Starlink’s Rapid Growth Points to a Tantalizing 2022 IPO

Today, perhaps more so than ever, anything Elon Musk touches appears to become instantly newsworthy. The same sentiment certainly applies to Musk’s ambitious satellite broadband project, Starlink. Slated for a future IPO, it seems that the company that’s operated by SpaceX has undergone significant growth in a matter of months - leaving investors guessing at the scale of the stock market debut that’s on the way. 

Only at the beginning of the year, it seemed like Starlink’s subscriber growth was slowing down, paving the way for potential problems when the company’s eventual IPO landed. 

To break the numbers down, between January 2021 and January 2022, SpaceX added an average of 11,000 new Starlink subscribers per month. Despite this, growth slowed to around 5,000 subscribers between November 2021 and January 2022, with the total number of subscribers growing from 140,000 to 145,000 within this time frame. 

Given that SpaceX was intent on reaching 500,000 total global subscribers by the middle of 2022, it seemed as though Starlink was underperforming the company’s expectations. 

In March, SpaceX vice president of Starlink commercial sales, Jonathan Hofeller claimed that "we currently have 250,000 subscribers, and that's across consumer, enterprise, and many businesses."  

Such an impressive claim implies that the company has gained some 105,000 new subscribers in a matter of weeks, and attained a 72.4% subscriber growth rate since January. 

Interestingly, Hofeller referenced SpaceX’s delivery of Starlink satellites to Ukraine in the wake of Russia’s invasion of the country in February, as well as speculating about a future in which schools and aircraft could support simultaneous streaming services through the power of Starlink’s terminals. 

(Image: Statista)

To leverage the rapid growth of subscribers, we can see that the number of Starlink satellites in space has climbed to over 1,900 in March 2022, up by almost 600 from a year prior. 

However, there’s still a lack of clarity regarding what ‘250,000 subscribers’ actually means. In February, Elon Musk tweeted “Over 250k Starlink user terminals,” which could indicate that Hofeller may have regarded each terminal produced as a subscriber. 

Given Starlink’s positive PR in the face of aiding Ukraine’s resistance against Russia’s recent invasion, the company’s ability to hit the coveted 500,000 subscriber mark may be a significant factor in the terms of its eventual IPO, and the company’s continued growth could lead to a money-spinning listing in the near future. 

What Will Starlink’s IPO Look Like? 

It’s fascinating to explore the value of Starlink ahead of a potential IPO. According to the pre-money valuation of the company that came alongside an $850 million funding round in February 2021, Starlink is worth $73.2 billion. However, following its rapid growth, and the wider collapse of the IPO market, this figure is likely to have shifted in the months since. 

Morgan Stanley’s estimation of the company’s value is closer to $81 billion, but it’s important to emphasize that this figure is dependent on the company’s projections of reaching some 364 million subscribers by 2040. 

Musk initially announced plans to send Starlink’s extension from SpaceX public back in early 2020, but this process may take several years depending on the health of the space sector as a whole. 

“An exact date for Starlink is unknown,” noted Maxim Manturov, head of investment advice at Freedom Finance Europe. “The company's executives have previously stated that Starlink needs projected cash flow for its IPO. It also needs billions of dollars of investments to build a satellite constellation, which could also postpone the IPO indefinitely.” 

“Overall, the industry itself may be of interest to investors, in terms of new technologies. The industry continues to evolve and new players are emerging in the market - Project Kuiper (a project of the founder of Amazon) and OneWeb (a London-based company with a 45% government stake),” Manturov added.

Could Starlink Go Public via a SPAC?

April 2022 saw rumors emerge that Starlink may take the SPAC route towards going public in a move that echoes Virgin Galactic Holdings' route onto Wall Street as a similar consumer service based in the space sector. 

Chamath Palihapitiya is a SPAC firm that has a big reputation in the IPO market, and its two SPACS, the Social Capital Hedosophia Holdings Corp IV, and Social Capital Hedosophia Holdings Corp VI are known for helping some of the largest private companies in the world to go public. 

Given that Starlink is growing in popularity and adoption at a rapid pace in 2022, we may see the company seek to move quickly to capitalize on its newfound market leverage. However, given wider market volatility on Wall Street, the option for going public may be more down to whether or not we see calmer waters ahead for listings. 

Either way, Starlink’s eventual arrival on the stock market will be heralded as a blockbuster IPO for the ages, whether it takes place in the coming months, or the coming years.