The Early Days of Trading
SpaceX is now twelve days past its IPO and is set to join the NASDAQ in the coming week. The first several sessions have been volatile: after dipping below its IPO opening price last week, the stock was trading higher again, sitting at $170.21 — roughly $20 above its IPO opening price, a gain of about 3.6% to 6% on the day.
The market's reaction so far has been entirely unsurprising and, arguably, justified. This is a heavily hyped name, and we have seen this dynamic before with Elon Musk companies. Despite that hype, SpaceX is genuinely an interesting and differentiated asset, so the way trading has played out is broadly in line with expectations.
Several factors are still in play. The inclusion into the NASDAQ 100, expected next week, is one near-term catalyst. There is also the historical track record of the largest IPOs, which have tended to struggle out of the gate. And it is worth remembering that, for all its size, SpaceX remains a relatively volatile company. Its earnings will bounce around, and it will be interesting to see how the market reacts to that variability over time. On the whole, though, the performance so far is more or less what one would expect.
What Defines Starlink's Success or Failure
A great deal of the company's valuation rests on future growth, with Starlink as the profitable engine of the business. Asked what would define Starlink's success or failure over the next five years, the answer comes down to the obvious metric: continued subscriber growth.
That said, some of the market's expectations are unrealistic. There have been projections of upwards of 40 million broadband subscribers. The skepticism here is not about Starlink's strength — Starlink is best in class at this moment — but rather about a possible misunderstanding of how large the addressable market for broadband subscribers actually is.
As things stand, Starlink already has more than 12 million subscribers, but it is already running into capacity issues in some markets. That constraint is expected to ease once the V3 satellites come online, but those are still at least a year away. There is also a structural ceiling: a meaningful contingent of potential subscribers simply isn't accessible because of their proximity to fiber. Fiber remains a superior technology today. The bet is that network innovations — particularly the V3 satellites and on-satellite (onboard) compute — can ultimately change that equation, but for now it remains a challenge. Critically, Starlink's customer base today is still primarily and largely rural.
Broadband Story or Mobile and Enterprise Story?
Starlink has already partnered with T-Mobile, and there have been reports of a potential partnership with Charter Communications to offer some form of mobile phone service. The question is whether Starlink is still fundamentally a broadband story or whether it is pivoting toward mobile and enterprise.
For now, it is still a broadband-first segment. Wireless will eventually become a major factor, but the timelines being floated are too aggressive. The T-Mobile partnership is interesting, yet T-Mobile itself, on its latest earnings call, re-emphasized that the network usage actually flowing to Starlink is relatively minimal. That is an impediment.
There is also a spectrum problem. SpaceX is still relying on spectrum from the mobile network operators that own it, because it has not yet been able to actually utilize the spectrum it bought from EchoStar for roughly $17 billion last summer. That remains to be determined. On top of that, the handsets themselves still need to get the capability into the phone. All of this means expectations need to be reset on when wireless can genuinely become a driver.
There are structural limitations as well. As the technology stands right now, the service will not penetrate buildings. It is, for now, really an emergency-service and coverage-gap solution. There is a massive market that needs exactly that — much of it international — but the timelines for when this becomes a major revenue driver need to be reset.
The Single Most Important KPI: Starship Cadence
If there is one thing to watch strategically, it is Starship — specifically, its launch cadence. Cadence is the key unlock because it drives everything else.
The V3 satellites are central to this. They are what will allow direct-to-device scaling to move beyond the light data services currently offered with T-Mobile. They will also roughly 10x the broadband capacity per satellite, at least from a downlink perspective. But the V3s cannot be launched without Starship, because they are so much larger than the traditional V2 satellites.
SpaceX is eyeing around 25 Starship flights in 2027. Hitting that number would be significant: it would essentially replenish the network's broadband capacity to the equivalent of what currently exists with roughly 10,000 satellites — assuming the constellation scales toward 60,000 satellites, with each launch carrying about 60 of the new-generation satellites, and assuming those launches proceed without mishaps or anomalies.
How to Value a Company in Transformation
SpaceX has evolved from a launch company into a communications platform, which makes it genuinely hard to value — the answer to "what kind of company is it?" depends on who you ask.
Fundamentally, it is best understood as a broadband-first company, and more broadly as a communications platform first. This mirrors the AI story currently driving so much of the valuation. There has been real scaling and progress on the AI front, but much of that — orbital data centers, re-imagining GPUs, getting "Terra Fab" online — again comes back to resetting timelines. All of that AI and adjacent work is ancillary; it provides great tie-ins, but it is not the core. The core remains the communications platform.
That core is, however, distinct from communications platforms of old, which were defined by limited growth. Starlink's growth outlook is genuinely robust. While there are projections of 40 million subscribers on a five-year horizon, a more realistic and still excellent outcome is around 30 million — a level that is very achievable and likely where the serviceable market shakes out, especially given the imminent entrance of Amazon into the market.
