There is no denying the rumors of a Starlink initial public offering. SpaceX President Gwynne Shotwell and Chief Financial Officer Bret Johnsen downplayed reports of imminent plans to spin off and take the satellite broadband internet provider public this year. But they also laid out milestones the company would like to achieve ahead of selling its stock to the public.

“We’re not focused on an [initial public offering (IPO)] for Starlink right now,” Shotwell said March 19 at the Satellite 2024 conference. “We’re really focused on growth, getting the [Starlink] network right. We’re not achieving the latencies that physics would allow us to do. We’re really going to focus on the product and the service for now, and then we’ll consider something in the future, possibly.”

• SpaceX aims to double the number of Starlink customers by year-end
• Starship-Super Heavy could transform the company’s economics

SpaceX aims to double the number of Starlink customers by year-end, Shotwell said. Starlink had more than 2.6 million customers as of March, according to SpaceX’s website.

The company is in the middle of several “high-risk, high-reward” projects—launching the Starship-Super Heavy, Starlink internet broadband and Starlink’s direct-to-cell service—and it would like to put those initiatives on stable footing before considering an IPO, Johnsen said at the conference.

Already, SpaceX is seeing some progress. In November, CEO Elon Musk said the Starlink division had reached cash-flow breakeven. And the company is selling Starlink to new types of users. Although its core customers are rural internet users, in a possible hint at expanding ambitions, Shotwell mentioned that “Starlink is ideally suited for suburban” areas.

To compete with ground-based internet services in suburban areas, SpaceX would have to lower Starlink’s latency. It seeks to do just that, having stated on its website in March that its goal is a stable 20-millisec. median latency.

“In the United States alone [over the past month], we reduced median latency by more than 30%, from 48.5 millisec. to 33 millisec. during hours of peak usage,” the company says.

In 2021, the Federal Communications Commission measured median idle latencies for terrestrial internet service providers in the U.S. and found that digital subscriber line customers saw delays of 22-36 millisec., cable customers 12-22 millisec. and fiber-optic customers 7-13 millisec.

SpaceX also is making inroads into the business-to-business market, having signed contracts with John Deere, Hawaiian Airlines and Royal Caribbean. In addition, the company is expanding its business with the U.S. Defense Department with its militarized version of Starlink, known as Starshield. The U.S. Navy says more than 60 of its ships host a Starshield.

By the end of August, the company plans to place its initial direct-to-
cellular phone Starlink constellation in low Earth orbit (LEO). Those specialized Starlink satellites would provide text-messaging services to T-Mobile customers using unmodified cell phones operating with standard LTE/4G protocols. Service is expected to start this year, according to SpaceX’s website.

The company also has signed direct-to-cell service agreements with Australia’s Optus, Canada’s Rogers, Chile’s and Peru’s Entel, Japan’s KDDI, New Zealand’s One NZ and Switzerland’s Salt Mobile.

Moreover, Shotwell said SpaceX is launching a new product line spun off from Starlink: commercialized laser communications systems for third-party satellites. Once on the market, the offering will be an unusual instance of SpaceX selling a product directly to another business. The company typically sells services, such as rocket rides or broadband satellite connectivity.

SpaceX is now the world’s largest manufacturer of laser communications systems. Its Starlink constellation hosts more than 10,000 terminals on orbit, the company posted on X, formerly Twitter, on March 4.

Builders of satellites for the U.S. Space Development Agency’s Proliferated Warfighter Space Architecture military constellation seem likely potential early customers, as the company notes on its website that its laser terminals “can be integrated onto partner satellites to enable incorporation into the Starshield network.”

The manufacturer’s Starship-Super Heavy launch system succeeded in reaching its intended suborbital trajectory in its third test flight on March 14. The Starship upper stage splashed down in the Pacific Ocean, and the Super Heavy booster was destroyed above the Gulf of Mexico.

SpaceX hopes to use that rocket eventually to lift more than 100 tons of payload to LEO per launch, landing the upper stage and booster back on Earth for reuse. Reusable launch en masse would transform the economics of reaching space, possibly lowering the cost of travel to LEO to $100 per kilogram, a fraction of the already historically low $6,000 per kilogram the company advertises for its Falcon 9.

Analysts see the Starship transforming the economics of the Starlink constellation, allowing SpaceX to launch the satellites more rapidly—further increasing the capacity of the network while also reducing its costs considerably and potentially leading to lower prices for consumers.

If SpaceX is able to move the Starship, Starlink broadband internet and Starlink direct-to-cellular businesses from high-risk to high-reward ventures, it would present a juicy IPO to markets.

At the conference, SpaceX CFO Johnsen noted that the company has an untapped credit facility from an undisclosed bank. Aspiring IPO underwriters could build their relationship with SpaceX by offering the company additional credit facilities, he added.

SpaceX would not go public to fund mergers and acquisitions of other companies, Johnsen said, and Musk, its largest shareholder, does not want the liquidity—despite the market capitalization of his electric automaker, Tesla, falling by more than 40% in the past 12 months.

Musk has expressed regrets about taking Tesla public, noting the legal burdens and expectations of pleasing shareholders and analysts quarter to quarter. Remaining private has allowed SpaceX to take bigger risks than might be tolerated by public shareholders, Johnsen said.

Once Starlink becomes a household name and starts to feel like a public company, it might make sense to sell stocks to the public, including for slightly lower cost of capital, Johnsen said, as SpaceX is interested in the “optionality” of an IPO. “We are in no hurry,” he added.