The Starlink logo will be displayed on your smartphone screen against a starry sky.
Null Photo | Null Photo | Getty Images
As investors line up to buy space x Despite having the largest IPO stock in history, the only real business they have to value is Starlink, the company’s satellite internet division. SpaceX says it is by far its largest company by revenue, its only profitable company, and has a dominant market position, with consumer broadband customers more than doubling to 10.3 million in the past year.
Meanwhile, the company’s space and artificial intelligence divisions generated combined revenue of $1.4 billion in the first quarter, with operating losses totaling $3.1 billion for the period.
But there are significant hurdles for Starlink to expand, making it difficult for prospective investors to determine a reasonable price to pay for the stock. SpaceX is still targeting a market cap of $1.77 trillion.
SpaceX is relying on the largest Starship rocket ever built or launched to begin flying and deploying its new V3 satellite to massively expand its Starlink service. The rocket is still being tested and has so far mainly carried dummy satellites into space.
SpaceX has racked up losses of $41.3 billion since its founding in 2002, and posted an operating loss of $1.9 billion in the first quarter, according to IPO filings. The company spent more than $15 billion developing Starship.
“It’s much more efficient to deliver to so many different locations from space than from the ground, so 10 million customers could eventually become hundreds of millions of customers around the world,” SpaceX Chief Financial Officer Brett Johnsen said during an investor roadshow. Johnsen also said SpaceX plans to bring 5G-equivalent service to consumer devices within two years.
SpaceX’s current numbers show that average revenue per usage is decreasing. This number decreased from $86 per month in the same period last year to $66 per month in the first quarter. For the full year last year, ARPU fell to $81 from $91 in 2024 and $99 in 2023.
Despite doubling the number of subscribers in the first quarter, operating profit remained largely unchanged, from $1.03 billion to $1.19 billion.
“The incremental revenue from the additional customers is not that great,” said Tim Farrar, president of TMF Associates, a satellite and communications industry research firm. That could require price increases, which Starlink introduced last month, increasing the risk of customer churn.
The cost of manufacturing Starlink terminals also remains a challenge for SpaceX as the company scales up. Farrar estimates that these devices typically cost about three times as much to manufacture as terrestrial Internet modems.
Meanwhile, Starlink is moving into a more competitive space. The company’s advantage so far has been its ability to reach customers in areas not served by traditional internet providers. Starlink has 9,600 satellites in low Earth orbit and serves customers in 164 countries and territories, SpaceX said in its IPO filing.
in contrast, Amazon Leo has not yet brought a satellite internet product to market and only began sending operational satellites into orbit in April 2025.
However, Starlink is now targeting more developed urban markets and has to compete with traditional broadband providers, creating a whole new level of price sensitivity.
“People underestimate the ability of terrestrial competitors to respond with pricing, bundling, etc.,” Farrar said, noting that despite being able to offer high-bandwidth service, the cost of terminals is making it difficult for Starlink. “It’s not too difficult for carriers to protect existing fiber customers by lowering their rates.”
A SpaceX spokesperson did not respond to a request for comment.
american airlines is the latest airline to sign a deal with Starlink, announcing last month that it plans to use Starlink for Wi-Fi services on more than 500 of its narrow-body aircraft. United Airlines, Southwest Airlines, and Alaska Airlines, which merged with Hawaiian Airlines in 2024, have also chosen Starlink. delta announced in March that it would use Amazon Leo starting in 2028.
James Ratzer of New Street Research is bullish on Starlink’s prospects. His company began coverage of SpaceX with a price target of $165, above the expected IPO price of $135. Latzer told CNBC in an email that the key question for SpaceX in partnership with Starlink is whether the company can “achieve the most efficient route” to the exponential growth it promises.
Once Starship and the new V3 satellites become operational, Starlink’s “capacity will explode,” Ratzer wrote. He said these satellites would be “10 times more powerful” than the ones SpaceX currently uses, and that Starship and V3 could make the service highly competitive with terrestrial broadband.
Therefore, a bet on Starlink is a bet on Starship. And when it comes to new rockets, there can always be setbacks. Another way the company is enhancing its constellation is with its current rocket, the Falcon 9.
“This is a very viable route, but it is inefficient and will take longer to expand the available capacity,” Latzer said.
Attention: SpaceX allocation almost decided
