Sat. Sep 30th, 2023
Starlink Falling Short of Revenue Promises with $10.6 Billion Gap

Starlink, the satellite internet division of SpaceX, is not meeting revenue expectations set by investors nearly a decade ago. Internal documents reveal that Starlink generated $1.4 billion in revenue for 2022, significantly below the projected $12 billion revenue and $7 billion operating profit outlined in a 2015 presentation.

SpaceX, a privately held company, makes it difficult to access financial records compared to Elon Musk’s publicly listed Tesla. The valuation of SpaceX at $150 billion has led investors in sectors like telecommunications and space exploration to closely watch the company, expecting a potential IPO for Starlink once cash flow becomes more stable.

Currently, Starlink continues to operate at a loss, with SpaceX reporting a loss of $559 million in 2022 despite a total revenue of $4.6 billion. It was recently discovered that Musk borrowed $1 billion from SpaceX for his personal Twitter purchase, later rebranded as X.

At the end of 2022, Starlink had approximately 1 million active subscribers worldwide. In comparison, AT&T had over 70 million postpaid mobile internet subscribers in the US alone during Q1 2023.

The challenges faced by Starlink in achieving expected margins are multifaceted. Difficulties in establishing a solid client base and maintaining sufficient operating capital are some of the contributing factors.

Although Starlink aims to provide high-speed internet across remote and rural areas globally, most potential customers reside in urban areas where access to affordable high-speed internet is readily available. The basic fee for Starship Residential plan is $120, making it less appealing for urban users.

While Starlink has explored opportunities in remote-access industries such as offshore oil rigs and international shipping, the company is still primarily targeting end consumers through partnerships with distributors like T-Mobile and retailers like Home Depot.

It is worth noting that Starlink’s mission to provide internet to the most remote areas may not be the most profitable business strategy. Recently, Musk mentioned the utilization of Starlink services in war efforts.

Furthermore, Amazon’s Project Kuiper, which plans to deploy 3,236 low-Earth satellites for internet access, could potentially become a competitor for Starlink. SpaceX, as the major satellite launcher in the US, provides launch services to other companies competing with Starlink.

Notable publicly traded competitors in the satellite constellation industry for internet access include Viasat Inc, Telesat, Geospace Technologies Corp, and Telstra Group Ltd.