Key insights
- An analyst argues that SpaceX's financial metrics, including a negative interest coverage ratio, substantial accumulated deficit, and significant negative free cash flow, would classify its bonds as distressed junk if evaluated by traditional credit standards. This perspective suggests potential underlying financial risks that could indirectly impact investor sentiment towards speculative growth companies.
SpaceX balance sheet and FCF explain everything I need to understand where it is heading
- Debt-to-EBIDTA 4.2 * negative interest coverage ratio * FCF to debt -48%. Awful * Retained earnings -40B!!! * FCF -20B. with B!
If SpaceX were evaluated as a "regular" asset-heavy business like a traditional airline, automaker, industrial manufacturer, or telecom provider—its credit rating would not just be junk; it would be deep, highly speculative distressed junk.
If a credit analyst applied standard quantitative ratios to a regular company showing an accumulated deficit of $41.3 billion, a quarterly net loss of $4.28 billion, and a negative free cash flow of $14 billion, it would score a rating of CCC+ or CCC from S&P, or Caa1 from Moody’s.