SpaceX, the fast-moving private-rocket company founded by Tesla’s (NASDAQ:TSLA) Elon Musk, is planning to spin out its Starlink space-internet business, possibly as a public traded venture, Bloomberg reported Thursday.
Gwynne Shotwell, SpaceX’s chief operating officer, raised the spinoff and IPO idea during a recent investor event in Miami.
“Right now, we are a private company, but Starlink is the right kind of business that we can go ahead and take public,” Shotwell said, according to Bloomberg. “That particular piece is an element of the business that we are likely to spin out and go public.”
While Shotwell did not say when such a move could happen, if Starlink goes public it “would significantly accelerate investor interest across the broader space economy,” Morgan Stanley analyst Adam Jonas said in a Friday note to investors.
Starlink is an ambitious project introduced by SpaceX to target the $1 trillion internet connectivity market.
The Satellite Broadband Network
As a richly valued venture-backed company with a current price tag of $33.4 billion, SpaceX launched its fourth batch of Starlink satellites last week. So far the space transportation company has launched more than 240 internet-beaming satellites. The company is expected to begin satellite-based internet service this summer.
Morgan Stanley forecasts indicate that even partial deployment of the Starlink broadband network of 1,000 satellites could generate billions in revenue.
SpaceX plans to surround Earth with 12,000 small satellites to provide high-speed, low-latency, and affordable internet access to anywhere in the world. Musk has said Starlink could net between $30 to $50 billion in annual revenue once running.
The Risk-Reward Gap
As previously mentioned, there’s no time frame yet set for a potential Starlink IPO, but according to a Morgan Stanley research – and this is based on competition from companies like OneWeb, Amazon and Telesat which are also planning large networks of internet-beaming satellites, cost-related factors, and subscriber rates – the going public risk/reward scenario remains wide with a bear case of about $5 billion and a bull case of $120 billion.
Bloomberg reported that an IPO would likely be welcomed by SpaceX investors who have to this point had limited or no ways at all to own a piece of another Elon Musk disruptive company.