00:00Today on Forbes, Starlink's numbers could bring SpaceX's valuation crashing down.
00:08Settling other planets isn't going to be cheap. That's why Elon Musk, after setting out to
00:13develop lower-cost rockets at SpaceX, decided to make money with them by launching a satellite
00:18network called Starlink to sell broadband internet access to ruralites. Writing on his
00:25social network X last year, he said, quote, Starlink is how we are paying for humanity to get to Mars.
00:33Starlink's progress has been stunning. In March, less than five years after starting service,
00:39it reached five million customers, more than doubling the market of the previous satellite
00:44communications incumbents, Viasat and Hughes, at their height. Sunny expectations for Starlink
00:52are one of the main reasons investors have been eager to pump money into SpaceX.
00:57Its valuation hit 350 billion dollars in December in a sale of insider shares,
01:03making it the most valuable private company in the world.
01:06That valuation has largely held steady on secondary markets this year, even as shares in Musk's
01:12electric car maker Tesla have plummeted 55 percent from a record high reached in mid-December amid
01:18faltering sales and public fury over Musk's role in the Trump administration and embrace of right-wing
01:24nationalists in Europe. On Wednesday, shares of Tesla surged 22 percent after President Trump
01:31suddenly announced a pause in most reciprocal tariffs for 90 days. By market close Thursday,
01:37shares had dropped back down 7 percent for the day. But even with a relatively steady valuation amid
01:43Tesla's troubles, some fear SpaceX, too, could face a reckoning, with the upside for Starlink not as high
01:50as investors seem to be betting. As with Tesla, it's partly a question of how much they're buying into
01:56Musk's grand vision and their willingness to overlook financials. Independent telecom consultant Tim Farrar
02:04told Forbes, quote, I don't think that Starlink alone as it exists today and the reasonable view of
02:10its future growth is going to support that sort of valuation. Rockets may be exciting, but the market
02:17for launching cargo into space isn't huge, between $10 billion and $15 billion a year. Profits aren't
02:24great either. Telecom, however, is another story. With Starlink, SpaceX is angling for a share of a market
02:32worth over $1 trillion a year. SpaceX has rapidly built a constellation of 7,100 satellites in low
02:40Earth orbit, 62 percent of all active spacecraft circling the planet, according to Harvard Space
02:46Watcher Jonathan McDowell. Starlink is making money from them by offering internet access to airplanes
02:53and ships and peddling a military version called Starshield, enhanced with secure communications and
02:59surveillance capabilities. It's also competing with companies like AST Space Mobile and Global Star
03:06to enable emergency cell phone service in remote dead zones. But its biggest opportunity by far is in
03:13high-speed residential internet access, a market that the research firm Quilty Space expects to account
03:19for 63 percent of Starlink revenue this year. SpaceX doesn't share financials, but Chris Quilty,
03:26founder of Quilty Space, estimates Starlink is on track to grow revenue 58 percent in 2025
03:33to $12.3 billion, making it one of the fastest businesses to hit the 11-figure mark.
03:40Morgan Stanley analysts, led by long-time Tesla bull Adam Jonas, believe much greater heights are ahead.
03:47They're projecting that in 2030, SpaceX will pile up $65 billion in revenue and $16 billion in net income,
03:55with Starlink accounting for 72 percent and 82 percent, respectively.
04:01They've also argued that SpaceX's growth prospects through 2026 could justify a valuation as much as
04:07double the current $350 billion, when looking at the multiples investors have given large,
04:13fast-growing public companies like Adobe and Intuitive Surgical.
04:17But those bullish vibes ignore some of the hard ceilings Starlink faces. Its satellites simply
04:24aren't capable of serving many internet customers in densely populated areas. And in rural regions,
04:30the population that can afford to pay its high prices is limited. Starlink has yet to launch in
04:36many countries in Africa and Asia, but the wealth disparities there are worse than in most of the
04:41markets it's currently serving. And in richer countries where it's able to charge higher prices,
04:46there may not be much room left to expand. Meanwhile, competing services are on the launch pad,
04:53including from rival billionaire Jeff Bezos' Amazon. For full coverage, check out Jeremy Bogasky's piece
05:01on Forbes.com. This is Kieran Meadows from Forbes. Thanks for tuning in.
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