| Predicted IPO Date: | 2025 |
| Current Valuation: | $137 billion |
| Total Revenue (2023): | $11.5 billion (predicted) |
| Total Funds Raised: | $10.9 billion |
| Number of Employees: | 10,000+ |
| Founded: | 2002 |
Overview:
- Starlink was launched by SpaceX, with the goal to provide high-internet service in rural areas.
- Starlink is led by CEO Elon Musk, who co-founded SpaceX with Tom Mueller in 2002.
- Taking Starlink public isn’t possible since it is a service provided by SpaceX.
- SpaceX is predicted to start trading on public markets by 2025.
How to invest before Starlink's IPO
Unfortunately buying Starlink stock isn’t as easy as buying Tesla stock.
To invest in Starlink you would need to buy stocks in SpaceX (since Starlink is a service provided by SpaceX).
SpaceX is still a private company so buying shares can be tricky.
First off, there's the classic route: buying private shares.
Companies like SharesPost or EquityZen allow you to buy pre-ipo stock. However, you'll need to be an accredited investor to use these platforms. This means you or your spouse will need to have a net worth over $1 million (excluding the value of your primary residence).
The upside? You're in early. The downside? It's risky, and there are often minimum investment amounts. Plus you're not the only investor who wants a piece of Starlink so finding shares in the company won't be easy. On top of that, shares in a private company can be illiquid, meaning you can't sell them as easily as public stock.
Next up, we've got mutual funds and ETFs. Some, like the ARK Space Exploration ETF (ARKX), have exposure to SpaceX due to their investments in related sectors. While you're not directly investing in SpaceX, you're riding the broader space industry wave. Plus, these are more liquid than private shares. The con? You're also exposed to the performance of other companies in the fund, who might struggle to bring in returns.
Finally, consider indirect investment. Some public companies, like Alphabet (Google's parent company), have invested in SpaceX. Buying their shares gives you a slice of the SpaceX pie, albeit a tiny one. The pro here is that you can trade these shares freely on the stock market. But remember, your investment is largely tied to the primary business of those companies, not just their stake in SpaceX.
As always, none of this is financial advice. Remember that investing is not without risk. Consult a qualified professional before making any investment decisions.
What you need to know about Starlink
Starlink, created by SpaceX, is changing the way we access the internet by building a vast network of small satellites in low Earth orbit.
The main goal?
To bring high-speed internet to rural areas that have been left behind.
But that’s not all.
Starlink has also been hard at work getting regulatory approval to offer broadband services on the move. Imagine having high speed internet access while you’re cruising down the road. They’ve got the green light from regulators, taking it one step closer to reality.
To expand their coverage even further, Starlink recently launched additional satellites with a specific focus on providing internet access to the polar regions. In just two years, they plan to have these regions covered, bringing connectivity to some of the most remote places on Earth.
Sure, they’ve faced some financial challenges along the way, but that hasn’t stopped them. They’ve soldiered on, keeping their satellite network up and running, even if it meant operating at a loss. Their motivation? Humanitarian reasons. They’ve been lending a helping hand to Ukraine during their conflicts with Russia, providing much-needed connectivity in the midst of armed conflict.
And there’s more good news. Starlink’s reach is expanding across the globe. Japan has become the pioneer country in Asia to be granted access to Starlink’s services. It won’t be long before more countries in the region follow suit.
Source: Pixabay
Is Starlink ready for an IPO?
Since Starlink is a subsidiary of SpaceX, the real question is “is SpaceX ready for an IPO?”.
First off, we can’t ignore the numbers behind SpaceX.
The company has attracted a whopping $9.8 billion in funding over 29 rounds, and, with a valuation north of $137 billion as of early 2023, it’s one of the most valuable private companies in the world.
The who's who of the investment world have a stake in SpaceX. Big names like Andreesen Horowitz, Sequoia, Founders Fund, Gigafund, Saudi Arabia’s Public Investment Fund and the Abu Dhabi Investment Authority to name a few.
However, we need to talk about the elephant in the room: current market conditions. As of June 2023, the stock market is showing bullish momentum, but fears of a potential recession are lingering. The Fed is caught in the inflation-interest rates tussle, with a series of rate hikes already implemented and more potentially on the way. Though the U.S. economy seems to have dodged a bullet with the debt ceiling compromise, the upcoming months will be critical for the Fed’s battle against inflation and the economy’s overall trajectory.
Whether we like it or not, the macro environment will likely play a role in whether Starlink goes public.
Who founded Starlink?
I’m going to make a guess that the only reason you’ve heard of Starlink is because of one man – Elon Musk.
We all know him as the maverick billionaire, but let’s dive a bit deeper.
Born and raised in South Africa, Elon moved to the U.S. to attend the University of Pennsylvania. After graduating with two degrees, he co-founded Zip2, which was sold to Compaq for a cool $300 million. From there he went on to co-found PayPal, which was later sold to eBay for a whopping $1.5 billion.
After PayPal, Musk decided to shoot for the stars (literally). He founded SpaceX in 2002, putting $100 million of his own money into the venture. Fast forward to today, and SpaceX is launching rockets, ferrying astronauts to the International Space Station, and even working to get humans back on the moon.
On top of his duties at SpaceX, Musk also spends his time running Tesla, Twitter, The Boring Company and Neuralink. Some investors have questioned whether he can effectively run so many ambitious ventures at the same time. Only time will tell.
As of June 2023, Musk’s net worth is estimated at a staggering $180 billion, even after losing $200 billion from his net worth in the previous year.
Notable investors in Starlink
Here is a list of notable investors in Starlink (i.e. investors who hold SpaceX stock):
- Saudi Arabia's Public Investment Fund
- Abu Dhabi Investment Authority
- Alpha Dhabi
- International Holding Company
- Matthew Brown Companies
- Stableton Financial
- Mirae Asset Venture Investment
- Kinetic Partners
- Space.VC
- Massive
Source: Crunchbase
What’s the market saying about the Starlink IPO?
Elon Musk said he wanted to make sure Starlink’s revenue stream was “reasonably predictable” before considering taking it public. Well, with annual revenues reportedly hitting $2 billion for 2022 and 2023 looking to be even bigger, it seems we may have reached that point. The ball's in your court Elon.
On the flip side, Musk did anticipate that Starlink would hit the $3 billion mark in 2020 and generate 80% of all SpaceX revenue by 2023. While it’s not quite there yet, the 150-fold growth in just 2.5 years suggests that Starlink is on the right trajectory.
The anticipation for a Starlink IPO is palpable among investors who see the potential for big returns. But it’s important to remember that investing in Starlink means investing in SpaceX, a privately-owned company. If and when Starlink goes public, investors will need to buy shares of SpaceX, currently valued at around a whopping $137 billion.
However, it’s not all smooth sailing. Amazon is also making strides in satellite-based internet services, and could emerge as a strong competitor. But the rising demand for high-speed internet, particularly in rural areas lacking traditional infrastructure, could be a game-changer for Starlink, potentially providing internet access to millions who currently lack it.
How does Starlink make money?
Starlink makes its cash by charging monthly subscription fees for their broadband services. This also includes one-time fees to ship the hardware as well as the cost of the hardware itself. They’re also looking to land lucrative contracts within the private and government sectors to generate even more cash flow.
Starlink’s business model is simple but seems to be working. By launching satellites left and right they have managed to acquire over a million paying subscribers. Starlink had nearly 20x the amount of satellites it had in space in 2022 compared to 2019.
Who is Starlink’s competition?
Starlink isn’t the only player in the internet satellite game. It's got some fierce competition on the horizon. OneWeb, which was snapped up by the UK government in 2020 and Bharti Global, Amazon’s Project Kuiper, Telesat’s Lightspeed, and Viasat are all vying for a slice of the pie.
Frequently Asked Questions
According to CNBC, CEO Elon Musk stated last week that the Starlink satellite internet business is unlikely to go public before 2025. However, there is a possibility of an earlier Starlink IPO. Elon Musk’s main criterion is for initial public offering of Starlink to be profitable with a predictable cash flow.
SpaceX (the parent company of Starlink) was valued at $137 billion in early 2023.
Starlink recorded its first ever quarter of positive cash flow in 2022. The company is expected to have its first full profitable year in 2023.
