By Al Root
Investors are arguing over the risks and rewards of SpaceX stock on the cusp of its record-setting IPO.
The star business underpinning the estimated $1.8 trillion valuation is Starlink, SpaceX's space-based broadband product. Exactly how much it's worth is hard to say. How well it works is an easier call. It's remarkable.
Starlink has some 10,000 satellites in low Earth orbit, serving more than 10 million customers in 164 countries, according to SpaceX's IPO documentation filed with the Securities and Exchange Commission.
That's a lot of people. Still, it's a lot of countries, so investors might not have had a chance to try it out. I had the chance to use it on a recent flight from the West Coast. The experience was eye-opening. Plane-based Wi-Fi is typically a struggle, with dead zones and slow service, depending on how many people are willing to fork over a few dollars to work during a flight.
Nothing like that happened with Starlink. There were no limitations on use. YouTube, websites, podcasts, work -- anything I tried worked smoothly, and the speed was, frankly, better than I get at home.
To be sure, this is a sample size of one. But it helps investors understand the opportunity. Baron Capital's Ron Baron projects 15 million customers by the end of 2026 and 300 million by 2036. "Starlink is the internet for the whole planet," he said in a recent presentation reviewing the IPO, pointing out there are billions of people with either spotty or no internet.
That projection would make SpaceX close to the same size as Verizon Communications, AT&T, and T-Mobile US combined. That could easily mean $500 billion in annual revenue by the middle of the next decade, and $300 billion in annual earnings before interest, taxes, depreciation, and amortization, or Ebitda, based on Starlink's current profit margins.
At current market valuation multiples, that could translate into $7.5 trillion in 2036, which translates to $1.8 trillion today if investors expect to earn 15% a year on average for the next 10 years.
That's the current IPO valuation -- all accounted for by Starlink. But that's just some rough math. Getting 300 million subscribers is far from assured and likely requires better satellites, which SpaceX has planned. The version three Starlink satellites need to be delivered by the still-in-development fully reusable Starship rocket.
To be doubly sure, 300 million is Baron's projection, and the firm is a longtime investor in Tesla and SpaceX and bullish on the future of both companies. Exactly how pricing and competition will develop is hard to say. Ten years is a long time to wait in the stock market.
SpaceX also needs to work out how to make Starlink more reliable in dense urban environments. The company, however, is already thinking of that with laser meshing technology and wireless spectrum acquisitions.
For now, SpaceX has a huge lead in space-based communications, with a dominant launch franchise, operating roughly two-thirds of all satellites orbiting the Earth.
It also has a product that works incredibly well on cross-country flights.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 07, 2026 14:25 ET (18:25 GMT)
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