Starlink Stock Forecast & Analysis

Written by Sean GraytokUpdated: 8th May 2022
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Elon Musk is at it again — another disruptive company with unearthly ambitions. But is Starlink stock a buy once it goes public?

Let’s find out in this Starlink Stock Forecast and Analysis.

Starlink is a satellite Internet company that began as a side project at SpaceX, Elon Musk’s private space company.

It has grown into one of SpaceX’s most exciting operations; its goal is to make Internet services available to everyone on the planet.

Starlink will be one of the best space stocks following its inevitable IPO

#1. Affordable Internet for All

According to a recent report, rural parts of the world either have no access to the Internet or no real choice in Internet providers. Even in the United States.

Here are the important findings from the study:

  • +83 million Americans can only access broadband through a single provider
  • Comcast and Charter maintain an absolute monopoly over +47 million people
  • The big telecom companies have “largely abandoned” rural America

A new homeowner in rural Wisconsin was told he’d have to pay $117,000 to get access to the Internet.

These high costs are due to constraints at the connection level — service providers are not incentivized to dig trenches and bring wirelines out to low-density populations.

Starlink plans to solve this problem at the network level, which does not discriminate against high- and low-density population areas because it is not limited by traditional ground infrastructure.

Starlink satellites divide coverage into cells spanning several states, including those abandoned by the legacy telecom providers.

#2. Better Internet for All

Starlink’s bandwidth and latency are a function of the number of satellites they launch. So, the more satellites in orbit, the better the connectivity.

Starlink satellites are over 60 times closer to Earth than the average satellite, resulting in lower latency and “the ability to support services typically not possible with traditional satellite internet”.

Starlink currently has over 1,000 satellites in orbit, but the company has applied for permission to eventually fly 42,000 satellites. Starlink is aiming to have 12,000 in orbit by 2029.

Starlink can optimize the locations and organizations of these constellations as more satellites are added to the network, further improving its speed.

#3. SpaceX Relationship Post Spin-Off

Satellites need rockets to get into space — fortunately, Starlink has a friend in SpaceX.

While potential regulation between these two companies is unknown, expect Starlink to choose SpaceX for all of its launch services in a free market environment.

It’s hard to imagine Elon Musk paying the United Launch Alliance to send his satellites in orbit, a joint venture between Lockheed Martin and Boeing (BA) he called “a waste of taxpayer money”.

How about awarding contracts to Jeff Bezos and Blue Origin?

We expect SpaceX to stay private for some time and secure contract after contract from Starlink. SpaceX may also exclusively provide satellite launches for Starlink and no one else.

#4. Beta Success

Starlink made its initial beta available to the public in October 2020, both domestically and internationally.

The package comes with a tripod, Wi-Fi router, and terminal to connect to the Starlink constellation, which costs $99 per month in addition to its one-time $499 upfront payment.

Starlink’s mobile app helps users find the best location for their router. A clear view of the sky is necessary for connectivity.

Following the successful launch of the beta, Starlink announced that its product could be “fully mobile” by the end of 2021.

Elon Musk loves capital-intensive businesses — he pursues challenges that few are willing to undertake due to high costs and low probabilities of success.

Satellite Internet? That fits the bill. As Musk pointed out, “Every new satellite constellation in history has gone bankrupt. We hope to be the first that does not.”

Tesla’s success has created a halo effect for other Musk companies. Society is turning to Elon Musk to solve its problems, and Internet access is no different.

We also believe Starlink’s relationship with SpaceX will contribute enormously to its moat.

As previously mentioned, there are uncertainties regarding anti-competitive legislation between these two companies, but it wouldn’t be the first time regulators turned their cheek for the sake of innovation.

Forbes estimates that Starlink could be valued at a little over $30 billion, based on 2025 revenues of $10.4 billion and a P/S multiple of 3x.

Starlink’s parent company SpaceX was recently valued at $74 billion. However, much of this can be attributed to Starlink’s newfound potential under the SpaceX umbrella.

SpaceX revealed that Starlink will cost about $10 billion to build but believes the operation could generate $30 billion a year in revenues.

That would be ten times the revenue of SpaceX’s existing rocket business.

Starlink is looking to disrupt the legacy telecom industry. Here are Starlink’s top competitors:

  • Comcast (CMCSA)
  • Charter (CHTR)
  • AT&T (T)
  • Verizon (VZ)
  • CenturyLink (LUMN)
  • Frontier (YC51)
  • Windstream (WIN)

There are a growing number of companies that are expanding their interests in space.

Companies like Iridium (IRDM), Kratos (KTOS), L3Harris Technologies (LHX), and OneWeb are focused on improving connectivity through wireless broadband and low-orbit satellites.

These names are major holdings in the new ARK Space ETF (ARKX) launched by Cathie Wood and her team at ARK Invest. We believe Starlink will be a top holding in ARKX and possibly ARKK once the company goes public.

Even theFAAMG stocks are getting involved in the last frontier. While Google has had satellites in orbit for many years, Amazon is the latest to enter the satellite Internet market — its recent filing proposal called for the launch of +3,000 satellites.

Expect Starlink to face new competition once industry costs come down and more aerospace and defense companies kick their space segments into gear.

#1. Angry Astronomers

Astronomers claim that Starlink satellites obstruct their research. They say that the brightness of the satellites corrupt their data and photographs.

New “all-sky survey” telescopes continuously scan the skies each night to help astronomers find asteroids, comets, new supernovae, and more.

Given these telescopes extremely wide view, they are likely to capture multiple Starlink passes in each image, which affects the integrity of the data.

SpaceX is working with the American Astronomical Society to mitigate the impacts of Internet constellations on astronomy.

#2. Geopolitics

Providing internet access to all of humanity will bring its own set of unique challenges. Many authoritarian countries block certain content and platforms to control their citizens.

This is an easy task because the government’s own the networks and service providers.

However, Starlink is the network and does not have intermediaries like the typical telecom company.

Individuals living under authoritarian regimes could bypass censorship by using a Starlink router and connect directly to the satellites above.

They’d be able to browse Facebook and search on Google because they’re using an entirely separate network than the one controlled by their government.

These regimes can simply make Starlink kits illegal — or they can choose a more inflammatory route and deem Starlink a threat to their national security.

The latter may result in complex geopolitical tension amongst Starlink, the United States, and the other global superpowers.

There are plenty of factors to consider when determining your portfolio construction. However, the following questions might help you settle on the right amount of Starlink stock:

  • Can Starlink be the first satellite constellation company to not go bankrupt?
  • Will geopolitical implications limit Starlink’s reach, application, and bottom line?
  • Will Starlink and SpaceX be allowed to operate in a free market?
  • Can Starlink be an effective company with a part-time CEO?
  • Will Wall Street and retail investors treat Starlink similar to how they treat Tesla?
  • Can Starlink overcome its initial costly investments and reach profitability?

Many of these questions will have to be answered before Starlink’s public offering.

Starlink is not a publicly-traded company; therefore, its shares are not available in the public markets. It is currently under the umbrella of SpaceX, another private company founded by Elon Musk.

Elon Musk recently announced that Starlink will IPO once its cash flow can be predicted “reasonably well”. The satellite project requires a ton of initial capital, and it may take some time for Starlink to get a sense of its cash flows.

The Starlink package costs an upfront $499 one-time payment followed by $99 per month.

Is SpaceX stock available?

Shares of SpaceX are not available to investors in the public market because it is a private company. Elon Musk said that SpaceX will remain private until it is making regular trips to Mars, which could be as far away as 2026.

Elon Musk has several disruptor companies, but Starlink might be his most exciting one.

Expect Starlink stock to be pricey and full of controversy.

This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we researched Starlink stock. 

Sean Graytok
Sean Graytok

Sean Graytok is our Co-Founder and leading expert in investing and financial management. His work has been cited in leading industry publications, such as InvestorPlace and Business Insider. Sean is interested in the people and technologies that are improving the world.