Is a Starlink IPO coming soon? Not so fast, says Elon Musk.
- Elon Musk says “wrong” on Starlink IPO news on X
- The market’s attention continues to be focused on a possible stock market listing.
- When can we expect a Starlink IPO: 2024 or 2025?
Elon Musk said on Wednesday it was “wrong” that his company SpaceX was in talks to take the company’s satellite business, Starlink, public through an initial public offering (IPO).
Musk made the one-word statement in a post on X, formerly Twitter, in response to a Bloomberg report. The report cited “persons with expertise.”
Bloomberg stated that SpaceX has transferred assets in its satellite segment to a wholly owned subsidiary. However, the report admitted that no decisions had been made and that it was also possible that an IPO would not take place.
As of Thursday afternoon, SpaceX had not provided an official response. Musk has previously hinted at taking Starlink public, stating in 2021 that the satellite-based internet service would go public once issues related to cash flows became more predictable.
How does Starlink make money?
According to a separate Bloomberg report, Starlink is likely SpaceX’s most profitable segment. Sales are expected to reach nearly $15 billion in 2024. The company’s utility scope has expanded dramatically over the past year and should account for a large portion of its revenue stream.
Through a constellation of satellites in low Earth orbit (LEO), Starlink offers high-speed internet for a monthly fee in addition to an upfront hardware fee. Expanding its coverage area has increased its customer base, and some analysts estimate it could generate revenue of over $30 billion per year.
Starlink currently has around 5,000 LEO satellites, in the coming years there will be around 12,000 and the final number could be almost 45,000. According to SpaceX, Starlink had over two million users as of the beginning of the year.
While this falls short of recent forecasts, analysts remain optimistic about the company’s future. Just this week, Starlink inked a deal to offer free internet to Mexico until 2026.
There are undoubtedly more deals to come for the world’s largest satellite operator. And with a decisive lead over rivals, some of which are backed by major companies like Amazon, Starlink remains in control of history with a commanding lead.
When can we expect an IPO?
It might be premature to expect a Starlink IPO in 2024. 2025 or perhaps 2026 is currently more likely. If things continue to go well for the Internet satellite business, the odds will likely change sooner rather than later.
SpaceX President and Chief Operating Officer Gwynne Shotwell said earlier this year that Starlink had a positive cash flow quarter. If the company posts back-to-back quarterly earnings, that could lead to more serious discussion of an offer, perhaps as early as early next year.
Of course, market conditions can also play a role. IPOs haven’t been as successful this year, but that hasn’t stopped Discourage companies from considering IPOs. Regardless, all eyes remain on Musk as he looks for clues.
Thomas Westwater, A tasty live financial journalist and analyst with eight years of market and trading experience. @fxwestwater
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