SpaceX files to go public
nytimes.com398 points by nutjob2 4 days ago
398 points by nutjob2 4 days ago
SpaceX has reduced the cost of getting a ton of mass into orbit by a factor of 10 and with their new system (Starship) it's poised further reduce that to 100x. They launch, land and re-use their rockets so often now that what was considered impossible 15 years ago is now routine. They currently put more things into space than the rest of the world combined and by a huge margin. They also have the most advanced internet infrastructure in the world and are poised to replace legacy ISPs and even mobile carriers in the coming decade. Oh, and they're doing all this while making a profit ($16B last year) despite their massive R&D spending and even with the money sink that is xAI their profits will be higher this year. It's hard to say that this isn't one of the most innovative and fast moving companies in the world. $1.75T maybe seems excessive, but less so than a lot of other companies out there.
$16B is the top line gross revenue number.
You don't count R&D as an expense per GAAP, so...
They have claimed $8B in EBITDA, also leaving out the amortization of R&D costs.
Those aren't audited numbers, as far as I know.
That article claiming $8b profit is indeed mislabeling EBITDA as profit. EBITDA removes any recurring replenishment costs, the cost of building the satellite, launching the satellite, the user equipment manufacturing and returns, all ground infrastructure build and replacement, all employee stock compensation (not counted!), no advertising costs (and they've actually had to do a lot of that lately to scrounge customers that are remote enough that their network isn't too congested to serve), no taxes are counted (though they get out of that because they have no profit!). Not to mention payments servicing all their debt and Starship development.
*they actually use "Adjusted EBITDA" which is even more nonstandard and means they define the accounting however they want!
>> *they actually use "Adjusted EBITDA" which is even more nonstandard and means they define the accounting however they want!
Enron would be proud...Theranos-level Transparency...
Right the commercial side never added up
90% of the valuation is about Golden Dome
Audited financials would be released with the S-1. But it's very unlikely that they are not audited given the amount of money they have raised.
No related to this conversation, but I just started reading some books on finance and I actually know what most of those terms mean now! Lol
Good for you! It’s fun when you realize it’s a constructed language that also tends towards precision. While accounting is not my favorite, financial models as a whole are incredibly powerful reasoning tools. On par, for me, with engineering or physics based first-principles reasoning.
Which financial models best describe reality in your opinion?
I'd always wanted to view affairs from a different lens, though I often feel the people who think everything revolves around bond rates or inflation numbers can miss the social picture of why things happen.
> Which financial models best describe reality in your opinion?
That’s a subject that fills many volumes on accounting, finance and economics. I don’t think you should be looking for one best theory, because there are valid differences of opinion in all these fields.
> I'd always wanted to view affairs from a different lens, though I often feel the people who think everything revolves around bond rates or inflation numbers can miss the social picture of why things happen.
The ‘social picture’ is what’s called welfare economics, which is a whole field in itself. I wouldn’t jump straight into welfare economics though, you’ll probably need to start with introductory economics to understand the basic terminology.
> Which financial models best describe reality in your opinion?
The most-powerful ones for individuals are the micreconomic mechanisms. Understanding how leverage, tranching and moving risk (and reward) across stakeholders and time, work, for instance. The necessary mechanisms and tradeoffs one must make, as well as the ones one should.
If you're looking for a formal model, it's the balance sheet. But not the accountant's. The financier's. Sources and uses, and uses and sources. Payments in, payments out. How do they balance over time; how do they change exposures to different layers of economic and legal control.
The primitives of these models are transactions and people. When you look through them, they're defining human wants and ambitions, faults and fears, patience and mortality.
That’s such an overly complicated answer. I’ve noticed people from a financial background often do this. Why? Does it make you feel special? Lmao.
It’s all basic stuff, often wrapped in jargon to throw people off.
If the fella wants to be properly informed, he needs a very strong understanding of fundamental microeconomic principles, along with macroeconomics. On top of that an understanding of financial accounting.
And… on top of that an understanding of corporate finance and valuation. Aswath Damodaran (look him Up on YouTube) is the go-to person for this.
Only then you will form a complete picture of what’s going on and make well informed statements about the future.
@crisscross Lmao down voted my post you panzy? Be a man and accept I’m right - your post is full of so much hot air that it deserved popping.
It's such common language in business that I didn't even realize I was writing so much jargon. I hope you inspired some people to look up the terms. It's really not that hard to understand.... Even CEOs can do it.
With the way I've seen some companies run, I'm not so sure CEOs can lol.
It's been interesting so far. The tough part for me is a the literature is all wrapped in "make your company more successful and profitable", and to be honest I couldn't give a shit about it that. I'm doing this for me, and because (especially on the age of AI) understanding this stuff is more important than ever.
They can, but they might not. Richard Branson famously said he didn't know the difference between gross and net even though he was at the head of Virgin Records.
Any recommendations ?
I'm just stating out on this, so I haven't gotten through everything I want to read yet.
Right now I'm reading Financial Intelligence by Karen Berman and and Joe Knight. There's different versions, but I choose the one "for managers". So far it's done a good job making the material understandable for someone who doesn't have a degree in finance. This the one that's more relevant to the post and will help you start understanding how companies operate at a financial level.
For personal finance I have read
I Will Teach You To Be Rich by Ramit Sethi and A Random Walk Down Wallstreet by Burton G. Malkiel. The first sounds "click-batey" but that's because "I will teach you the boring effective way to manage you're finances" doesn't sell. The latter gets more into the weeds on investing. Bother are great (though Random Walk has been edited many times and the beginning of the book has become bloated, so I'd recommend skimming it a bit since it's just history on epic financial crashes).
I'm planning to read:
7 Powers — Hamilton Helmer
Good Strategy/Bad Strategy — Richard Rumelt
The Outsiders — William N. Thorndike Jr.
The Intelligent Investor — Benjamin Graham
The Psychology of Money — Morgan Housel
I have a bachelor from a school of business and I have no clue.
What did you read that worked?
I'm going to copy/paste a reply I left for another commentor, so I don't have to retype everything lol
I'm just stating out on this, so I haven't gotten through everything I want to read yet. Right now I'm reading Financial Intelligence by Karen Berman and and Joe Knight. There's different versions, but I choose the one "for managers". So far it's done a good job making the material understandable for someone who doesn't have a degree in finance. This the one that's more relevant to the post and will help you start understanding how companies operate at a financial level.
For personal finance I have read
I Will Teach You To Be Rich by Ramit Sethi and A Random Walk Down Wallstreet by Burton G. Malkiel. The first sounds "click-batey" but that's because "I will teach you the boring effective way to manage you're finances" doesn't sell. The latter gets more into the weeds on investing. Bother are great (though Random Walk has been edited many times and the beginning of the book has become bloated, so I'd recommend skimming it a bit since it's just history on epic financial crashes).
I'm planning to read:
7 Powers — Hamilton Helmer
Good Strategy/Bad Strategy — Richard Rumelt
The Outsiders — William N. Thorndike Jr.
The Intelligent Investor — Benjamin Graham
The Psychology of Money — Morgan Housel
The Art of Deception.
You do not need to study anything else. You can even be very successful in every stages of your life with it.
Hey are absolutely not replacing “legacy” isps and certainly not mobile. Even if they had perfect coverage, sat signals are way too sensitive to obstructions.
No, but they are replacing bad ISPs. I have a relative in Brussels, while there is 10gig fiber on a nearby street, he's stuck on 100/10 coax, and to add insult to injury, Starlink is cheaper.
Coax is an old tech, but it is surprisingly innovative and pushed limits a lot with right equipment. Newest full duplex and extended spectrum models could potentially reach 10/10 Gbps and all they require is changing some passive splitters in the cable plant and RPD plus CM supporting new modulation. Which are way way cheaper than satellites.
What I'm saying, is as soon as there is a real competitor pressure, ISPs can upgrade their deployments in under a year or two, even without touching buried copper. Of course they can also choose not to do that too :) .
I mean your relative is maybe a member of the tech elite who needs amazing bandwith but 100 Mbps/10Mbps is not going to be limiting for most people. Coax is already pretty fast considering it probably takes its source from fiber at street level and mostly constrained in uploading. I just went from coax to fiber and I cannot tell the difference when browsing, streaming or sharing. Maybe it is because my devices are stuck on wifi 5 but even then I have my doubts.
On the other hand : "Starlink users typically experience download speeds between 45 and 280 Mbps, with a majority of users experiencing speeds over 100 Mbps. Upload speeds are typically between 10 and 30 Mbps."
That doesn't sound meaningfully different. What is the price difference ?
You are quite right. Also in practice Starlink has random jitter and packet loss at unpredictable times, very visible when talking to my colleagues in Ukraine when they are on backups or in the country. It's fine solution, but landlines are for now superior. Also Starlink's bandwidth depends a lot on the majority of people staying on the landlines. Starlink is nothing short of miracle, but it has limitations. Interesting to see the if the v2 and v3 will upend the status quo.
cable is still more stable than starlink. I have regularly issues on a teams call with starlink while it just works with cable.
And come on 100/10 is not bad despite the other 10gig fiber
True. They're replacing legacy ISPs in areas where your choices are high latency geostationary satellite service, dialup, or DSL where the nearest DSLAM is far enough away that it may as well be dialup.
If anything they'll go for the lucrative customers that _need_ a signal to go faster through vacuum than through glass.
Maybe some decent revenue offering sat to cell for the traditional carriers.
There is no workload that latency sensitive is there? If it is you just move the server where it's needed. I.e. you do HFT next to the stock exchange.
Definitely not a usecase for Starlink.
For the microseconds-chasers, there's microwave relay links, say between Chicago and New York (ref e.g. https://bullseye.ac/blog/economics/inside-the-world-of-high-...). Sending a signal up a few hundred km and down again a few hundred km adds way too much latency, and signal-hopping between fast-moving satellites adds way too much jitter for "such applications".
They do make internet convenient and somewhat reliable for places that had no other options (on my boat, etc.) But I doubt they can displace wired or microwave relays, and why would they? On-earth systems are much cheaper to maintain even if the cost to LEO reduces by another order of magnitude.
And density is limited. Starlink cannot more than a tiny fraction of a city.
Limited by the amount of satellite coverage? Or on the ground limitations from ever greater division of bandwidth? I guess those two are directly correlated, but they could in theory add microwave relays into the mix to help offset higher population dense areas from lower density ones with less used bandwidth.
I think it's mainly a limitation of the beam steering: terminals that are close together need to be seperated in bandwidth so that they don't intefere with each other, and there's only so much bandwidth available. Tighter beam steering could help but that is something that tends to bump up against physical limitations.
(and it's an area where it would need orders of magnitude improvements to address the density of cities, it's not really close at the moment)
Really interesting insight, thanks!
In the past I've worked on consensus based protocols like the ones used in modern cellular systems; basically edge devices register with a controller system that then coordinates time slots for distribution/use of bandwidth for the limited spectrum. Adds a lot of complexity and requires highly accurate time synchronization mechanisms to have any hope of working, but they certainly could leverage something like that to further increase support at higher densities. That is, if they're not doing that already.
That's another way to divide up the total amount of available bandwidth (common on any shared medium and they are almost certainly already doing this), but it doesn't increase the amount of available bandwidth in a given area.
You mentioned beam contention as the key problem, which consensus networks solve at the cost of latency at the high end. As for bandwidth, in theory, you get the full network speed when it's "your turn", so that looks somewhat "bursty" when cycle lengths are too high from high demand. Naturally it evens out at human perception timescales appearing as lower bandwidth though. And obviously there's a saturation point where it no longer makes sense to continue slicing the pie and more complex mitigation strategies like exp back off, priority queuing, varying cycle lengths, etc need to be added into the mix.
To decrease that latency in high density areas like cities they'd need to reach for something like terrestrial microwave relays to add more connection points from adjacent (in horizon) "freer skies"
To be fair, in Tokyo I see a lot of ISPs pushing 5g routers. Many buildings have fiberoptics pulled to the basement and then use VDSL for the last meters, and I bet they'd rather move everyone over to 5G than have to start actually installing proper fiberoptic internet. In Norway, 5g has been advertised as something groundbreaking and radical. We have been told "now surgery is finally possible with mobile networks" (hospitals don't have fiberoptics??) and similar. Very Apple 2010s "The ipad can now be used by (good person) to do (good thing)"-like. But nobody cares, real users don't see any benefit.
A normal person will probably never notice the difference between 4g and 5g because of what they use their phone for, and giving every household a proper fiberoptic line is probably a much better quality of life improvement. But ISPs dont want that future. They want everyone to be connected to these neighborhood hubs that don't require last-100m-cables and expensive construction. The same can probably be said for Starlink. It's "Good enough", and that's good enough to get sales. They don't care about the quality of the product they deliver, or if fiberoptics are superior. They care about sales.
Their technical accomplishments are doubtlessly notable, but does the expected business growth justify this valuation? Honest question, how many things do we really need to send up there that reducing the cost to orbit by 100x will trigger Jevon's paradox and lead to 100x more launches?
I suppose "data centers in space" is the current answer but again, I'm suspicious about its feasibility.
Barring that, until we have another "killer app" besides Starlink, like a giant orbital space station or a moonbase, I'm curious whether there is enough demand.
Personally, I think that valuing businesses by their expected growth is doing really bad things to our society.
We used to value businesses by their current returns, usually dividends paid to shareholders. And we treated any statements about their future plans as interesting but not something anyone should trust.
Now we value stocks on what their price will do in the near future, because the primary return to shareholders is an increase in share price, effectively speculation rather than dividends as the method of returning value to shareholders. So we're incentivising companies to be constantly pushing their share price up (rather than paying decent dividends), which does bad things to both the company and the economy as a whole.
It's not how the system was intended to work and we find ourselves on a treadmill of constant growth that is killing everything good.
Valuing anything by its expected, long term value is just accurate. You'd consider the longevity of, say, a garment when you purchase it. The fact that a car has a lot of miles in it, and therefore will need replacing earlier, is something that any reasonable person will consider with its valuation. We spend money educating children not because of the value of the knowledge that second, but the expected value in the future, including how it'll be useful to learn other things.
So of course we price businesses based on the expected long term value of the shares, as best as we can guess it. But the fact that a company degrades in value as it "overgrows", and engorges itself to become an entity that can't innovate or do anything efficiently in itself goes into the price too. It's not as if a place like IBM doens't want to grow: We just know they won't.
As for speculation rather than dividends, I suspect the real medium why this happens isn't just need for infinite growth: Again, as growth expectations slow down, price moderates: See Paypal vs Stripe. The issue is mroe of a principal-agent situation, as it's very difficult for the median shareholder to, say, force Zuck to stop spending money on the metaverse. And it's not just at the top level: We have a lot of incentives in organizations for people to push for more hires, even when there's very little value to be had. Anyone with a long career can see how much less tense a growing company is that one that has decided its headcount is stuck for a long time, or possibly shrinking.
Principal Agent problems are just much more annoying to put a blame on, because instead of being able to blame some exec all on their own, we get to look at ourselves too, and how what is good for us differs so much from what is good for employers too. The blame is spread thinly, and the behaviors that would lead to more efficient companies are also worse for workers. Then it's suddenly people easier to like, and we don't like where "try to be profitable at the most optimal size" takes us.
Isn't it much simpler than that? Dividends and profits are taxed. Reinvesting to grow revenue isn't. That's why you see companies doing stock buybacks; prevents them from paying taxes, prevents their shareholders from paying taxes.
When humans are involved the waters are pretty muddy and the forecasts of possible growth rosier than reality. Seeing companies losing money hand over first while those same companies get insanely high valuations is common enough that these are obviously short term money grabs before the house of cards collapses.
Imagine valuing Google in early 2000s on its revenue and dividends. It would have nearly zero value, but if you bought then you knew it was going to be one of the biggest companies in the world.
Only boring stable companies that have no growth like Coca-Cola make sense only valuing without further growth.
So speculative fiction, making this basically gambling since the entropy for picking a "winner" is so high. For every Google there's a hundred others that had similarly brilliant ideas that either flopped or failed to monetize. Your anecdotal example is just retroactive survivorship bias.
Agree, but Coca-Cola has plenty of value despite being "boring" and "stable".
The post I was replying to was saying that SpaceX had no growth and therefore little value. That's a mindset that sees companies as speculative assets that are only valuable if their price is set to change in a way that a speculative profit can be made.
SpaceX is making money and doing well, the business fundamentals are working out, and it is valuable because of that. If it turns into a boring, stable, company then that's a good thing - it's less likely to spend $10B of shareholder funds chasing some sci-fi pipe dream (instead of, say, spending $1B testing its assumptions first) in the hope of continuing to be valued as a "high-growth" stock.
Coca Cola indeed has a lot of value its market capitalization is USD 76 billion making it one of the 30 most valuable companies in the world!
The problem with SpaceX is that its valuation is almost entirely driven by its expected future growth. For 2025 SpaceX reported EBITDA of USD 7.5 billion. Other mature aerospace companies (Lockheed, Northman, Airbus, Boeing etc.) are currently valued as ~19x EBITDA (i.e., Market Cap / EBITDA is ~19x). But SpaceX is being valued at 166x EBITDA (USD 1.25 trillion market cap / USD 7.5 billion EBITDA).
What drives this difference in valuation? The answer is quite simple, investors expect the EBITDA to grow and quite rapidly. EBITDA could grow via higher margins (EBITDA margins is EBITDA / Revenue, and for SpaceX it is already a decent 50%), but even at 100% EBITDA margin (i.e., zero operating cost) its valuation multiple would b 83x EBITDA. So the only way to justify SpaceX valuation is if its revenue grows and gorws rapidly.
A quick back of the envelop calculation would shows that investors expect SpaceX revenue to grow at minimum of 65-70% annually for the next 5 years. If the revenue grows at less than that the investors are unlikely to earn a good return on their investment.
Someone else here pointed out that when your biggest asset is a network of thousands of satellites that all have a five-year lifespan, earnings after depreciation is unusually important.
>> SpaceX is making money and doing well, the business fundamentals are working out, and it is valuable because of that.
Not true. They have to build a new constellation, every four years, at a cost of 8 billion dollars, and that is not accounted for.
Their main customer is...them: https://news.ycombinator.com/item?id=47613231
"SpaceX is making money and doing well, the business fundamentals are working out, and it is valuable because of that."
Spacex is making $10 billion. That does not give it a value of $1.75 trillion.
The $1.75 trillion value is wholly based on speculation about its future growth.
But they made up a bunch of forecasts with rosy future prospects! Think of how profitable they'll be if literally the world model matched their simple growth equations!
From my perspective, it's all just collective gambling when it comes down to it for tech IPOs these days. The market trends are just as much a popularity game as they are anything else.
I agree - I think there should be a rule that prevents anyone who buys a stock from selling it inside the following 2 years or so. And another rule that says every stock must pay a dividend that is a fixed percentage of the company's profit, modifiable only rarely and only by the board of directors. Then anyone buying stocks would have to price them more by the actual present-day dividends and strength of the company in the present day than by what someone else might buy the stock for tomorrow. It would curb speculation and reward responsible companies that are building strength for the long term.
You’re free to invest that way if you want. You might one day wake up and wonder why your Blockbuster Video shares did so badly. But Netflix seemed way overpriced.
Investing in future prospects encourages companies to plan for the future, rather than extract what they can from the present. The stock price is a big motivation for execs, so they can only invest in R&D if the market understands why it makes sense to spend money now in expectation of future profits.
People have been speculating on future returns since forever.
The East India company (an example of capitalism gone very very wrong) was speculatively founded with £4m (in today’s money) and went on to corner half of global trade.
This rose-tinted past of honest capitalism did not exist.
I like your term "honest capitalism". I'm putting that in my back pocket for later.
Capitalism breeds monopolies by rewarding first movers with economic advantages via feedback loop. This is how the system is designed to work, always has been, always will be.
The fact that capitalist systems require unbounded growth for "success" is the real society killer, but crazy valuations is definitely a concrete symptom of this as we reach growth limitations; we're now pushed to "just assume" that the growth is still plausible when it's clearly not to keep the status quo.
> but does the expected business growth justify this valuation?
What was the expected value of investing in a colony in the Americas? It’s very hard to quantify. Most of them failed, but some people got very very rich.
Starlink seems like a no-brainer at this late date, but I remember thinking "He'll never be able to make money from internet satellites. This has to be some kind of scam. Look what happened to Irridium."
Data centers in orbit certainly seem like a pipe dream, but SpaceX certainly has the technology it needs to put them there, and that's a huge competitive advantage (like it was for Starlink) if they do turn out to be feasible.
Star link is not a 'no-brainer' they currently have 9/10 million customers and need 10k star link satelites. One satelite costs 300k and works for 5 years.
To this, they need humans operating the space side, the base station, they need base stations etc.
It is affected by weather as well.
Its not a 'no-brainer' and while space x showed its somehow a business, amazon and others are entering this space now too. So they never had a first mover financial advantage making big bucks and others are coming which will drive customer base and margin down.
And data center in orbit is not just a pipe dream, its stupid on a whole new level. Smart would have been to build like a DC City in the middle of the USA were its super cheap and introducing the necessary infrastructure to it. But alone the R&D, the sending it up there, solving hard space problems just to not being able to touch hardware when it fails, man thats stupidity on a whole new level.
It's stupid, but it mostly works because they also own the sat deployment side of the equation as well.
Dropping the cost to launch (replacement sats etc) by continuing to take greater piece of all total space launches along with large step function capacity refinements with each new rocket generation, means they will continue to push the economics in their favor. $300k/sat might not be worth it, but unless there's a number of back to back unmitigated disasters with their new rockets (totally possible given the cost of getting it wrong) launch costs will continue to drop as they iterate. Even in the worst case where starship never works, they can still salvage and continually refine their current proven designs.
That said, I do not trust their IPO valuations at all. I have enormous respect for what SpaceX has accomplished in such a short time span. When the US government deprioritized further space R&D for all launch vehicles and relied entirely on Russian launch vehicles, I honestly thought it was the end of an era of innovation in space in my (current) country. I'm glad I was wrong to some extent, even if it means an over reliance on the private sector to make further progress.
You may point out that private space ventures sadly have similar problems to ceding to foreign nations, and you wouldn't be wrong. The only silver lining for me is getting to see continued progress in my lifetime. It doesn't take all the sting out of government funding drying up for space launch vehicles, especially when our other budgets like defense are so insane, but I'll take it at face value as a victory for humanity to continually improve space capabilities at scale in any form.
I def also want to see continue progress and investing in space is only a problem in capitalism, which i'm not a big fan of anyway.
But it would be so much better if the person behind this would have more character.
To be absolutely clear, as I make no allusions: we operate in a brutal, broken system from the current financial systems under capitalism in its current form. I'd likewise argue that a billionaire "with character" vs a billionaire with none is still highly problematic. The very existence of billionaires is the root of enough social ills that they should not exist as a class of people at all. Many in that class would even claim to be "doing what's best" in all honesty, when nothing could be further from the truth. Sadly that doesn't mean the ruling class simply ceases to exist because of our collective desires. Nothing short of massive societal change through collective action, something humans have been proven to be really, really bad at time and again, would make any other system possible. I digress..
That said, SpaceX engineers managing to perform impressive feats in manned and unmanned space travel still stands as something to be lauded in my book, even if their leadership deserves none of it. These feats are made _more impressive_ given the poor, child-like behavior found in their particular brand of leadership rather than less.
The employees of SpaceX have made their views about leadership very well known several times now, often with real consequences to themselves and their families. We live in unfortunate times. I'll take my slivers of hope for humanities continued advancement in space travel where I can however, even as it seems the fabric of society further unravels.
Personally I just don’t believe “data centers in space” is a sincere goal. There’s no way any of the cooling benefits or whatever offsets the additional layers of significant construction and maintenance challenges, collision and other environmental risks, and unknown risks.
There’s no way. Every proposal is either a bid for capital via moonshot enthusiasm or a stalking horse for something else, and these days I wouldn’t be surprised if it was orbital weapons platforms in disguise.
I'd like to see lists of "Things Elon Musk will never be able to make money from, but did" and "Things Elon Musk will never be able to make money from, and didn't".
Cybertrucks. Electric semis. Full self driving. Battery city.
I'll leave up to the reader to put them on the appropriate list.
I think Elon made loads of money from full self driving, without Tesla even delivering it once.
He personally might have made money on Cybertrucks, too.
Short list: https://www.rollingstone.com/culture/culture-lists/elon-musk...
longer list: https://elonmusk.today/
Cult of personality will take you pretty far apparently. So far in Elon's case he could drop his mask of technical genius and become an inordinatly wealthy memelord/shitposter and still have a following.
For many decades, the only way the commercial aviation business survived was carrying the mail.
Sure, but factor of 10 cheaper in a market that is tiny still isn't that much. Even if you assume a 10x market size increase, its still tiny.
> They also have the most advanced internet infrastructure in the world and are poised to replace legacy ISPs and even mobile carriers in the coming decade.
That's quite the claim. I believe Starlink is a great business, the largest sat business for a long while to come (unlike space datacenter) but even if you are, very, very bullish on it, its not enough to justify the price.
You basically need to believe that:
- Launch market to 10x and grow faster then it ever has for decades
- Starlink goes from already being amazing systematically crushing terrestrial competition.
- xAi wins the AI race (this is almost absurdly optimistic)
- AI data-center becoming a insanely thing (also absurdly optimistic)
And even then this is hard to justify. And I certaintly don't believe 3. or 4. And 1 is a stretch. And while I believe in Starlink continued growth, terrestrial infrastructure still has lots of advantages for cities, where most people actually live.
I fully expect Jevons paradox to hold for cheap kg to orbit. Spacex could be the monopoly transportation provider of the Solar Alliance. Yes that’s fanciful, but it illustrates the potential.
So we are now hypothesising fully-developed multi-planetary civilisations to justify an IPO price in 2026? By the same leap of logic Coca-Cola is worth 1 trillion times its current price since it's poised to be the galaxy's drink of choice. And I'm being reasonable with my estimate here, how many galaxies could we actually be talking about in potential?
Standard Oil is a ready counter point. The advent of the automobile greatly effected its success. And if one considers the value of children (Exxon, chevron, mobile,etc) after the supreme dissolved it in 1911, it was a tremendous value.
One can easily imagine a similar scenario for cheap kg to orbit.
Not really, because Standard Oil controlled pipelines, had deals with railroads and owned the overwhelming amount of refining capability and owned the supply as well.
SpaceX is ahead, but its only technology, and nothing in Falcon 9 or even Starship suggest that nobody else can replicated it.
SpaceX themselves realized that launch itself isn't a big enough business, so they went themselves after space based comms. For SpaceX to stay ahead they would need to be technologically ahead on every single technological advanced.
But with companies like Amazon and so on involved, SpaceX is nothing like Standard Oil that was already the biggest company. SpaceX can not defend its monopoly on launch or space comms.
Comparing them to standard oil is silly.
I don't see how replacing mobile carriers with space based infrastructure is physically possible.
It's not meant to replace terrestrial networks, it's a space-based alternative that serves areas carriers have no financial incentive to cover. Terrestrial cellular towers cost between $150k to $500k per tower, and are not economically feasible in less populated areas. There are also many dead-zones in mountainous regions, since cell signals are blocked by mountains.
Starlink Mobile supplements this, it's simply cheaper for mobile providers to partner with them than do their own buildout. Currently only 5% of the earth's surface is covered by cellular signals. Starlink will push that up to 85+%, and is backward compatible with existing cellphones.
> it's a space-based alternative that serves areas carriers have no financial incentive to cover
In a nutshell: they're serving a market that has less money to spend using more expensive tech than the current industry leaders. Maybe I'm wrong but it doesn't scream "massive profit".
I think Airplanes are going to be pretty profitable. They are sort of running a market cornering operation there. But, there will be competition eventually. Starlink is way faster than the alternatives so most airlines have switched and Starlink has rapidly increased their prices for aviation. Idk if it's enough though, they are definitely running lots of promos for home customers.
That sounds pretty niche. And airlines have already extremely thin margin (that have been eaten by fuel price increase). I wouldn’t be surprised if they drop that type of luxury
It’s another product for airlines to sell and make money off. It also serves to keep passengers entertained and content. It’s going to be a very strong market for Starlink IMHO.
> I think Airplanes are going to be pretty profitable.
Container ships, military vessels, even fishing expeditions could enjoy an internet connection and cell service.
It's big in the recreational boating community, as those folks generally have the disposable income to support a SpaceX ISP subscription.
Worldwide there's roughly 30 million recreational boats, whereas for commercial aircraft carrying people (not cargo) is more like 30k, so different orders if magnitude. It's highly likely boating would be a more profitable industry to satisfy demand for than airlines in the long term. That is unless they're charging exorbitantly more for airline contracts than personal boat use, which is totally possible.
Amazon Leo just signed delta as a customer so competition is indeed close behind.
I think SpaceX is an incredible company but at this valuation I’d expect it to have something as pervasive as the iPhone or Nvidia chips. It seems to have only small niches.
But you're just looking at internet.
SpaceX has the lion's share of the world's launch market, if you include Starlink.
Delta’s ViaSat based Wireless is fine. The latency is hire. But it really isn’t a competitive disadvantage.
If Starlink becomes common enough on flights, I absolutely believe it will be a competitive disadvantage.
I have been flying a lot post Covid between it being a hobby of ours and consulting - I’m currently Platinum Medallion on Delta.
Frequent flyers choose their airlines for a lot of reasons - which airline has the most direct flights from their city, who has the best frequent flyer program, etc. The latency of the Internet is seldom a factor or the difference between 10Mbps and 50Mbps.
Non frequent flyers just buy the cheapest flights. The major three airlines make money off of business travelers, business and first class flights and credit cards.
would you choose a flight that's $200 more expensive because it has starlink?
If I’m flying for work and Starlink is that much better, quite possibly. My wife’s experience with other in-flight WiFi providers has been quite poor, often to the point that it barely works. Having said that, neither of us has been on a flight with Starlink yet.