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Starlink IPO

How to trade on Starlink shares

Elon Musk’s satellite communications business Starlink is speculated to be eyeing an initial public offering, which could happen at any time within the next couple of years. Find out everything you need to know about the SpaceX spin-off, Starlink’s potential IPO and how you can get involved with Starlink shares.

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2022/2023

Starlink's IPO date

$42bn+

Starlink's valuation

$30bn

Starlink's annual revenue

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What is Starlink?

Starlink is a satellite constellation that provides internet access to most of the Earth, ran by Elon Musk’s aerospace company SpaceX. It is a network of more than 1,000 satellites that deliver high-speed service anywhere on the planet. Starlink has secured regulatory approval in the UK, Australia, Greece and Germany so far, and has over 10,000 users globally. Its first full year of service is expected to be in 2021.

When is Starlink’s IPO date?

Starlink hasn’t yet released an official date, saying only that it will have an IPO “when its cash flow is more predictable”. CEO Elon Musk first announced plans for an IPO in February 2020, but this could take several years, depending on the health of the space sector.

What is Starlink’s valuation?

There is a lot of speculation around Starlink’s valuation, and most analysts agree that Starlink makes up the majority of its parent company’s value. Analyst Adam Jonas from Morgan Stanley predicts that out of SpaceX’s overall valuation of $74bn, Starlink accounts for around $42bn or even higher.

In a written report in September 2020, Morgan Stanley predicted that Starlink could even reach a valuation of $81bn before it goes public. This is due to growth within the space sector and recent achievements from both companies, such as bringing back NASA astronauts from space, launching more satellites and conducting test flights of its Starship rocket. However, past performance is not indicative of future results.

SpaceX’s latest funding round took place in April 2021, raising a total of $1.6bn in the first half of 2021.

How to trade on Starlink’s IPO

1. Register

Trade CFDs on Starlink’s upcoming listing.

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2. Pick a trading strategy

Decide whether to buy (go long) if you think Starlink will increase in value or sell (go short) if you think it will decrease.

3. Read our risk-management guide​

Find out how to combat stock market risk by placing stop-loss and take-profit orders on open positions.

4. Practise while you wait

Trade on competitor stocks such as Virgin Galactic, ViaSat and Boeing to solidify your knowledge of the space market.

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An overview of Starlink’s financials

Starlink’s satellite constellation program costs around $10bn but is expected to bring in annual revenues of between $30bn and $50bn. This may be reflective of a sector that is seeing a large influx in investment, as throughout the first quarter of 2021, Space Capital reported that almost $1.9bn was invested in space companies. Therefore, Starlink’s future IPO may garner a large amount of market interest.

The company has launched over 1,000 satellites for Starlink and intends to have a total of 42,000 satellites once the project is complete. Forbes even estimates that Starlink will garner about 2.3% of all new internet users by 2025, with coverage spanning a large portion of the global population. As Forbes’ valuation of Starlink is slightly lower than that of Morgan Stanley, at $30bn, this could mean that Starlink will be generating revenues of over $10bn per year.

However, there is no way to tell without official company reports, so we will have to wait until closer to the IPO date for Starlink’s financials to be released in more detail.

Why may investors be interested in Starlink?

According to Forbes, we are expecting SpaceX’s total number of launches to grow this year, with a total revenue of $1.6bn. This may be driven by an increase in space travel and point-to-point transport around the earth.

Starlink has received favourable attention from governmental agencies, winning contracts with NASA and the US Department of Defense. SpaceX was recently awarded almost $900m in subsidies by the Federal Communications Commission (FCC) to bring high-speed internet to rural areas of the US. This beats competition from publicly traded competitors such as Virgin Galactic and Boeing.

SpaceX is seen as an innovative company, having carried out the first commercial manned launch and putting an emphasis on reusable rocket technology, thanks to CEO Elon Musk’s dedication to making space flight more cost efficient.

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What are some potential challenges for Starlink?

The space technology sector is becoming extremely competitive, given advancements in 5G technology, which can offer gigabit-speed internet over a wide area. This means that as competition increases, Starlink needs to keep their services attractive and relevant, as well as reasonably priced.

Starlink’s services may be most attractive to areas with weak connectivity, such as rural and remote areas of the US and Canada where there is lower purchasing power, which could lead to more disappointing revenues than expected. In order to combat this, the company would need to offer superior services to target higher-value customers in urban areas.

Satellite constellations come with a number of external risks, such as the possibility of collisions and causing light/sky pollution. Although Starlink is trying to reduce these measures by lowering the altitude of its satellites and changing the surface material of its products, the risk still remains.

Who are Starlink/SpaceX’s competitors?

The space field is very competitive right now so there is a lot of pressure for both Starlink and its parent company to perform. In particular, the low earth orbit (LEO) satellite industry is quite niche, so the companies that would pose the most threat to Starlink perhaps would be ViaSat [VSAT], Boeing [BA], Orbcomm [ORBC], Globalstar [GSAT], Iridium [IRDM] and EchoStar [SATS]. These stocks are all available to trade on, on our Next Generation trading platform with a CFD trading account while you wait for Starlink’s listing to become live.

In comparison with Starlink, the majority of the above companies seem to have much smaller valuations of around $2-6bn. This could suggest that although Starlink will arrive later to the stock market, it may gain a larger market share straight away and perform well in the face of its competitors.

Starlink may also face competition from billionaire-backed businesses such as Kuiper, a subsidiary of Amazon, which has been approved to deploy over 3,200 satellites as part of an initiative to build a LEO constellation, according to the company’s website. Another potential is Microsoft’s Azure Orbital, which is a fully managed Ground Station as a service introduced to the public in 2020. As the space sector is expanding so quickly, investors should keep an eye out for news and developments.

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