Commercial returns or deep space exploration? Every time the SpaceX (SPCX.US) starship takes off, it's a choice question

The Zhitong Finance App learned that SpaceX (SPCX.US) has grand plans for Starship (Starship). If all goes according to plan, this 407-foot rocket will one day be used to build an artificial intelligence (AI) data center network that orbits Earth and send humans to the Moon and Mars.

However, until the Starship is launched on a regular basis, every lift-off will mean a trade-off. Elon Musk is facing a strategic dilemma: whether to launch a satellite that will generate cash flow or send humans into deep space — and the return of the latter is uncertain.

SpaceX first plans to launch the first batch of upgraded, improved, revenue-generating Starlink (Starlink) V3 satellites into orbit during the critical 14th test flight of the Starship. On August 20, an airspace notice issued to pilots listed September 15 as the target launch date. This time is later than the launch window at the end of August mentioned by Musk in the earnings conference call. However, SpaceX has yet to publicly confirm the specific launch date, and Starship's launch plans are often delayed due to hardware preparation progress and the US Federal Aviation Administration (FAA) approval process.

Keeping the Starship running as intended is critical for SpaceX and its shareholders. The company not only needed Starship to revive its own Starlink communications network — a business that contributed nearly 55% of the company's revenue in the second quarter, but also needed it to launch satellites for various commercial uses. Also, there is probably the most lucrative mission — sending a futuristic in-orbit data center “Big Mac” into space. SpaceX said this could help it open up an AI market with a total value of up to $26.5 trillion.

This forced Elon Musk to make major decisions. Launching more satellites will almost certainly bring in big cash and provide investors with immediate returns. However, refining the Starship's deep space exploration capabilities will require an additional investment of several billion dollars, and it is likely that more test launches will be required, and the return is even more uncertain.

Starships are critical to Starlink's growth and the fulfillment of Musk's ambitious ambitions. Musk predicts that this rocket, which is designed to be able to be launched quickly and repeatedly, is expected to be launched at a frequency of nearly once a day within a year, making it an engine of SpaceX's financial success for many years to come.

Clayton Swope, deputy director of the Aerospace Safety Program at the Center for Strategic and International Studies (CSIS), said that the next phase of Starship development will test whether SpaceX's way of making money clashes with Musk's vision of “making humans live on a planet other than Earth.”

Operating multiple businesses in parallel will force SpaceX to improve rocket launch capabilities while balancing competing demands from various parties: corporate customers who want to launch more satellites, obligations corresponding to the US space program with their own ambitious goals and requirements, and SpaceX's own desire to expand Starlink and stand at the forefront of human deep space exploration.

SpaceX said the Starship will be capable of all of these tasks. This rocket will eventually become the only aircraft launched by SpaceX, succeeding the current “main force” Falcon 9 (Falcon 9). Since 2010, SpaceX has relied on Falcon 9 to serve its space customers, deploy Starlink satellites, and deliver cargo and astronauts to the International Space Station.

However, Falcon 9's size and capacity are insufficient to allow SpaceX to rapidly expand its commercial space business and fly further into deep space. Musk said that in order to launch satellites in batches and deliver the personnel and materials needed for deep space settlement, he needed a high-capacity rocket that can fly repeatedly and safely.

SpaceX's major revenue generator, AI and connectivity businesses, including Starlink, are expected to surpass the launch business

To quickly reach the goal of launching the Starship every day, many things must go smoothly — the Starship took off the ground only twice this year. However, a successful low-orbit test flight will prove that nothing can stop SpaceX from using Starship to launch Starlink satellites over and over again.

After that, every Starship launch will be an option to some extent. Will SpaceX use every new launch to expand the Starlink network? Or will they continue to test and improve Starship's other design mission: sending humans to other planets?

SpaceX Chief Financial Officer Brett Johnson said at an investor conference on Thursday that he is excited about the Starship's upcoming test flight “because it will be a revenue-generating flight”. At that time, the company “will enter the rhythm of mass production and launch the mass-produced V3 Starlink satellite into orbit.”

Starlink vs NASA

Ten years ago, Musk announced the Starship Program, which he sees as a key part of his dream of settling on Mars. Financial documents show that SpaceX has invested more than $15 billion in Starship so far. The company is betting that its satellite business can bring in more capital while engineers carry out research and development to prepare this aircraft to send humans away from Earth.

Over the past three and a half years, almost every test launch of the Starship has been aimed at proving that it can take off, go into space, and return unscathed. Although it has experienced some explosive setbacks like other rockets, tests of its ability to launch satellites in space have progressed relatively smoothly recently.

The partially reusable Falcon 9 was a breakthrough in the space industry. The Starship, on the other hand, needs to be taken to the next level — it returns to Earth in perfect condition and can be directly reused. This has always been a major challenge, as large spacecraft must endure extreme heat when returning from space. Although Musk has said, concerns about the Starship's heat shield have basically been resolved.

Space Policy Group advisor Mike French said SpaceX must first prove that the Starship can reliably perform basic tasks before expanding to more complex uses. “I think what we're still seeing is that this expansion hasn't happened yet,” he said.

SpaceX investors aren't the only ones who have high hopes for the Starship. The rocket is the backbone of an approximately $4.3 billion contract between SpaceX and NASA to help astronauts return to the Moon, which expires in 2028. During the August earnings call, analysts asked Musk about the progress of the Starship's transformation into a lunar lander.

Musk said at the time: “Before we get anyone on board, we need to make the Starship super reliable in launching satellites. But we expect to achieve a very high launch frequency, which will soon reach the level of safety required for human space flight, which may be possible by the end of next year.”

As far as the lunar landing mission is concerned, the Starship still has a number of milestones to be achieved. To prove that this rocket can fly the long distance it needs to cross, SpaceX needed to dock the two rockets in space and transfer propellant between them. This technology has never been tested in space on the scale required for SpaceX to land on the moon. SpaceX President Gwen Shortwell did not give a test schedule when analysts asked the question during the earnings call.

Improving in-orbit fueling technology will require more testing and will consume more company resources while SpaceX expands launch capabilities. To complete only one lunar landing, the Starship may need to perform about a dozen or more continuous recharge launches, but the exact number is still changing.

SpaceX's commitment to NASA also requires it to build multiple versions of the Starship. According to NASA Aerospace Safety Advisory Committee member Paul Sean Hill, a lander built for NASA is different from a starship used to launch a satellite, and it will need to meet NASA's strict safety standards. “This non-standard model is a big problem in their manufacturing process,” Hill said.

NASA said it has “full understanding” of the commercial partner's R&D progress and expressed confidence in SpaceX's ability to develop the Starship as a lander. “SpaceX has a long history of advancing major projects in parallel, from Falcon Heavy rockets and Starlink to Starships,” the NASA Press Office said in an email. The office also stated that once the Starship starts flying more frequently, it will provide more opportunities for further development of the aircraft.

capital buffer

After the $4.3 billion contract between SpaceX and NASA was split over a multi-year R&D cycle, the scale was actually quite limited. In contrast, financial documents show that in 2025 alone, Starlink generated $11.4 billion in revenue, an increase of nearly 50% over the previous year.

Speaking about the new Starlink product line during the August earnings conference call, Musk said, “We do expect the Starlink Communications business to achieve very rapid revenue growth with the (deployment) of the V3 satellite.” “Its capacity is more than 10 times that of the V2 satellite, and the number of our launches will also reach 10 times that of the V2 satellite.”

In response to various competing priorities, SpaceX is using its capital buffer to invest in new launch sites, including the recently announced plan to cost $100 billion space port off the coast of Louisiana, which could enable it to dramatically increase launch frequency in the next few years.

Carissa Christensen, founder of space analysis company BryceTech, said, “What really impressed me was the amount of capital SpaceX can obtain today.”

Until the Starship is launched on a regular basis, every lift-off will mean a trade-off. SpaceX said in its IPO filing that the company “may prioritize our own launch payloads over additional US government contracts or third party customers.” The company has begun to turn down customers who rely on Falcon 9 to get into space, causing panic in the satellite industry.

On the other hand, shutting the government out is not necessarily a winning strategy. Christensen said, “For space companies, the government is too important. It's a regulator. It is the provider of launch facilities. It's a paying customer. It's also a source of expertise.”

About one-fifth of SpaceX's disclosed revenue comes from its various contracts with the US government, which gave the company a strong incentive to maintain the government's favor. Equally important is protecting against competitive threats from rival Blue Origin — if SpaceX struggles or shifts its focus elsewhere, NASA may turn to Blue Origin to supply the lunar lander. Christensen said, “It's a tightrope balance, and this company is going to be very good at it. I think SpaceX takes its government customers seriously enough and will work hard to satisfy them.”