount of fear and panic in SpaceX employees to encourage them to work more hours and take fewer days off.
Update: Musk has tweeted a brief public comment confirming that he believes bankruptcy is actually an unlikely – but not impossible – outcome for SpaceX.
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
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Investor's Corner
SpaceX and Nvidia team up on Musk’s orbital AI bet
SpaceX revealed a new Nvidia satellite partnership, then Musk pledged an exclusive Nvidia hardware commitment.
SpaceX and Nvidia are now working together on the hardware that will power Musk’s orbital data center ambitions. SpaceX announced on X on Tuesday that it is partnering with Nvidia to design the compute payload for Starmind AI1, the first satellite in a planned constellation built to run AI workloads directly in orbit. Each Starmind satellite will carry Nvidia’s Rubin GPUs and Vera CPUs, according to the post, which included renderings of the payload design.
The announcement landed hours before SpaceX’s first earnings call as a public company, where Musk went further, saying the company has committed to building its AI infrastructure exclusively on Nvidia hardware. “We think the Vera Rubin architecture is the best architecture. We think it’s the best AI computer, and we greatly value our close cooperation and partnership on many levels with Nvidia,” Musk told investors on the call,. “So we’re exclusive to Nvidia.”
Musk said SpaceX plans to deploy Nvidia’s Vera Rubin NVL72 rackscale system, codenamed Kyber, both on the ground and in space. He set a target of 2 gigawatts of compute capacity online by the end of this year, scaling to roughly 10 gigawatts by the end of 2027.
SpaceX’s newest Starmind will make earth data centers obsolete
Starmind has been in development since Musk confirmed the name in June, following an xAI trademark filing that tipped off the project before SpaceX made it official. The idea is massive in scope and instead of moving data down to ground based servers, satellites equipped with onboard processors and large solar arrays would compute AI workloads in orbit and beam results back to Earth. SpaceX has already filed with the FCC for a constellation of up to one million satellites to support the effort, citing constant solar power and the absence of zoning restrictions as advantages over terrestrial data centers.
The Nvidia exclusivity marks a shift in tone from just two weeks ago, when Musk was busy knocking down a report that SpaceX had ordered $52 billion worth of Nvidia GPUs through Foxconn, calling it fake news at the time. The dollar figure in that rumor may have been wrong, but the underlying direction seems correct. SpaceX’s AI division already leases Colossus compute capacity to Anthropic and Google, and Tuesday’s earnings report showed AI revenue climbing sharply as those deals ramp up.
Nvidia shares rose roughly 3% in Tuesday trading on the news, while SpaceX stock climbed nearly 9% during the day before giving back gains after hours as investors digested the earnings report’s capital spending figures.
SpaceX (NASDAQ: SPCX) reported a beat in revenues and EBITDA in its first earnings call report while also minimizing losses as its business continues to gain momentum.
After its IPO in July, SpaceX saw some tough losses on Wall Street due to a major selloff after a delay in its 13th Starship test flight. The ship launched later that week and completed what was arguably the most successful IFT operation in the Starship program’s history.
Nevertheless, the company is continuing on and reported some encouraging financials while also promoting what appears to be a robust outlook moving forward in its Space, AI, and Connectivity divisions.
SpaceX to report first-ever earnings today: here’s what to expect
Earnings Results
- Revenues: $7.8 billion reported vs. $6.7 billion expected
- Adjusted EBITDA: $3.5 billion vs. $2 billion expected
- Net loss of $541 million, an improvement of $467 million from net loss of $1.0 billion
Additionally, CFO Bret Johnsen had these comments:
“2026 has been a momentous year so far, and the second quarter demonstrated the true power of SpaceX. Revenue growth accelerated across all our business segments and we delivered strong operating leverage, with significant margin expansion led by our new AI compute agreements. Our unparalleled leadership in launch, Starlink subscriber growth, new enterprise and government partnerships, and best-in-class AI infrastructure underscore our ability to drive meaningful scale and deliver attractive returns. As a newly public company, we are delighted to welcome our broad base of shareholders and bondholders. We ended the second quarter with $100 billion of cash, cash equivalents, and marketable securities, and $47.5 billion in backlog. This financial strength gives us substantial capacity to invest in Starship, Starlink Broadband and Mobile satellites, and our AI platform, while maintaining a disciplined long-term capital allocation framework.”
Space Business Highlights
SpaceX shared some of its biggest Space Business Highlights for Q2:
- Space revenues grew 55% sequentially and 29% year-over-year to $962 million, driven by a higher number of large customer launches and a favorable customer shift compared to the prior year
- Total costs and expenses for the Space segment were up by $389 million year-over-year, as we continued to accelerate R&D investments in our Starship program, which we believe will reduce the cost to orbit by 99% or more relative to the historical average, and unlock significant revenue potential across all business segments
- Leading launch provider for the world with 78 launches and 1,041 metric tons of mass to orbit deployed over the six months ended June 30, 2026, primarily allocated to Connectivity for the deployment of our Starlink constellation
- Starship V3 development continued to advance towards full and rapid reusability:
- Completed Starship V3’s first suborbital mission in May, Flight 12, which achieved a successful lift off from our new Starbase pad, a precision landing of Starship’s upper stage, and deployment of modified V2 Starlink satellites
- Subsequent to the second quarter, completed Starship Flight 13 in July, which achieved all flight objectives including deploying 20 production V3 satellites, demonstrating in-space relight of a Raptor engine, and executing the softest ever splashdown of Starship, providing critical views of an intact heatshield
SpaceX will report its earnings today at 4:30 P.M. EDT.
Elon Musk issued a second pointed warning to SpaceX short sellers on Tuesday, just hours before the company was set to release its first quarterly earnings as a publicly traded firm. Responding to a report highlighting elevated short interest, Musk wrote on X: “I try to warn them, but they just double down …”
The comment came as data from S3 Partners showed roughly 95 percent of available SPCX shares to borrow were on loan, translating to about 34 percent short interest as a percentage of the float. The stock has traded under pressure since its record-breaking IPO in June 2026, declining significantly from early peaks.
I try to warn them, but they just double down … 🤷♂️
— Elon Musk (@elonmusk) August 4, 2026
This marks the second such message from Musk in under three weeks.
On July 17, amid post-IPO volatility, he stated: “The survival probability of firms who maintain a significant short position in SpaceX over time is very low.” At that time, SPCX had fallen roughly 30 percent from its peak above a $2.6 trillion valuation, with short sellers reportedly realizing gains of about $8.7 billion.
Musk’s warning aligned with optimistic analyses projecting that Starship-driven cost reductions could enable a multi-trillion-dollar space economy through applications such as orbital solar power, asteroid mining, data centers, and Mars-related projects, positioning SpaceX as critical infrastructure.
SpaceX is scheduled to report second-quarter results after the market close later today, followed by a webcast. Analysts anticipate revenue near $6.9 billion, reflecting growth in Starlink, launch services, and AI-related segments. The earnings release precedes a major lockup expiration on August 6 that could free hundreds of millions of insider shares.
Musk has a long track record of confronting short sellers, particularly regarding Tesla, where he has argued that persistent bearish positions underestimate transformative technologies. Critics view his optimism as overly ambitious given near-term stock fluctuations, while supporters see temporary dips as opportunities in a longer-term expansion of the space economy.
As SpaceX opens its books to public scrutiny for the first time, the high short interest and Musk’s repeated cautions set the stage for heightened market attention on the results and management’s commentary.
SpaceX and Nvidia team up on Musk’s orbital AI bet
SpaceX reports beat in first earnings while minimizing losses
