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Why Starlink is so important to SpaceX’s IPO

When analysts and investors talk about a potential SpaceX (SPAX.PVT) IPO, which is likely to happen this summer at the earliest, they are largely talking about Starlink.

Satellite internet service has grown from an engineering project into a dominant revenue machine powering the world’s most valuable private company.

Read more: SpaceX: How to buy before IPO?

Despite last report Claiming that SpaceX lost $5 billion last year, it is stated that this loss is due to its heavy investments in xAI.

SpaceX’s core rocket launch business and, more importantly, its Starlink satellite service generated approximately $6 billion in earnings before interest, taxes, depreciation and amortization (EBITDA).

Examining Starlink and looking at its business model and how it plans to grow is key to SpaceX’s story. When you put it all together, it makes SpaceX the most anticipated offering of all time; We see that its size dwarfs the estimated valuation of $2 trillion.

SpaceX’s Starlink satellite broadband antenna goes on sale in the computer department of the Fnac store at the Victor Hugo shopping center in Valence, France, on March 8, 2025. (Nicolas Guyonnet/AFP via Getty Images) · NICOLAS GUYONNET via Getty Images

Starlink is essentially a broadband internet service delivered from space, a global service that reaches more than just around the world. 9 million customers It has plans to expand further in residential, business and government segments.

Currently, the service is “a low-latency, broadband internet system delivered through a constellation of thousands of LEO satellites,” according to a recent report from PitchBook on the importance of SpaceX and Starlink, and “extends SpaceX’s advantage by vertically integrating the full cycle (design, manufacturing, and operation).”

The result is a system unlike anything created before: global, fast, and almost entirely controlled end-to-end by a single private company.

Rather than relying on ground-based fiber or cell towers, Starlink uses a constellation of satellites in low earth orbit (LEO) (just 340 to 750 miles above the surface) to beam high-speed internet directly to small, self-deployable dishes on the ground. Because LEO satellites are much closer to Earth than traditional geostationary satellites (in a 22,000-mile orbit), Starlink says signals travel much shorter distances, reducing latency to 25 milliseconds, comparable to many wired broadband connections.

The scale of the Starlink satellite constellation is huge. The constellation consists of more than 9,600 operational satellites, accounting for nearly two-thirds of the 14,300 active payload satellites worldwide, PitchBook said.

Starlink's newer gigabit V3 satellite is shown in comparison to other satellites. — Starlink’s newer gigabit V3 satellite is shown in comparison to other satellites. · SpaceX

SpaceX has built and launched more active satellites than all other space programs and companies combined and continues to add approximately 70 satellites per week to its constellation.

“Scale matters,” PitchBook analysts wrote, noting that building satellites at this pace is more akin to industrial production than the “traditional aviation rhythm.”

This scale is also part of the customer’s hardware experience. SpaceX has announced plans to produce approximately 15,000 Starlink kits per day, with plans to expand production and bring more processes in-house.

“These numbers matter,” PitchBook said, “because they support a fundamentally different cost curve: volume production accelerates learning, increases returns, and increases bargaining power.”

Starlink's mobile application appears on iPhone. — Starlink’s mobile application appears on iPhone. · Jake Conley/Yahoo Finance

Starlink’s product portfolio extends far beyond consumer broadband.

PitchBook classifies the service into three main areas: commercial connectivity (residential, business, maritime, and aviation), Starshield (“a specialized government-focused product line leveraging Starlink technology for national security use cases including secure communications and Earth observation”), and direct-to-cell — an emerging connectivity service (in partnership with carriers like T-Mobile) designed to deliver text and voice coverage to unmodified LTE cellphones.

To build its subscriber base, which currently has more than 9 million subscribers worldwide 4.6 million people added last year alone — Starlink is being innovative when it comes to consumer deals.

Case in point: Starlink’s deal with prepaid operator US Mobile last week; This deal will offer new and existing customers packages that include residential Starlink for as low as $47 per month.

The deal with US Mobile is intriguing because most carriers avoid making deals with SpaceX because it could threaten their mobile business.

And that threat is evident in Starlink’s new direct-to-cell (DTC) service, which provides internet access via satellites to regular, unmodified cell phones. PitchBook reports that the DTC offering currently serves “more than 6 million monthly subscribers and 12 million people who have connected at least once,” and this is before full commercial launch.

How does Starlink's direct-to-cell (or device) service work? — How does Starlink’s direct-to-cell (or device) service work? · Pitchbook via SpaceX

By partnering with existing mobile operators rather than replacing them, Starlink adds a new layer of revenue with potentially massive scale; Effectively, each mobile subscriber represents a potential coverage extension customer.

And of course, that’s a big part of the business case when valuing SpaceX’s IPO.

Because SpaceX is still private, investors and analysts must look to external data sources to gauge how the business is performing.

Starlink has an estimated revenue of $10.6 billion in 2025, according to PitchBook; That was about 67% of SpaceX’s $15.8 billion in total revenue, with EBITDA of $5.8 billion representing an EBITDA margin of 54%, according to PitchBook.

Information reported similar figures. SpaceX’s core business (Starlink, rocket launches) generated nearly $6 billion in EBITDA last year, but total company revenue rose to $18.5 billion.

Starlink’s margins are closer to those of a software provider than a traditional technology hardware business, reflecting the basic economics of the model: Once the constellation is in orbit, each incremental subscriber adds high-margin recurring revenue at near-zero marginal cost.

Subscriber growth is accelerating. By the end of 2025, Starlink reached more than 9 million subscribers in more than 155 countries, doubling the number of subscribers for two consecutive years. Analysts and investors are likely expecting a new customer surge, and Starlink’s recent deal with US Mobile could achieve that.

US Mobile's Starlink bundle plans were announced Thursday. — US Mobile’s Starlink bundle plans were announced Thursday. · USA Mobile

For IPO investors, the combination of recurring subscription revenue, expanding margins, multiple vertical growth, and the massive cost advantage from the parent company’s ability to launch rockets cheaply is the game.

As PitchBook puts it, Starlink “creates recurring domestic demand that will justify large-scale capital expenditures and forces SpaceX to act like a high-volume manufacturer rather than a dedicated aerospace manufacturer.”

SpaceX’s IPO would essentially be almost a Starlink IPO; Opportunity to invest in the world’s largest and fastest growing satellite internet business, powered by the only launch provider capable of renewing and expanding a constellation of 9,600 satellites on an industrial scale.