What do we know about the Starlink IPO?
Elon Musk has said the Starlink IPO is still three or four years away, but that won't stop investors and the public getting excited for it's eventual listing. The valuation of the company could be around $80 billion or even more, according to various reports. However, due to the rapidly-changing sector and the unclear date of flotation, an exact figure is difficult to predict.Want to trade more IPOs? Visit our IPO trading page.
How to trade Starlink shares
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- Place the trade
How much is Starlink worth?
Starlink is worth $73.2 billion according to the pre-money valuation that came with the February 2021 funding round of $850 million. Morgan Stanley has estimated that the listing could see the company’s valuation hit $81 billion. However, the calculation of this figure relies upon projections of 364 million subscribers by 2040.
What does Starlink do?
Starlink is a network of space satellites that enables high-speed internet connectivity worldwide. Set up in 2015 and run by Elon Musk’s aerospace and space transportation company SpaceX, the operation currently has more than 1,800 satellites in orbit that send information to ground receivers to enable broadband coverage.
The operation launched its first satellite in 2019, with increasing numbers now being sent into orbit and 120 new satellites manufactured per month.
Nearly $886 million in funding was secured by the project at the end of 2020 from the Federal Communications Commission. In total, some $5.3 billion in funding has been achieved so far, with substantial amounts likely to follow. In 2018, the cost of designing, building and deploying the constellation was slated to be $10 billion.
As of August 2021, Starlink said that it has so far shipped more than 100,000 terminals to customers in 14 countries. The current userbase of Starlink is more than 10,000, largely in northern states of the US. However, Musk has said that the project is on course to acquire half a million users by mid 2022, with SpaceX having revealed that ‘hundreds of thousands’ of people have signed up for trials.
Longer term, the plan is for a network of thousands of satellites that could enable download speeds of up to 10 Gbps. Starlink projects revenues of $30 to $50 billion by 2025.
Who are Starlink’s competitors?
Starlink’s main competitors are Oneweb, Kuiper Systems and Azure Orbital. Oneweb – backed by the likes of Airbus, Virgin’s Richard Branson and Japanese financier Softbank – had fallen into bankruptcy but was saved by new funding, including a 42% stake held by the UK government, which secured the resurrection of the constellation.
Amazon subsidiary Kuiper Systems has invested $10 billion in its own constellation, with the intention of deploying more than 3,000 satellites over the next decade. Meanwhile, Microsoft-backed Azure Orbital deployed its first ground station earlier in 2021 and will be working with a range of partners to deliver geospatial data to its customers.
How does Starlink make money?
Starlink charges $99 per month for the beta version of its service, along with a setup fee of $500, plus taxes and fees. This model will naturally be reviewed as the number of satellites grows and the userbase is scaled.
What is Starlink's business strategy?
Starlink’s business strategy is based on providing accessible internet across the world via its satellite network. It seeks to grow its market penetration from an estimated figure of 0.1% of all internet users by the end of 2021, to 2.3% of the world’s online userbase by 2025. This could mean more than 14 million users by the midpoint of the decade.
It is thought that before Starlink can provide a full service to the majority of the world’s population, it will need around 10,000 satellites in orbit, meaning the company is less than 20% there as of August 2021.
The operation will be competing with 5G operators which will seriously challenge Starlink’s ability to deliver on speed, price and reliability. Speculators on the operator’s eventual IPO will be interested to see how the provider can reduce its currently prohibitive costs, as well as revise its consumer price point as it scales to make the service more universally affordable.
Moving forward, Starlink will also have to address the problem of its satellites’ brightness impacting scientific observations, as well as the risk of its satellites colliding, which could potentially send damaging debris into the stratosphere.
Is Starlink profitable?
Starlink is not currently profitable; the operation’s satellite dishes and WiFi routers are currently being sold for $500, far less than their production cost. Musk has said that SpaceX is working on a terminal that is less expensive to produce.
Who owns Starlink?
Starlink is owned by SpaceX and operates as a division of the wider company. SpaceX itself is owned mostly by the Elon Musk Trust, which has 54% equity. The rest of the company is split between finance organisations such as Sequoia Capital – even Google’s parent company Alphabet is understood to have a stake.
Key personnel of Starlink/SpaceX
- Jonathan Hofeller – Vice President, Commercial Sales
- Elon Musk – CEO (SpaceX)
- Gwynne Shotwell – Chief Operating Officer (SpaceX)
- Bret Johnsen – Chief Financial Officer (SpaceX)
- Brian Bjelde – VP, HR (SpaceX)