Could Starlink’s Business Model Challenge SpaceX’s Sky-High Valuation?

SpaceX has become the most valuable private company in the world, largely due to the rapid growth of its satellite internet division, Starlink, Forbes reports.

However, some analysts are questioning whether Starlink’s potential justifies SpaceX’s massive valuation.

Starlink has grown at an astonishing pace, surpassing 5 million customers in just five years and outpacing long-time satellite internet providers like Viasat and Hughes. This success has driven investor enthusiasm, helping SpaceX reach a $350 billion valuation in December 2024.

Starlink is projected to generate $12.3 billion in revenue in 2025, making it one of the fastest businesses to hit 11-figure revenues. Some forecasts even suggest that by 2030, SpaceX could bring in $65 billion in revenue and $16 billion in net income, with Starlink contributing the majority.

Despite its success, Starlink faces several constraints:

• Limited Service Capacity: Starlink’s satellites can only serve a limited number of users in densely populated areas. In major cities like New York, capacity would be enough for just 7,000 households out of 8 million.

• Affordability in Developing Markets: Starlink has yet to launch in many countries, especially in Africa and Asia, where income disparities could limit adoption. In India, for instance, only 3% of households earn over $35,000 per year, reducing the addressable market.

• Regulatory and Competitive Pressures: Starlink still lacks approval in some key markets, such as India, while facing increasing competition from Amazon’s Kuiper, China’s SpaceSail, and European alternatives like OneWeb.

Starlink has become a critical tool for military and government operations, with the US government accounting for 25% of its revenue in 2024. However, its close ties to Elon Musk have led to backlash in some countries. Recently, Italy halted talks on a $1.5 billion contract, and Ontario, Canada, canceled a $68 million deal due to political concerns.

Starship, SpaceX’s next-generation rocket, could play a crucial role in increasing Starlink’s satellite capacity and reducing launch costs. However, some analysts believe the projected $48 billion in Starlink revenue by 2030 may be overly optimistic. If Starlink’s expansion is slower than expected, investors may begin to question whether SpaceX’s sky-high valuation is sustainable.