Why 95% of SpaceX’s profits evaporated.

For years, SpaceX has been regarded as the ultimate symbol of success in the private space industry. Founded by Elon Musk, the company has completely transformed the rocket launch market, turning spaceflight from an exclusive government domain into a commercial industry worth hundreds of billions of dollars. With its Starlink satellite network, SpaceX has even established a steady revenue stream—one expected to become Musk’s new “money-printing machine.”

However, recently leaked financial reports paint a starkly different picture. Despite surging revenue, SpaceX’s profits reportedly plummeted by 95%; the company is even projected to record losses amounting to billions of dollars in 2025.

What is happening to the company once considered invincible?

Starship – SpaceX’s Biggest Financial Black Hole

The first—and most significant—reason lies with the Starship project. This is the colossal rocket program that Elon Musk envisions will carry humans to the Moon, Mars, and beyond.

However, developing Starship is by no means cheap.

Unlike the Falcon 9—a mature rocket family boasting high reusability—Starship remains in its testing phase. Each test launch costs tens to hundreds of millions of dollars, not to mention the expenses involved in constructing infrastructure at Starbase in Texas, researching the Raptor engines, and employing thousands of full-time engineers.

Numerous reports indicate that SpaceX has spent over $15 billion on Starship in recent years. This means that the bulk of the profits generated by Falcon 9 and Starlink have been all but “devoured” by the ambition to conquer Mars.

Notably, Starship currently generates no significant revenue. Although NASA has signed contracts to utilize a version of Starship as a lunar lander for the Artemis program, the revenue derived from these agreements is not yet sufficient to offset the massive development costs.

In other words, SpaceX is investing like a high-growth technology company, rather than operating as an enterprise that prioritizes short-term profits.

Starlink is making good money… but it’s not enough.

If there is one division that truly generates cash flow for SpaceX, it is Starlink.

This satellite internet service has grown at an explosive pace over the past few years, boasting millions of customers worldwide. Some analyses suggest that Starlink could generate over $11 billion in revenue and billions in operating profit.

However, the catch is this:

SpaceX must continuously launch new satellites.
Starlink satellites have a limited lifespan.
The costs of manufacturing and operating the network are enormous.
The company must invest in ground stations, bandwidth, and global market expansion.

This makes Starlink resemble a global telecommunications enterprise more than a “super-profitable” technology venture.

More importantly, the earnings generated by Starlink are being diverted to fund Starship and other long-term projects. Consequently, despite Starlink’s robust growth, SpaceX’s consolidated profits continue to plummet.

The xAI deal has made the situation worse.

Another factor that caught investors off guard is the connection between SpaceX and Elon Musk’s AI company, xAI.

According to numerous reports, SpaceX’s recent financial losses reflect the operations of xAI following an internal merger. xAI is the company behind the Grok chatbot and competes directly with OpenAI, Google DeepMind, and Anthropic.

AI is currently a sector that burns through capital at an astonishing rate. To train advanced AI models, xAI must spend billions of dollars on:

data centers,
Nvidia AI chips,
electricity,
server infrastructure,
and large language model research.

Leaked documents reveal that xAI incurred losses exceeding $6 billion in a single year alone.

This implies that:
Virtually every dollar Starlink earns is consumed by AI and Starship.

SpaceX is pursuing a “burn cash to dominate” strategy.

While many view a 95% drop in profits as a warning sign, some experts interpret it as a familiar strategy employed by Elon Musk.

Tesla endured years of losses before becoming the world’s most valuable electric vehicle manufacturer. Amazon, too, faced criticism during its early days for “not knowing how to make money.”

Musk appears to be applying the same formula to SpaceX:

Rapid growth.
Market dominance.
Massive investment in the future.
Acceptance of near-zero short-term profits.

The problem is that this strategy is extremely risky.

If Starship fails—or if AI fails to generate future returns—SpaceX could be left saddled with a massive debt burden, lacking the robust cash flow needed to sustain itself.

Some reports suggest that SpaceX’s total debt and financial obligations have surged rapidly during its recent expansion phase.

An IPO could be the key to survival.

Multiple sources indicate that SpaceX is preparing for a historic IPO with a valuation that could exceed $1.7 trillion.

If the IPO is successful, the company will raise a massive amount of capital to:

continue developing Starship,
expand Starlink,
build AI infrastructure,
alleviate short-term financial pressures.

However, an IPO also means that SpaceX will be required to be more financially transparent than before. Public investors are typically not as patient as venture capital funds; they want to see actual profits, not just promises regarding the future of Mars.

This will be the greatest test for Elon Musk.

The fact that “95% of profits evaporated” does not mean SpaceX is collapsing. On the contrary, the company remains the world’s most powerful space enterprise, boasting:

a dominant market share in rocket launches,
a rapidly growing Starlink system,
pioneering reusable technology,
and a long-term vision unmatched by any competitor.

However, reality also demonstrates that Elon Musk’s ambitions are becoming incredibly expensive.

Starship, AI, and the dream of Mars are consuming massive amounts of capital—and doing so faster than Starlink can generate profits. In the short term, this has caused SpaceX’s financial performance to deteriorate significantly.

The biggest question right now is not “Is SpaceX losing money?” but rather:

Will today’s colossal investments be enough to transform SpaceX into the most valuable company in human history in the future?