Elon Musk, the enigmatic entrepreneur behind SpaceX and Tesla, has once again reclaimed the title of the world’s richest person, courtesy of Tesla’s surging shares. However, it is the potential spinoff and initial public offering (IPO) of Starlink, the satellite-broadband unit of SpaceX, that could catapult Musk’s wealth to new heights—and it might happen sooner than anticipated.
Venture capitalist Chamath Palihapitiya made a bold prediction in January, stating that a Starlink IPO would take place this year and become the most significant deal of 2023. Palihapitiya further speculated that Starlink’s valuation would be at least half of SpaceX’s current worth, which is substantial.
Recent reports from the Wall Street Journal indicate that SpaceX aims to increase its valuation to $150 billion by allowing employees to sell stock. In January, the company successfully raised $750 million, valuing SpaceX at $137 billion. It is worth noting that a trust associated with Elon Musk owns an impressive 42% of SpaceX, as reported by the Journal in December.
When asked about a potential Starlink IPO during a Twitter Spaces talk with Bloomberg’s Ashlee Vance, Musk playfully responded, “It would not be legal for me to speculate about a Starlink IPO,” followed by a burst of laughter. Vance, author of two books exploring Musk’s endeavors, pointed out that SpaceX is a private company and inquired about the reason behind Musk’s inability to discuss the matter.
Musk clarified, “We’re private, but you cannot—it’s I think against regulations to talk with any kind of specifics about a future public offering.” While Musk’s response neither confirms nor denies the possibility of a Starlink IPO, it does highlight regulatory constraints surrounding discussions of potential public offerings.
Starlink, with over 1.5 million customers as of early May, serves as the primary driver of SpaceX’s valuation. The satellite-based network aims to provide high-speed internet access globally using thousands of satellites orbiting Earth at a low altitude. In February, SpaceX President Gwynne Shotwell announced that Starlink would generate profits this year and revealed that the company achieved positive cash flow in the previous quarter.
Vance expressed occasional doubts about the feasibility of Starlink’s business case due to the substantial investment required for a venture that carries inherent uncertainties. Musk was asked if he shared these concerns. In response, Musk stated, “The business case is not subjective, it is objective. If you can provide a compelling internet connection, where the quality of the product and the price are competitive with terrestrial options—or often there are simply no terrestrial options—then you obviously have a business.”
Moreover, Musk mentioned that SpaceX has implemented well over 1,000 modifications to the Starship, their spacecraft designed for Mars missions. The Starship faced setbacks when it exploded and failed to reach orbit during its initial test launch in April. However, Musk expressed optimism about future launches, stating that the probability of the next flight reaching orbit is much higher, estimating it at around 60%.
While the prospect of a Starlink IPO remains uncertain due to regulatory limitations on public discussions, the success of the satellite-broadband service and SpaceX’s continuous innovation provide a solid foundation for future endeavors. As Elon Musk continues to push boundaries in the realms of space exploration and technology, the world eagerly awaits what the future holds for his ambitious ventures.