The most highly anticipated IPO of the Decade
Starlink is a satellite internet constellation constructed by SpaceX, providing satellite Internet access. SpaceX plans to sell some of the satellites for military, scientific, or exploratory purposes. SpaceX is leveraging its experience in building rockets and spacecraft to deploy the world’s most advanced broadband internet system - Starlink. As the world’s leading provider of launch services – and the only provider with an orbital class reusable rocket – SpaceX has deep experience with both spacecraft and on-orbit operations.
Satellites planned to be deployed and orbit by 2024
Estimated yearly revenue
Starlink is a plan by SpaceX to put 12,000 satellites into low Earth orbit (LEO) that offer high-speed, low-latency, cheap internet access to anyone anywhere on the planet. That’s the end-game. All you would need to use Starlink is a $200 pizza box-sized receiver. Each satellite will talk to four others using lasers as they constantly orbit Earth, together creating a web of Ku-band and Ka-band broadband connectivity as fast as the speed of light that surrounds the planet at all times, and for all locations.
In order to beam connectivity to the surface, a massive network of ground-based stations will also be necessary. So although 12,000 satellites sounds like a lot, it's only a fraction of the infrastructure that SpaceX will have to construct. Starlink will happen in phases, but the ultimate goal is to have about 8,000 satellites orbiting just 500km above the planet, and the remaining 4,000 orbiting much higher up, at around 1,200km.
SpaceX is leveraging its experience in building rockets and spacecraft to deploy the world’s most advanced broadband internet system - Starlink. As the world’s leading provider of launch services and the only provider with an orbital class reusable rocket, SpaceX has deep experience with both spacecraft and on-orbit operations.
What is an IPO?An IPO is a financial process through which a private company transitions to a public one by offering its shares to the general public for the first time. This transformation involves a series of steps, including regulatory compliance, financial disclosures, and often significant media attention. Once the IPO process is complete, the company's shares become publicly tradable on stock exchanges, making them accessible to a wide range of investors.
How IPO's work?The IPO process typically involves the following key stages: Preparation: The company hires investment banks and legal advisors to navigate the IPO process. Financial statements, prospectuses, and disclosures are prepared to provide potential investors with insights into the company's financial health and future prospects. Regulatory Approval: The company must adhere to stringent regulatory requirements and get approval from regulatory bodies such as the Securities and Exchange Commission (SEC) in the United States. This ensures that investors are provided with accurate and transparent information. Pricing: Investment banks determine the initial offering price for the shares. This price is usually based on a combination of financial performance, market conditions, and investor demand. Allocation: Shares are allocated to institutional and retail investors based on demand. Institutional investors often receive a larger share of the allocation due to their larger investment capabilities. Trading Debut: The company's shares start trading on stock exchanges, where investors can buy and sell them freely in the open market.
What are the benefits of early stage investing?Potential for High Returns: Early stage investors who had faith in the company before its IPO can benefit from substantial capital gains if the stock price appreciates post-listing. Successful IPOs have the potential to generate significant wealth. Access to Innovative Companies: Investing in IPOs allows early stage investors to be part of a company's growth journey from the very beginning. This offers the opportunity to support innovative startups and emerging technologies. Diversification: Adding IPO investments to your portfolio can provide diversification benefits, reducing overall risk. A well-diversified portfolio can help mitigate losses in case of underperforming stocks. Liquidity: Once a company goes public, investors can buy and sell shares easily on stock exchanges, offering liquidity that may not have been available when the company was privately held. Information Availability: Publicly traded companies are required to disclose financial information regularly, providing investors with greater transparency and insights into the company's operations.
Risks to considerWhile investing in IPOs can be rewarding, it's essential to be aware of potential risks, including market volatility, price fluctuations, and the possibility of a stock performing below expectations. Conduct thorough research and consider consulting a financial advisor before investing in any IPO. IPOs represent a significant opportunity for early stage investors to engage with exciting companies at the early stages of their public journey. These investments can yield substantial returns and offer the chance to be part of a company's growth story from its inception. However, it's crucial to approach IPO investments with diligence, understanding the risks and conducting due diligence to make informed investment decisions.
"There have to be reasons that you get up in the morning and you want to live. Why do you want to live? What's the point? What inspires you? What do you love about the future? If the future does not include being out there among the stars and being a multi-planet species, I find that incredibly depressing." - Elon Musk
Many investors are quite interested in the Starlink IPO. As Elon Musk said in late 2020, such an IPO is possible, but does heavily depend on how easy it would be to forecast its financial performance. Starlink (SpaсeX) is a satellite communication system, which includes 4,000 satellites, with an expected bandwidth of web traffic of up to 50% (although it is 10% for locations with a high population density). The system gets directly connected to the customer gadgets through user terminals. Elon Musk announced this project in January 2015. During five years, Starlink was being successfully developed in the US and Canada, and the investors acknowledged its potential, having invested over $10B. In 2020, Starlink and SpaceX got split, with the former being now treated as a separate company. By March 2024, it is expected to launch 50% of satellites into orbit, while the other 50% should be launched by 2027.
Starlink's Pre-IPO Financial Performance
On October 26, 2020, Starlink started testing its satellite system, and this is not yet complete. Customers, however, can already purchase its equipment for $499 and pay $99 monthly to get satellite internet connection.In December 2020, it was reported that the project would raise $885.50M the next year in order to provide web access to the remote locations in the United States. As of January 2021, Starlink network included 10,000 terminals. The project is being financed by its shareholders, whose number is growing rapidly. As this is private investment, however, we are only aware of the amounts raised. For instance, it is known that in 2019, the project raised $1.02B, while in 2020 this amount reached $2B.
Starlink IPO date is yet unknown. Based on both the expert’s comments and the cautions Musk's statements, however, we could assume it might take place in 2024.
Starlink IPO Outlook and Target Market
As Elon Musk said that high-speed satellite internet access cannot be free, one may assume the project does cost money, the cost of fully fledged version being somewhere between $10B and $15B. The business plans state that the earnings should rise by $30B per year, and the number of customers, to 40M, by 2025. However, Morgan Stanley experts believe that the project will be able to break even no earlier than in 2033.
Elon Musk's SpaceX raised $850 million last week at $419.99 a share, a penny below the $420 share price Musk made infamous in 2018. This equity private round now raises the company's valuation to near $74 billion. It was oversubscribed, with the company receiving $6 billion in offers. Race for the stars: Starlink – launching above in January 2021 – has helped push SpaceX's valuation into the stratosphere. All this represents a 60% jump in the valuation of Elon Musk's Starlink and Starship business from its last round six months ago. That previous round saw it raise $2 billion, at a $46 billion valuation. With Alphabet shutting down its Project Loon, and Facebook previously abandoning its own solar-powered drone Aquila project, SpaceX's plan for low-orbit broadband is looking better and better.
Starlink's apparently more promising space-based approach to connectivity has attracted its share of competitors.
Meanwhile, in the other big astronomic private-sector gamble, Virgin Galactic's valuation has climbed and stalled in the last week after another delayed SpaceShipTwo test flight. Admittedly, Elon Musk has cited a space-sized financial hurdle ahead for the company over the next year, with capital expenditures far dwarfing revenues coming in. Currently with 10,000 users, Space X "needs to pass through a deep chasm of negative cash flow over the next year or so," Musk says.
But "once we can predict cash flow reasonably well, Starlink will IPO," he predicts.
Musk believes the Starlink network will take roughly $10 billion a year to build. When complete, though, it will eventually bring in around $30 billion a year, he estimates. Or ten times the annual revenue of SpaceX's existing rocket business. Starlink has started accepting $99 a month pre-orders in the US, UK and Canada for what it calls its "Better than Nothing Beta".
The pre-orders are fully refundable, says the website, and "placing a deposit does not guarantee service." There's a one-off $499 or €499 cost too, for the Wi-Fi router and a small satellite dish which the company's official installation guidelines creatively creatively dubs "Dishy McFlatFace".
The subscription gets customers an average download speed of 100 to 150 Mbit/s.
Mass-market competitors, in areas with fiber broadband, could offer speeds up to 500 Mbit/s for only £62. It's most likely to be an attractive offer in more out-of-the-way areas. Which could be a good gamble: Over 40% of the globe is without access to the Internet. For now, the growing Starlink constellation focuses on North America and Britain. But as more satellites are launched, Starlink will be able to offer "near global coverage of the populated world in 2021," pledges the company.
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