SpaceX and Starlink Just Passed 3 Important Milestones

The numbers add up: It is finally time for SpaceX to IPO Starlink. Read More...

The numbers add up: It is finally time for SpaceX to IPO Starlink.

“May the Fourth be with you,” goes the online Star Wars greeting — and the Force was certainly with SpaceX in the month of May. This month alone, the tiny space company that Elon Musk established with his PayPal cash in 2002 (and which has grown into the dominant player in space launches) reached three incredible milestones in its growth path.

Here they are in order:

  1. 21.
  2. 6,000.
  3. And 3 million.
Neon communication satellites circle Earth beaming down transmissions.

Image source: Getty Images.

21 space launches — with just one rocket

On May 17, SpaceX set a new record for reuse of a flight-proven Falcon 9 rocket, launching and landing the first stage for the 21st time. For a rocket that was originally designed to last perhaps 10 launches, this was quite a feat.

And with 99.9% of other space companies out there still flying expendable rockets, it’s a feat no other company on Earth can match.

6,000 Starlink satellites

That record-breaking rocket, by the way, was carrying 23 SpaceX Starlink satellites up to assume their positions in orbit around the Earth. Coincidentally, it was also the rocket that broke a second record for SpaceX. On May 17, SpaceX put its 6,000th Starlink satellite in orbit.

SpaceX has actually launched more than 6,500 total Starlinks, but these satellites are designed to have a limited lifespan and to regularly fall out of orbit and be replaced with upgraded models. As of today, two missions past the May 17 mission, SpaceX has 6,065 Starlinks in orbit — of which 5,991 are operational, according to the latest data from Starlink-counter planet4589.org.

Why is this significant? SpaceX wants to put a total of at least 12,000 Starlinks in orbit to fully fill out its satellite constellation. At 6,000 satellites, SpaceX has effectively hit the halfway mark.

3 million Starlink subscribers

A second satellite tracker, Orbit.ing-now.com, reports there are currently just under 10,000 satellites in orbit today. This means that SpaceX’s Starlink accounts for more than 60% of all satellites in orbit around Earth. And why does SpaceX need so many satellites?

According to Elon Musk, Starlink just passed the 3 million Starlink subscribers mark, and they all want their bandwidth needs provided for.

But just because Starlink has hit 3 million subscribers, don’t expect SpaceX to slow down, or sit on its space laurels. By the end of this year, experts forecast that Starlink will hit 3.8 billion subscribers, generating annual revenue of $6.8 billion.

At SpaceX’s targeted 60% operating profit margin, this could realistically mean as much as $4.1 billion in fiscal 2024 operating profit for SpaceX. Thus, the company’s satellite communications subsidiary will end 2024 generating the vast bulk of SpaceX’s profits.

Nor will that be the end of the story. Long-term, SpaceX hopes to build Starlink into a $30 billion annual revenue business, generating $18 billion in annual profit. To do this, I calculate SpaceX will need to grow its user base roughly sevenfold in size, to 22 million subscribers.

What it means for investors

Now what does all of the above mean for investors — either investors who managed to acquire privately held SpaceX stock, or those hoping to buy on the public markets, in the long-awaited Starlink IPO?

Four years ago, if you recall, Elon Musk told us that while he will probably never IPO SpaceX itself until he’s reached his goal of establishing a colony on Mars, he probably will IPO Starlink — just as soon as its “revenue growth is smooth & predictable.”

I don’t know about you, but to me, growing from 3 million subscribers in just a few years, with another 27% growth predicted over the next seven months — and 7x growth predicted over the next few years, seems pretty smooth and predictable to me. In fact, it’s downright impressive! With Falcon 9s launching like clockwork, the satellite count ticking up regularly in orbit, and subscribers down here on Earth growing like weeds, I think the Starlink IPO probably isn’t too far away today.

I intend to invest in it. How about you?

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: short June 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy.

Read More

Add Comment

Click here to post a comment