There’s been a great deal of speculation surrounding a potential Starlink initial public offering (IPO).
The main reason for this interest is Musk’s reputation in the investment space. Despite recent pitfalls at X, previously known as Twitter, the man has been involved in multiple highly successful and high-profile tech companies. Starlink itself is an offshoot of one of his other companies, SpaceX.
Even without Musk’s involvement, Starlink has immense market potential. A lack of connectivity is one of the most significant bugbears facing the proliferation of technology like autonomous vehicles and the internet of things. By removing this restriction, Starlink could cultivate a flood of invention and innovation and allow edge computing to thrive.
Though a Starlink IPO has yet to be officially announced, there has been a great deal of speculation, and some experts have suggested that the occasion may be closer than many realize. With that in mind, those considering a Starlink investment must ensure they understand the company and its technology as soon as possible.
A satellite internet connection transmits and receives data via a network of near-Earth satellites. Though this technology isn’t new, it has evolved considerably over the past several years. At the time of its inception, it was generally only used by subscribers in remote areas who had few other options for connectivity.
To explain why, we need to first explain the different types of internet. The two most common are land-based connections and cellular or mobile connections.
Landline internet uses telephone lines, coaxial cables or dedicated fiber-optic cables to send and receive data from a modem or router. This device then serves as an access point, allowing everything from computers to smart home appliances to connect to the internet. Mobile internet, meanwhile, leverages nearby cell phone towers to beam data directly to and from connected devices.
That brings us around to what makes Starlink exciting. Although not yet competitive with landline internet in terms of cost, the company offers considerably higher data caps and speeds than any other provider on the market — up to 500 mbps with a 1 terabyte cap. Starlink’s low-orbit satellites are also less vulnerable to geographic interference while offering more consistent and reliable coverage.
“Once we can predict cash flow reasonably well, Starlink will IPO,” he explained at the time. “(It will be) at least a few years before Starlink revenue is reasonably predictable. Going public sooner than that would be very painful.”
Musk added later that year that Starlink’s parent company SpaceX “needs to pass through a deep chasm of negative cashflow over the next year or so to make Starlink financially viable.”
At the time, Musk said a Starlink IPO wasn’t likely until at least 2025 or later.
In early November 2023, Musk reported that Starlink had once again “achieved breakeven cashflow.”
It seems fairly clear based on Musk’s comments that we shouldn’t expect a Starlink IPO anytime soon. So why is there so much speculation that one is just around the corner?
As with any investment, it’s important to do your research and speak to an accredited brokerage or investment advisor before you commit any capital.
From an investment perspective, Starlink displays incredible promise. The company’s ties to Musk, a man with an established track record of successful technology startups, has generated considerable interest out of the gate. Yet even ignoring the connection to Musk, Starlink has a massive potential addressable market thanks to ongoing demand for better connectivity and a relative dearth of viable options for edge computing.
Trends such as distributed work and the proliferation of internet of things devices will only further drive this demand.
With that said, it’s best to exercise a degree of restraint where Starlink is concerned. Although the company will very likely be a sound investment once it goes public, there is currently a great deal of exaggerated hype and speculation surrounding it. Anyone who chooses to add Starlink shares to their portfolio if the company does go public should first ensure they understand what to expect — something they cannot do by listening to hype alone.
This is an updated version of an article first published by the Investing News Network in 2023.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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