Elon Musk has confirmed on Twitter that his company, SpaceX, could possibly go bankrupt in the wake of a severe global recession.
Earlier this week, an alleged email from Musk to SpaceX employees was leaked to the media, unveiling the risk of bankruptcy if the company does not get its Starship launches right by next year. In the detailed email sent over the Thanksgiving holiday, Musk had reportedly told SpaceX employees that the problems in the Raptor engine production were “far more severe” than was earlier suspected and the company needed all hands on deck to recover from the disaster.
The Raptor engines are the workhorse of SpaceX’s Starship which is due to take humanity back to the Moon. SpaceX also plans to utilize Starship to launch up to 400 satellites in a single attempt as part of the deployment of its Starlink constellation, CNBC had reported in 2019. As Musk reportedly said in the leaked email, Starlink’s internet service could reach millions of units in a short span and it was necessary that its updated version V2 be in orbit to handle the increased demand.
As space science communicator Tim Dodd elaborated on Twitter, SpaceX could have a cash-flow issue, since most of its future projects are dependant on the Starship. While agreeing with Dodd, Musk presented a scenario where SpaceX could no longer raise funds.
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
While this might seem a far-fetched scenario, given the uncertainty around the coronavirus pandemic, it cannot be ruled out either. Musk seems to have also realized that his thinking might seem a bit of paranoia and therefore quoted Andrew Grove in the tweet.
In his book, titled “Only the Paranoid Survive”, former CEO of Intel, Grove, refers to Strategic Inflection Point, a nightmarish moment for a company when it needs to adapt rapidly or risk losing out. With so many future launches scheduled on the Starship, it is clearly the moment of reckoning for the company.
