What the SpaceX IPO Means for Starlink's Future
Written by Ryan Vanzo for The Motley Fool -> Starlink remains SpaceX's most profitable business. Investors should expect continued growth and investment. The SpaceX IPO may just be weeks away. The company is reportedly attempting to achieve a $2 trillion valuation, which would
The SpaceX IPO may just be weeks away. The company is reportedly attempting to achieve a $2 trillion valuation, which would allow it to raise upwards of $75 billion in new capital.
Many experts believe the IPO is overhyped and caution retail investors to stay away. Others, however, are salivating at the massive total addressable markets that SpaceX is targeting. According to a recently filed IPO prospectus , SpaceX's management team believes it has "identified the largest actionable total addressable market in human history." In total, the company values its opportunity at an astounding $28.5 trillion -- a figure that seemingly justifies a $2 trillion valuation if it can execute on that potential.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Much of that potential has nothing to do with Starlink, arguably SpaceX's most successful segment historically. Last year, for example, the company's rocket launch segment generated just $4.1 billion in revenue. The company's AI division, meanwhile, generated just $3.2 billion in sales. Starlink, however -- which SpaceX calls its "Connectivity" segment -- racked up $11.4 billion in sales. It was SpaceX's only profitable business.
Looking at SpaceX's prospectus, however, only a small fraction of the company's stated total addressable market deals with Starlink. What exactly, then, will become of this segment? Will other segments like rocket launches and artificial intelligence eventually eclipse the success of Starlink? Digging further into the prospectus, a few clues appear.
SpaceX lists two addressable opportunity values for its Starlink division: $870 billion for Starlink Broadband and $740 billion for Starlink Mobile. Starlink Broadband is the company's global internet service, which has already begun scaling. Starlink Mobile, meanwhile, is already working with terrestrial cell service providers to reduce dead spots, but could someday be a stand-alone cell service of its own. According to SpaceX, "Starlink Mobile will become a significant new contributor of Connectivity" in the years to come.
While a combined $1.6 trillion addressable market seems lucrative, SpaceX actually believes its Starlink opportunity is just a fraction of its overall addressable opportunity. The company sees a $26.5 trillion addressable market for AI, comprising $2.4 trillion for AI infrastructure, $760 billion for consumer subscriptions, $600 billion for digital advertising, and $22.7 trillion for enterprise applications.
In light of these figures, investors may think that SpaceX's AI division may receive most of management's attention, as well as a disproportionate amount of the company's post-IPO capital.
