Starlink, a subsidiary of SpaceX, is the current undisputed leader in delivering internet services through low-orbit satellites, with over 1.5 million subscribers. The company’s rapid growth has investors wondering how to buy Starlink stock.
Starlink is an unusual IPO candidate, as it is a subsidiary of another privately held company – SpaceX – that is also viewed as an IPO candidate.
There has been a great deal of speculation over a possible SpaceX IPO, with CEO Elon Musk refusing to give any specific projections or even hints as to when it might occur. There has also been speculation that SpaceX might consider a Starlink IPO, potentially even before SpaceX goes public.
Elon Musk has reportedly told employees that a Starlink IPO is possible in 2025 or later.
Moving Starlink public before SpaceX could be an appealing strategy. Starlink is the best-developed segment of SpaceX’s business, with some projections anticipating revenues of $16 billion/year by 2027. Selling even a portion of Starlink could provide SpaceX with abundant funding for its other efforts while allowing it to retain operational control.
A Starlink IPO would also provide substantial profit potential for shareholders. But can you buy Starlink stock?
Let’s take a closer look at how to buy Starlink stock:
|Starlink: Fast Facts
|Low-Orbit Satellite Internet Service
|Project Kuiper (Amazon), Local ISPs
|Elon Musk, Kimbal Musk, Gwynne Shotwell
|Unknown, estimates vary widely
|Projected IPO Date
What Is Starlink?
Starlink is a satellite-based global Internet Service Provider. The company uses a constellation of low-orbit satellites to address the latency problems that have traditionally plagued satellite communications systems.
Starlink has been marketed to mobile users and to rural or developing-nation residents who need high-speed internet but have limited or no access to traditional internet service providers.
The Starlink system consists of an antenna, cable, and router, which users install themselves. A mobile app assists in location selection and verifies that a location is free of obstructions. The antenna is self-adjusting and will seek out the best angle to connect to available satellites.
Starlink launched its first 60 satellites in 2019 and now has over 4000 satellites in low-earth orbit. The Federal Communications Commission (FCC) has already approved 12,000 satellites, and Starlink parent SpaceX has requested approval for 30,000 more.
Starlink connections become faster, more reliable, and accessible to more users as more satellites are placed.
Starlink is operated by SpaceX, and satellite development takes place at a SpaceX facility in Redmond, WA. Starlink uses SpaceX equipment to launch and place its satellites.
Starlink operates on a fairly straightforward business model. Customers purchase hardware from Starlink and pay a monthly subscription fee. Starlink offers several packages.
- Standard residential service covers a single location. Initial hardware cost is typically around $599, and the monthly service fee is $90-$120 depending on location. Download speed is typically 100-200 Mbps.
- Mobile service is used by RVs and others requiring use in multiple locations. The setup cost is the same, but the service fee can reach $135/month. Speed varies with location.
- Maritime service is used on water only and can deliver up to 350 Mbps. The installation cost is $10,000, and the monthly fee is $5000.
- Business service costs $500 a month and delivers up to 500 Mbps, with priority 24/7 service.
Starlink’s customer base has been expanding rapidly.
Starlink has attracted both individual and corporate users. In August 2022, Royal Caribbean Group, a major cruise ship operator, announced that Starlink will be installed on all of their 64 ships and any new ships they order, including 10 vessels currently under construction.
When Will Starlink Hold Its IPO?
Discussion of a Starlink IPO goes back to February 2020, not long after the first satellites were deployed. No dates or necessary conditions for an IPO were discussed at that time.
A year later, a series of Musk tweets gave slightly more insight into what it would take for Starlink to go public.
In June 2022, CNBC stated that Musk had told SpaceX employees that a Starlink IPO was 3 to four years away, which would place it in 2025 or 2026. Musk emphasized that the company should be “in a smooth sailing situation” with “good predictability” to support an IPO.
In October 2022, CCI Insight reported that Starlink could go public as early as 2025 with an offering designed to raise capital to expand its satellite constellation.
Starlink has arguably satisfied some of the conditions Musk set in 2022, with a stable revenue base 0f 1.5 million subscribers paying an average of $110/month each. An IPO will also depend on the health of the overall market, the IPO market in particular, and on public perceptions of the space business.
Musk’s most recent statement on the hot topic of Starlink was in June 2023, when he commented, “It would not be legal for me to speculate about a Starlink IPO”
Starlink and SpaceX have not filed any prospectus or pre-IPO paperwork with the SEC, and at this point, any prediction of an IPO date remains speculative.
Starlink’s Financing and Valuation
Starlink is a subsidiary of a VC-backed private company, SpaceX. Because of this relationship, Starlink’s initial funding has been effectively included in SpaceX’s funding. Starlink has not held private placements expressly for Starlink.
We can assume that the venture capital backers behind SpaceX are also exposed to Starlink and would receive Starlink shares in any IPO. We do not know how any share distribution would be organized, how many shares would be retained by SpaceX, how many would go to SpaceX investors, and how many would be sold in the IPO.
The same phenomenon makes it almost impossible to arrive at a meaningful valuation for Starlink. Private company valuations are usually based on the prices of recent share offerings, and without a share offering specifically for Starlink, any valuation assumption is too speculative to be useful.
SpaceX is currently the most valuable venture capital-backed private company in the US and the second most valuable in the world (behind TikTok parent ByteDance), with a current valuation close to $150 billion. Starlink certainly represents a substantial portion of that.
Venture capitalist and former Facebook executive Chamath Palihapitiya has claimed that Starlink’s value would be approximately 50% of the SpaceX valuation, which would place it at $75 billion. This figure – like any estimate of Starlink’s value – must be regarded as speculative.
Until Starlink files a formal prospectus, we will have no audited financial statements providing reliable information on Starlink’s finances. Some information has been publicly discussed, and more can be deduced for information on Starlink’s customer base.
- SpaceX President Gwynne Shotwell has stated that Starlink had a cash flow positive quarter in 2022 and “will make money” in 2023.
- Payload Space, a space industry newsletter, reported in 2022 that SpaceX is generating around $1 billion in annual revenue from Starlink.
- Starlink reportedly has 1.5 million subscribers. At an average of $110 per month each, that would indicate recurring revenues close to $2 billion, potentially higher as some users subscribe to the higher-cost mobile, maritime, and business services.
These figures are, of course, not a substitute for audited financials. Starlink clearly has a sustained revenue stream that will grow as the subscriber count grows. We still don’t have a clear understanding of Starlink’s costs or debt.
Many of Starlink’s startup needs, including the design, construction, launch, and placement of the satellites, were supplied by parent company SpaceX. We do not know how these costs are accounted for or what amortization schedule exists between the two companies.
Starlink owns SpaceX and will presumably retain a majority interest even after an IPO, so we can assume that the financial relationship between the countries is organized on mutually advantageous terms. We still don’t know what those terms are or how large an obligation Starlink has to SpaceX.
How Can I Buy Starlink Stock?
Starlink is still privately held, meaning its shares are not available on the stock market, yet many are wondering how to buy Starlink stock. Are there alternative methods to acquire it?
Invest Through a Pre-IPO Secondary Market
There is a secondary market for pre-IPO shares, and it is sometimes possible to purchase them. Online pre-IPO marketplaces may acquire shares from early investors or employees who have received shares through stock options.
You may be able to buy Starlink shares through these marketplaces.
- Forge Global/Sharespost is the product of a merger between two major pre-IPO marketplaces. The minimum investment is $100,000. Some shares may have higher minimums. Potential buyers may need to pass a qualification process.
- EquityZen acquires pre-IPO shares from early investors and employees and makes them available to qualified investors. There will be a qualification process, and the minimum investment is $10,000, potentially higher for some shares.
- SecFi specializes in linking outside investors with employees who need to liquidate their stock options.
- Nasdaq Private Market provides access to private company shares for investors who meet the SEC’s accredited investor criteria.
- EquityBee is a private marketplace that allows investors to fund an employee’s stock options in exchange for a share in the proceeds from their eventual sale.
To use these platforms, you will have to register and open an account. You may need to meet a minimum level of income and investment experience to qualify, and there may be other criteria. There’s no guarantee that any marketplace will have Starlink shares available.
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Invest in SpaceX
There is no assurance that any of the companies above will have Starlink shares available for sale. If they do not, you could consider reviewing the same companies to see whether you can buy SpaceX shares.
There is also no assurance that SpaceX shares will be available, and SpaceX carries all the same risks common to any pre-IPO company and some specific risks of its own. SpaceX shares – if you can get them – would still be a way to invest indirectly in Starlink.
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Invest in the IPO
When considering how to buy Starlink stock, you should note that several major brokers offer account holders the opportunity to participate in IPOs. All of them have requirements that investors have to meet. You will have to answer questions to confirm that you comply with the rules on IPO investment.
- TD Ameritrade allows participation in IPOs if TD Ameritrade is part of the selling group. Participating account holders need a minimum balance of $250,000 or 30 trades in the last calendar year.
- Fidelity allows participation for customers who are in the Premium or Private client groups or those who meet minimum household asset requirements.
- Charles Schwab requires an account balance of $100,000 or a history with at least 36 trades.
- E*Trade does not restrict IPO participation by account balance or trading history. You will have to fill out a questionnaire from the underwriter of the IPO to determine your eligibility.
Most IPOs allocate only a small number of shares for retail investors. Even if you qualify, you may not be able to be able to buy the number of shares you want. You may not be able to buy shares at all.
Many IPO purchases come with a lock-up period, usually 90 or 180 days. You will not be able to sell your shares until this period expires.
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Invest After the IPO
The most conservative approach on how to buy Starlink stock would be to wait for the IPO and buy the shares in the public post-IPO market. You can do this through any brokerage account.
You won’t get in at the low price offered by pre-IPO or IPO purchases, but it’s the simplest way to invest, and there’s still a substantial upside if the company succeeds.
📊 Learn more: For those curious about the IPO market, check out our guide on how to buy IPO stock. And if you’ve ever considered getting in earlier, our post on pre-IPO investing might be worth a read.
Are There Any Concerns About Starlink?
If you want to know how to buy Starlink stock, it’s important to note that, like all companies, an investment in Starlink carries its own set of risks. Those risks are accentuated by Starlink’s status as a pre-IPO company with no established schedule for going public. There is no assurance that there will ever be a market for the shares that you buy.
These are some risks specific to Starlink.
- Space-based competition. Amazon’s Project Kuiper aims to fill essentially the same niche as Starlink. Starlink has a huge headstart, but Amazon has enormous financial clout and may be able to deliver a superior product.
- Land-based competition. Starlink primarily serves users who do not have access to modern land-based fiber broadband networks, which typically provide higher speeds and lower latency at a lower price. As these networks expand, Starlink’s user base could shrink.
- Affordability. Much of the potential user base that does not have access to high-speed internet is located in developing countries, where Starlink’s high upfront cost could limit adoption.
- Capital-intensive business. Placing satellites requires enormous upfront costs, potentially involving either debt or dilution of the company’s equity base.
- Dependence on a single individual. SpaceX and Starlink are heavily dependent on Elon Musk. Questions have been raised about Musk’s stability, and these companies could lose much of their appeal to investors if Musk or one of his companies experiences significant difficulties.
- Regulation. Starlink intends to place tens of thousands of satellites in low-earth orbit. It is not clear whether these placements will interfere with other communications or space-based functions.
Any or all of these factors could emerge as significant threats to Starlink.
Starlink does not share one risk factor common to companies in the private space industry. Companies that depend on launch revenue or space tourism could be dramatically affected by any accident anywhere in the industry.
This risk is less important for Starlink, which derives continuing revenue from satellites already in place. In 2022, up to 40 Starlink satellites were destroyed during placement by a geomagnetic storm without any lasting impact on the company.
Conclusion on How to Buy Starlink Stock
If you’re wondering how to buy Starlink stock, there are several methods to invest in private companies like Starlink. Some ways are more difficult than others. But if you’re willing to do some digging, you might be able to purchase Starlink stock before the company’s IPO.
Starlink is a highly speculative investment with substantial risks. There’s no way to anticipate when an IPO will be held, so your funds could be tied up for some time. If the gamble pays off, the gains could be substantial.
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Starlink operates a low earth orbit satellite internet system delivering high-speed internet to areas that cannot be serviced by traditional internet systems. Starlink is a subsidiary of Elon Musk’s SpaceX.
Starlink is still privately held, meaning its shares are not available on the stock market yet. There are ways to purchase pre-IPO stock, but success is not guaranteed, and there may be qualifying requirements. There is no assurance that Starlink will ever go public.
All pre-IPO companies carry risk: there’s no assurance that your investment will ever be liquid. There are also risks specific to Starlink. The company may face a limited user base, competition from space-based and land-based systems, and regulatory risks, among others.