There’s no denying the impact that Starlink already had on people in rural areas across the world. Starlink’s rapid ascend made some wonder who’s behind the firm to begin with.
In short, rocket manufacturer SpaceX currently owns Starlink. The internet provider is a sub-division of SpaceX and was first birthed in 2015.
However, SpaceX may actually not own Starlink in perpetuity. Why that may be the case as well as a slew of other questions will be answered in the next few chapters.
Will SpaceX Own Starlink Forever?
As it stands, Starlink remains in the hands of SpaceX. The two operate in somewhat of a symbiotic relationship in that Starlink utilizes SpaceX’s launch capabilities to deploy its constellation.
SpaceX, in return, may eventually profit from the supposedly higher margins that Starlink is expected to yield (more on that in the next chapter).
Regardless, SpaceX may not own Starlink forever. More precisely, SpaceX plans to spin off Starlink whenever the latter goes public.
A separate business entity is created whenever a company is spun out of another. Existing shareholders in the parent company (SpaceX, in this case) consequently receive stock in the new spun-out firm (Starlink). The number of shares they receive is dependent on the number of shares they own in the parent company.
There are multiple reasons why one company would spin out of another. One of the biggest aspects is that shareholders believe that the newly created company can accrue substantially more value by itself than as a division.
The most prominent example of this being the case was PayPal’s separation from eBay in 2015. Similarly, Starlink would possibly create substantially more value for its shareholders if it were spun out.
But why is that the case? The simple answer is profitability and to a lesser extent revenue predictability. Starlink is eventually expected to operate at profit margins of around 50 percent, which makes for a much more compelling investment story.
Secondly, it is, at least for now, either the only game in town or at the very least a much more lucrative option compared to satellite providers like HughesNet or Viasat. As a result, customers are expected to stick with the service for much longer, which makes it easier to price in future revenue.
This, in turn, would allow Starlink to raise debt or equity-based funding at more favorable terms because investors can accurately predict returns.
Meanwhile, if Starlink were to remain with SpaceX, it would not be able to accrue as much stakeholder value. The reason is that SpaceX’s core launch business isn’t nearly as profitable as Starlink, especially with more competitors such as Rocket Lab or Blue Origin entering its turf.
How Much Does SpaceX Make from Starlink?
Unfortunately, since both SpaceX and Starlink are not publicly traded companies, neither of them are required to publicize their annual returns.
So, how much SpaceX is making from Starlink is pure speculation at this point. Luckily, we do have a few data points that would help us arrive at a ballpark figure.
For once, Starlink surpassed one million subscribers in December 2022. The majority of its customers are likely from the United States and Canada – the two markets Starlink launched in first.
Customers in the United States currently pay $110 per month, on top of a one-time hardware fee that is equal to $599. Canadians are charged a slightly higher amount (feel free to check our global availability and price list for additional reference).
If we just assume that all customers were on a $110 per month plan, then Starlink would generate $1.32 billion (= 12 months x $110/month x 1 million customers) in revenue per year. Starlink would’ve made another $590 million from hardware sales in that scenario.
However, the reality looks a little different. For once, Starlink is priced substantially cheaper in a lot of other markets across the globe. Second, SpaceX has donated a few thousand dishes to Ukraine in an effort to help the war-riddled country to fight off Russian troops.
On the other side, Starlink offers a variety of other plans, which are priced above the $110/month residential plan. For example, both RV (now called Roam) and Portability cost $135 per month.
And business plans incur even greater costs. Its maritime plan would put you down a cool $5,000 per month, on top of the one-time hardware costs of $10,0000.
If I were to guess, then SpaceX is already generating annual revenues of around $1 billion from Starlink. That number will certainly increase substantially going forward as more and more countries are approving Starlink as well as by Starlink adding even more lucrative business customers.
Who Are the Investors in Starlink?
Again, the people or rather institutions do not own shares of Starlink but SpaceX, which is Starlink’s parent company. Some of those investors may own Starlink shares once it is spun out of SpaceX and goes public.
With that being said, SpaceX currently boasts 79 total institutional investors and 10 lead investors according to its Crunchbase profile.
Lead investors include venture powerhouses such as Andreessen Horowitz or Founders Fund, government agencies like NASA or the United States Space Force, tech giants like Google, and asset managers such as Baillie Gifford.
A small portion of the SpaceX option pool is also made up of its employees who have been selling equity during various funding rounds. For example, back in December 2022, SpaceX allowed its employees to sell their existing shares at $77 apiece, consequently valuing the whole company at $140 billion.
The option pool of a tech company normally makes up 10 percent to 20 percent of the firm’s total stock.
However, Musk still owns around 44 percent of all shares while institutional investors have poured over $10 billion into SpaceX. Therefore, I would assume that the option pool is likely closer to 10 percent than it is to the higher mark.
Does Tesla Own Starlink?
No, Tesla does not own Starlink. In fact, the companies only share one commonality, which is that Elon Musk is the CEO of both Starlink owner SpaceX and Tesla.
Interestingly, though, Musk has hinted at a potential link-up between his two companies in the past. Starlink plans to eventually offer cellular services in the United States thanks to a partnership with T-Mobile.
When asked if Tesla car owners will be able to access the feature as well, Musk simply replied with “yes.”
Unfortunately, Tesla drivers should not expect to be able to watch 4K movies or play games online in their vehicles. When further pressed about the mobile option, Musk said that the cellular coverage would provide speeds of 2 to 4 megabytes per second.
In other good news, though: Tesla recently hinted at a potential installation of Starlink devices at its charging stations. The Hawthorne (SpaceX HQ) charger is already equipped with a Starlink dishy as the linked tweet indicated.
I will never switch to T-Mobile, I want nothing to do with Evil Elon Musk, who has been shutting down communications through Star Link with Ukraine, crippling their ability to fight the Russians.
Hi Loretta, while it is a dicey topic indeed, Elon Musk has nothing to do with T-Mobile (except Starlink’s partnership with them).
Elon Musk owns 45% of Starlink. There is the connection. I avoid anything related to Elon Musk
Loretta, please join the Ukrainian military to put some skin in the game and to counter Elon’s “evilness”.