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Elon Musk’s Starlink is one of the most anticipated IPOs in recent years, but it’s coming slower than many investors expected.
Read on for everything we know about the IPO so far, starting with an explanation of what Starlink is, some background on Starlink’s IPO prospects, and the latest Musk IPO news.
If you’re impatient and can’t wait to get your hands on satellite internet stocks, we’re also sharing some alternatives to consider adding to your portfolio in the meantime.
The short version
- Starlink is a satellite internet provider and a division of Elon Musk’s spaceship company, SpaceX.
- Musk first hinted at a Starlink IPO in 2019 when he suggested it could come in 2022, but more recent updates suggested otherwise.
- In 2022, Musk announced to his employees that a Starlink IPO would likely not happen for at least three to four years, pushing its launch to 2025 at the earliest.
- While you can’t currently invest in Starlink, there are many other satellite technology stocks and ETFs on the market.
What is Starlink?
Before we dive into Starlink’s stock launch, let’s back up a few steps and talk about the company itself. This satellite internet company is a division of the aerospace company SpaceX. Starlink was founded by Elon Musk, the open CEO of Tesla.
Musk founded SpaceX in 2002 and created Starlink in 2014. Starlink offers high-speed internet service and particularly benefits customers in underserved rural areas.
Starlink has grown considerably over the years in business. Although expansion has been slow and many customers are on long waiting lists, the service already has more than 400,000 subscribers worldwide. And the company recently announced a partnership with T-Mobile to offer its customers mobile service in remote areas.
The Starlink IPO: Background
Speculation about Starlink’s initial public offering (IPO) isn’t exactly new. In fact, in 2019, Musk stated that he was contemplating an IPO for his satellite internet company. At the time, he suggested it could be about three years before we see an IPO.
Three years later, and the IPO date has still not been announced.
But Musk started talking again about a 2022 IPO date more than a year ago.
In a February 2021 tweetMusk said, “SpaceX needs to solve the negative cash flow problem in the next year or so to make Starlink financially viable. Every new satellite constellation in history has failed. We hope to be the first to don’t do it.”
He said we will see a Starlink IPO “Once we can predict cash flow reasonably well.”
This delay disappointed many potential investors, but they are hoping for an IPO. And it’s easy to see why people are eager to invest in this company. The latest numbers from a May 2022 funding round put the company’s valuation at around $127 billion. And based on the company’s pricing and number of customers, Starlink likely has annual service revenue of more than $500 million.
The latest news on the Starlink IPO
It’s been three years since Musk first floated the idea of a stock launch for Starlink, and about a year and a half since he shared his update via Twitter. So where does that leave us today?
The last update came from Musk in June 2022. In an audio recording obtained by CNBC of a meeting with company employees, Musk stated: “I’m not sure exactly when that [IPO] it is, but maybe it’ll be like, I don’t know, I just guess three or four years from now.”
In other words, it doesn’t look like we’ll see a public offering of Starlink stock until at least 2025, possibly later.
Also in the same audio recording, Musk warned his employees that an IPO would not necessarily be a sure path to riches. He referred to the public markets as “volatile” and claimed they could “really hit you with a gun if you don’t meet expectations.”
Read more about IPOs >>> IPO to be seen in 2022
Other Ways to Invest in Satellite Internet Besides Starlink Stock
Satellite technology is not exactly new. In fact, the first satellite, Sputnik 1, was launched into space in 1957. And in the years since, this technology has only expanded.
Satellite technology has become increasingly important as a vital source of Internet, especially for those who do not have easy access to cable or fiber Internet. Companies such as Starlink and other satellite Internet companies played an important role in expanding high-speed Internet access to rural and remote areas.
Given the importance of satellite internet, it’s easy to see why so many people are eager to invest in it. The good news is that just because you can’t invest directly in Starlink doesn’t mean you can invest in internet or satellite technology.
First, you can invest in satellite technology by investing directly in these companies in the industry. Some of the top satellite stocks in 2022 include Iridium Communications, ViaSat, Gilat Satellite Networks and more. Also, Amazon also dipped into the satellite industry, so you can get some exposure by investing there.
One of the best ways to invest in satellite internet technology is by investing in it exchange traded funds (ETFs) rather than individual actions. ETFs still give you industry exposure, but they also reduce your risk by spreading your assets and diversifying your portfolio. In other words, you’re not trying to pick industry winners and losers and put all your eggs in one basket.
According to Nasdaq, two of the most popular satellite ETFs are Look for Space ETFs UFO i SPDR Kensho Final Frontiers ETF ROKT. These funds have been around since 2019 and 2018, respectively, and focus their efforts on different parts of the satellite industry.
The bottom line
Many investors have been waiting patiently to hear news of a Starlink IPO. But according to the latest news from the company’s founder, Elon Musk, it doesn’t look like that’s going to happen anytime soon. If you want more immediate exposure to this industry, there are other stocks and ETFs you can invest in while you wait for Starlink to go public.
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