A SpaceX Subsidiary: Now or Later?

A stack of 60 SpaceX Starlink satellites sits a top the second stage of a Falcon 9 rocket ready to deploy.

Credit: The New York Times & SpaceX

Gwynne Shotwell, the president of SpaceX, recently told a group of investors that their nascent Starlink program may branch off and become public. Starlink is SpaceX’s efforts of delivering low latency internet anywhere in the world via a constellation network of Low Earth Orbit (LEO) satellites. This public subsidiary would provide SpaceX with an opportunity to increase their revenue relative to their current launch service’s ability to bring in income. If a public subsidiary is launched, investors should be hesitant rushing to buy stock. Elon Musk and his respective startups often encounter manufacturing issues during the embryonic development of the company. However, it seems that SpaceX is waiting until an established constellation is in orbit before branching off. Musk seems to understand that in order to fund his Mars venture he will need ancillary and reliable revenue streams. Something like a Starlink subsidiary has the potential to be more lucrative than their current launch services. The telecommunications industry reels in exponentially more net income than rocket services.

In turn, this is the most reasonable evolutionary step for SpaceX development. Starship, the rocket currently under development, is privately funded and Elon predicts that total research costs will range between 2 and 10 billion dollars. SpaceX is only valued at a little more than 30 billion dollars so in order to reasonably expedite Starship development a revenue influx of the magnitude of a Starlink subsidiary is necessary.

A Starlink satellite train speeds across the night sky.

Credit: digitaltrends.com

Investors should evaluate factors such as manufacturing capabilities for ground based receivers and latency speeds when determining the value of a Starlink subsidiary. In addition, this is the first time satellite constellations plan are coming to fruition. Such an agglomeration of satellites in LEO may uncover unknown issues such as space debris with consideration to close proximity satellites. Various issues must be resolved before SpaceX can reasonably create a public subsidiary, the most important of these being actually getting more than a thousand satellites in space.  

Gabo Perez-Alvarez is a junior in the School of Foreign Service studying Science, Technology, and International Affairs (STIA). He is the Commercial Team Leader at the Georgetown University Space Initiative.