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.
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!
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.
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.
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 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).
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.
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.
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.
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".
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)
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.
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.
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.
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.
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.
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.
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".
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.
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.
Anything at sea, too. Going on a cruise? The cruise ship can offer you Wifi backed by Starlink for another few bucks. Or even your cell provider could get you hooked right up to Starlink for some phones.
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.
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.
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.
No but the airline might choose starlink. I think a gogo business install is on the hundreds of thousands and annual costs in the tens of thousand for their Eutelesat based system.
There's enough vast terrestrial areas that have had no other options, so those areas may have pent up demand at least in the short term. However, I think they'll need to figure out how to further lower costs to target those poorer underserved communities that tend to come up in these discussions. That is, unless some sort of subsidy is put in place by governments that know that internet connected communities boost economic values, etc. Some such programs likely already exist in some form in the US, but are largely regional so may take some effort to integrate into those systems.
AFAICT, popular tech companies owned by cult of personalities tend to get overinflated evaluations. I agree that the promise of returns tends to be rosier than reality, but at least SpaceX makes a tangible product and isn't the average AI shilling company with no hope of returns. Here at least they have first mover advantage along with lower scaling costs than their competitors thanks to the rocketry side of the biz. I have enormous respect for what SpaceX has accomplished (even if I'm not a fan of the company's owner, etc.)
Some very rough math. $16 billion in EBITDA with 9million customers. This translates to about $1800 average annual subscription. Per month this is $150.
That is I think Starlink's target customers are ISP deprived. I asked Gemini estimate the size of that market. It said about 10 million in the US and over a 1 billion worldwide. I assume the Elon is pushing the 1 billion number. The problem I see is that outside the US, not everyone can pay $165 per month for internet.
> Terrestrial cellular towers cost between $150k to $500k per tower
I'd be interested to find out exactly where this cost exists. I would expect the majority of the cost (especially in rural/mountainous areas) to be more with power and backhaul, rather than the physical radio gear. Because it's rural, you should be able to easily just use coverage bands (ie 850 MHz or 900 MHz) with relatively high transmission power. This would easily be able to cover 300 km2.
Because of the higher transmission power, and the fact that the tower would be in the middle of nowhere, wouldn't the OPEX be higher, with smaller numbers for CAPEX?
A lot of the cost is regulatory. I used to work at a mobile provider, and it took months to get permission from all the various government agencies before we could actually start building. Even if the tower is in BFE, you still have to get all your plots to the FCC, you need EPA signoff for batteries and fuel tanks and such. Plus there's always state and local permits of various kinds. We had a custom workflow application just to track all of that and there were dozens of steps.
Cell towers aren't very expensive on an ongoing basis, but every few years you're rolling out the next big technology (we went from analog to 1x to 3g to LTE while I was there) and it's a headache.
Every city has phone lines. A phone line allows you to replace it with fiber. A fiber and a tower has long loves.
A star link server has 5 years.
Setting up a terrestrial network is already done and it was relativly easy because you build it up from most profitable to lowest profitable.
Star link only serves 9/10 Million people right now with already 10k satelites whith only a lifetime of 5 years and if this market is profitable, the margins will go down sign due to other competitors. Which are already working on it.
Well if you make the argument that it will replace terrestrial networks and that's why its worth X trillion $ then yes, you do actually need to cover the 1% of earth surface where the waste majority of people actually spend most of their time.
The question is not if its a good business, the question if its a 2 trillion $ business, and if you only cover the 95% of earth without coverage. That more like a couple 100 billion $ business at best.
In regions like Nigeria or the Philippines, Starlink costs over 100% of the average monthly income. The individual addressable rural market really is closer to 1% than 40%.
Starlink Mobile actually reinforces my point. Most don't have phones capable of using it. And even at that, it’s a low-bandwidth designed for SMS and emergency data, not a primary ISP replacement. Of course, you can believe what it could be... Much like all of Elons products, they are always coming
5G Non-Terrestrial Networks (NTN) is already part of the 5G standard. It's not a replacement for terrestrial carriers, it's an expansion that enables devices to be always connected and select the appropriate terrestrial vs satellite connection transparently. ~75% of the land mass on Earth has no cell coverage, ~90% if you include the oceans. It's the same transition in theory that we had from landlines to cell towers.
Great, but the overwhelming majority of money is made from the place people actually live. Those places are called cities. Only about a few % of earth are built on, and even among those the top 1% is where most people live.
Don't get me wrong, that fucking great business, but its not 'replacing terrestrial ISP' level great.
They said the same thing about cell phones vs landlines back in the day. Based on Starlink's revenue doubling year on year, and a six fold increase since 2022, I don't think anyone really knows what the upper bounds for global access is yet. And traditional telcos are usually limited to a region whereas Starlink is global. Just the top 20 global telcos alone are almost $2 trillion in market cap and $1.35 trillion in revenue. Starlink has captured less than 1% of that revenue to date.
McKinsey estimated the global market for cellphones would be 900,000 units in 2000.
They were off by 100 million.
Even until the 90s some telcos believed that cell usage would never eclipse landlines which would remain the base of their business. It sounds ridiculous today because cell numbers outnumber landlines almost ten to one and have been dominant for over two decades.
They did. I worked in telecommunications from the late 90s until 2016. The death of the landline and dominance of mobile was a genuine surprise to the industry. The iPhone was the knockout blow.
my most altruistic view : they said it through actions.
Rural areas were the last areas to join the mobile networks.
This is just a practical thing though; why would you build a tower for a community of 900 people when there are still gaps in the major metropolitan areas? It can't all happen simultaneously regardless of how badly we wish it could.
There were a lot of people back in the early '90s who thought cell service would never be widely adopted because of the cost. It was clear you didn't need a mobile phone -- we'd all gotten long just fine without one.
I worked at Radio Shack in 1995 shortly after carriers started subsidizing phones aggressively and you could “buy one for penny”. They were selling like crazy.
Just some quick Googling says that cellphone penetration went from 1% in 1990 to 50% by 1999.
The Motorola Startec was introduced in 1996 and clones came quickly thereafter and were all the rage
Although it’s also the case that people like me owned cell phones for quite a while but didn’t use them to any material degree especially for personal uses for a while.
Per minute costs were expensive, roaming from your local city took a lot of work, they were bulky bag phones and you still had to pay separate long distance charges, I’m not surprised.
Sprint changed that in the late 90s where all calls were 10 cents a minute anywhere you were calling from and too and you stayed on their network.
Exactly. I eventually bought one and then an other and chose a calling area that was most likely to correspond with people I might communicate with on trips and the like but it was backup/emergency use. Not something you used personally day to day or even maybe week to week.
It doesn't not seem like anything approaching a lucrative business.
TAM: How big is the market for high speed internet that can pay $1200+/year and isn't already well-served by comcast/at&t/etc? And of course, this is all with finite spectrum too. So you can't serve the major cities.
No doubt there exist buyers. But rural Montana doesn't have that many households. Add that 5 year replacement cycle and Musk's Trump alignment that has Europe building their own for security reasons.
These are US telecoms, the satellites blanket the entire Earth at all times. Lower ARPU, but still. Also, it seems like they're swallowing a large percentage of flight/cruise/military internet. And direct-to-cell data coverage of the entire Earth.
It has technical merit and it is impressive. But I doubt it's worth that much. I guess Musk has the talent of pushing and getting what he wants, so I guess we'll see how it plays out. I'm just afraid for the future is SpaceX in these crazy crazy times.
thats the game though. Elon is selling a "slice of the future" and everyone starts having FOMO... the result is a P/E ratio of 300 or whatever crazy number. We will all agree that the company isn't worth that, but theres a bunch of people happy to buy meme stocks that will make a ton of money without the slightest idea of how to value stocks. Botton line an asset is worth what people are willing to pay for it.
At some point we'll reach saturation of what we're comfortable putting into LEO, or at least greater pushback from governments leading to regulations in hopes of avoiding that. There's a lot of space junk out there already and they're still pumping out those isp satellites en mass.
Luckily these specific spacex LEO sats decay pretty rapidly (unless they've made them more advanced recently, I haven't followed closely as of late.) So I guess they'll keep themselves busy at least refreshing the fleet.
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.
This comment reads like an S-1 pitch deck and almost every claim is false or misleading.
The $16B is not profit its revenue, and I strongly suggest to learn the difference before investing. The $8B figure is EBITDA, also known as, earnings before interest, taxes, depreciation, AND amortization.
For a company running around 9500 LEO satellites with a less than 5 year lifespan, depreciation is the business.
Their FCC filings show that about 500 satellites deorbited just in the first of half of 2025 alone, and they were all under 5 years old. The estimates for constellation sustenance are currently at $5-8B per year in satellite manufacturing (about $500K each) and launch costs are about $3M each. That is the real capex that EBITDA hides. Net income has never been disclosed and probably for good reason...
And lets not even mention the $19 billion EchoStar acquisition who is almost certainly! not included in the $8 billion EBITDA figures reported...
The most critical is that xAI is excluded from the number. XAI had a $1.46B net loss in Q3 2025 on just $107M in revenue, accelerating from $1B the prior quarter. They were burning $1B a month at the time of filing. This pig was then merged into SpaceX in Feb 2026 along with X/Twitter. So start with $8B EBITDA, subtract $5-8B satellite replacement, subtract $4-6B per year in xAI losses, subtract interest and taxes specially amortization and you are very very deep in the red. Once audited financials go public, every analyst with a calculator and a working brain will see this.
Also the revenue is largely circular... Over 70% of Falcon 9 launches in 2025 were internal Starlink missions so SpaceX is its own biggest customer. Starlink is 70% of total revenue. The so called "launch business" and "internet business" are the same capital cycle booked as two revenue lines ;-)
Replace legacy ISPs? Really? Starlink has 0.2% residential market share after 5 years, with declining ARPU ($85 avg vs $120 US) and congestion already emerging at 10M subs. It is a niche rural/maritime ISP, not an AT&T killer.
And on the valuation? NVIDIA for example, who has an almost actual monopoly on AI chips, with $216B revenue, and $120B net income, at 56% margins, trades at 20x revenue. Tesla…. already considered absurdly overvalued at P/E 355, trades at 15x. Amazon at 3x. Meta at 10x. SpaceX wants 110x !! times revenue, with no audited financials, unknown net income, and a freshly absorbed money losing AI company. Even on bullish 2026 projected revenue of $24B, it's 73x so nearly 4x NVIDIA multiple, and NVIDIA actually prints profit...
Starship on another side is very very far from routine... 11 flights, 5 failures. But notice on thing...In 2025 alone on Flight 7 the upper stage exploded from harmonic vibrations. Then Flight 8 exploded from propellant mixing. Flight 9 was destroyed on reentry...Ship 36 exploded on test stand
...the first V3 booster exploded during pressure testing and was scrapped.
See a pattern here? Each failure from a different root cause. So multiple unsolved failure modes, not iteration. It has never reached orbit, never caught a ship, never demonstrated orbital refueling.
This offering is the most scandalous ever and the structure tells you everything. The filing is confidential, REAL financials only need to go public 15 days before the roadshow. Nasdaq is literally changing its index rules effective May 1 to allow a fast track Nasdaq-100 entry in 15 trading days. This is a rule that never existed before, and is made for this IPO, forcing billions in passive index buying on day one.
Public float is just 3% to 4%. This is one of the tightest floats for any major US IPO in modern history, and I have been following the markets for 20 years. They do 30% retail allocation what is three times the norm and tells you exactly who the target buyer is.
Given this level of rule bending, dont be shocked if the S-1 with real audited numbers quietly drops at the last legally permissible moment, maybe minutes before the IPO? ensuring hype and retail commitments are fully baked, before anyone really looks at what the financials actually say.
It will be a wildly successful IPO. Same playbook as Tesla 2010, just with more zeros and fewer functioning prototypes.
The only thing I can argue with is the thoughts on Starship. Each ship failing in a new way is exactly what you'd expect to see from a research project fixing one issue at a time and progressing a bit further until the next issue crops up. I would be much more concerned to see _the same_ failure happen over and over with no clear plan to resolve the issue.
Those are a lot of great points but I'll nitpick a couple things. While it's true that Starship has never reached orbit, they have reached orbital velocity several times. They could have gone into orbit if they'd aimed in that direction, but they didn't because it's a test rocket and they didn't want it to stay up there if anything went wrong.
And I don't think the multiple failure causes mean they aren't iterating. They're making changes with every launch. It might mean that everything's a tradeoff, and a lot of times when you fix one thing, you create a problem somewhere else. Building a fully, rapidly reusable rocket is a really difficult task.
Something you didn't mention is that even on the "successful" flights they suffered some damage on reentry. They'll have to fix that if they want rapid reuse, which is essential for the super low costs Elon estimates.
I'm not sure what you mean by "never caught a ship" but they did catch a landing first stage with their launch tower, which was a pretty fancy trick nobody had tried before.
> See a pattern here? Each failure from a different root cause. So multiple unsolved failure modes, not iteration. It has never reached orbit, never caught a ship, never demonstrated orbital refueling.
Wouldn't it be worse if it was all from the same root cause. That would suggest they can't figure out how to fix the problem. Multiple failures with different root causes provide almost optimal experimental data. I'm not saying the failures are necessarily good for SpaceX, but we are seeing progress and a willingness to push the envelope.
This IPO makes me more worried about the future of SpaceX then experimental rockets blowing up. That said, I can see why some people will invest in SpaceX, SpaceX has a significant lead in the space race and may end up gaining a near monopoly on access to space.
How to do you factor in the military demand for Starlink?
If you follow the war in Ukraine, there is absolutely no denying that Starlink is a total gamechanger. Mostly because it's inherently hard to jam, but also got acceptable latency allowing for unrestricted FPV strikes. Because of this, Ukraine seems to have achieved Russian air-defense degradation to the point of limited "free hunting" in the deep.
In that use case, even "AI in space" kinda make sense to me, for future drone developments. One-way drones don't have to waste expensive compute for autonomy, when the compute can be in space above. This would save one RTT for drone control, too. For cheap, jamming resistant swarm (semi-)autonomy, to overwhelm AD, it seems like the perfect solution.
The cat is out of the bag, there is no way the military will ever let go of this capability. Cheap drones are the future, LEO sats provide the comms. There will be long running service contracts.
I see the civilian use rather as a "peace time" subsidiary, now, but the main customer will be the military. And due to SpaceX's launch platform and commercial offering, it's giving the US a hard technological edge in warfare, since it's difficult to afford a LEO sat network without cheap launches and civilian co-pay.
I am too stupid to make a proper economic argument, but it seems like a clever and sustainable business model :D Would love to hear your thoughts!
>See a pattern here? Each failure from a different root cause. So multiple unsolved failure modes, not iteration. It has never reached orbit, never caught a ship, never demonstrated orbital refueling.
Solid comment on the ISP business but this is straight up bullshit. They absolutely better have different root causes. That’s exactly what iteration looks like. Blowing up subsequent ships for the same problem would be incompetence.
Also the ship has very explicitly been held from an orbital trajectory to ensure predictable reentry in the event of no re-engine light. It’s very apparent from external analysis it was capable of the extra few seconds of engine runtime for an elliptical orbit.
The jury is still out on Starship. And also a bold claim to say that SpaceX by itself has reduced the cost of a ton of mass into orbit by a factor of 10. Did it play an important role in that reduction? Sure...
Who else “played a role” in Falcon 9 reducing the cost of mass to orbit, exactly ? I guess some public money went their way ?
Also which jury is still out on starship ? I haven’t read any serious criticism that suggests there are insurmountable technical obstacles to it working. Timelines and the exact final cost-to-orbit are still debatable I guess ?
The achievements of the program so far and the infrastructure currently under construction in Starbase and the cape are seriously impressive. This is no speculative, skunkworks endeavour.
I don't think anyone can say there are insurmountable obstacles, but it's still a hard problem they haven't solved yet. Bits of the rocket are still melting on reentry, and they have to fix that to achieve rapid reusability. Plus they haven't demonstrated a heavy payload yet. We can't be sure they'll actually achieve extreme low cost until they've done both of these things.
For anything beyond Earth orbit, they also need to demonstrate orbital refueling.
I've seen articles raising technical concerns about all of these, but I'm not enough of an expert myself to have an opinion.
> Also which jury is still out on starship ? I haven’t read any serious criticism that suggests there are insurmountable technical obstacles to it working. Timelines and the exact final cost-to-orbit are still debatable I guess ?
There are also other space companies outside of SpaceX who have innovated and reduced the cost of mass to orbit.
Just trying to add the perspective that while yes, SpaceX is impressive, there are also other companies and this hero-like worship of SpaceX (or any other company/person) is not great.
So far everybody's playing catch-up, but there are some innovative rocket companies out there. Blue Origin is finally getting to orbit with partial reusability, Rocket Lab and Relativity Space are doing some cool stuff, and Stoke Space is working on full reusability, evaporative cooling for reentry (using hydrogen fuel for the second stage, which works much better for this than methane), can steer for landing without gimbaling the engines, and has a full flow staged combustion engine like Starship.
So nobody is entitled to a thought that is against the hive mind here?
I think it's worse than what you're saying. It's almost impossible to have an objective discussion on any technology he touches in a online forum without someone mentioning his behaviors. Godwins law.
Well I don't know about you, but I at least think that it's good that the "hive mind" questions people who don't hate neo-nazis. Because that tends to be a warning sign when it comes to many other nasty opinions one might hold.
And I'll just pre-empt any argument about how Elon is not a neo-nazi because that gesture he did on that stage wasn't a Hitler salute or whatever, I'd suggest any potential person wanting to argue that to save their breath. Or whatever other arguments one can possibly come up with to excuse some of the statements and actions of Elon.
As for an objective discussion about the tech he's involved with, he has objectively ruined any good reputation and potential goodwill people had for... what exactly?
It's fine if all you (impersonal) want to do is talk about how cool SpaceX's rockers and whatnot are, but one shouldn't be surprised if others get uneasy due to the entity behind said rockets or that they wish to discuss that.
To complete the Godwin quota, it's like trying to have an "objective discussion" about the V2 rocket while ignoring that those rockets were built by the quite literal Nazis for their war capacity. And that some of the scientists and engineers working on said project, built by slave labour, ended up in America and the USSR due to operations Paperclip and Osoaviakhim respectively.
