GoKawiilAs investors line up to buy SpaceX stock in the largest IPO on record, about the only real business they have to evaluate is Starlink, the company's satellite internet division. It's by far the biggest by revenue, the only piece of the company that's profitable, and it boasts a dominant market position, with consumer broadband customers more than doubling over the past year to 10.3 million, SpaceX says.
Meanwhile, the company's space, and artificial intelligence segments generated a combined $1.4 billion in first-quarter revenue, while their operating losses totaled $3.1 billion in that stretch.
But even for Starlink, there are significant hurdles to expansion, making it harder for prospective investors to determine a reasonable price to pay for shares. SpaceX is still targeting a market cap of $1.77 trillion.
SpaceX is relying on its Starship rockets, the largest ever built or launched, to begin flying and deploying its new V3 satellites to massively expand their Starlink service. The rockets are still being tested and have mostly carried dummy satellites to space so far.
According to its IPO filings, SpaceX has accumulated a deficit of $41.3 billion since it was founded in 2002, and recorded an operating loss of $1.9 billion in the first quarter. The company has spent more than $15 billion developing Starship.
SpaceX CFO Bret Johnsen said during the investor roadshow that "10 million customers can become hundreds of millions of customers around the world in time, because it's so much more efficient to deliver to so many different locations from space than it is terrestrially." Johnsen also said SpaceX plans to bring 5G-equivalent service to consumer devices within two years.
Based on the figures SpaceX is putting out now, average revenue per using is dropping. The number fell to $66 per month in the first quarter from $86 a year earlier. For all of last year, ARPU slid to $81 from $91 in 2024 and $99 in 2023.
Even as the number of subscribers doubled in the first quarter, operating income barely budged, going from $1.03 billion to $1.19 billion.
"Extra customers have not been generating much incremental revenue," said Tim Farrar, president of satellite and telecom industry research firm TMF Associates. That can necessitate price increases, which Starlink rolled out last month, raising the risk of customer churn.