Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Starlink IPO: everything you need to know

SpaceX is hard at work building its satellite-internet business, Starlink. Rumours surrounding a Starlink IPO have surfaced and investors are readily awaiting further news. Learn more about the anticipated listing and how to trade it with IG.

Call 0800 195 3100 or email newaccountenquiries.uk@ig.com to talk about opening a trading account. We’re available from 8am to 6pm (UK time), Monday to Friday.

Contact us: 0800 195 3100

Starlink IPO: everything you need to know

SpaceX is hard at work building its satellite-internet business, Starlink. Rumours surrounding a Starlink IPO have surfaced and investors are readily awaiting further news. Learn more about the anticipated listing and how to trade it with IG.

Call 0800 195 3100 or email newaccountenquiries.uk@ig.com to talk about opening a trading account. We’re available from 8am to 6pm (UK time), Monday to Friday.

Contact us: 0800 195 3100

Why trade Starlink IPO with IG?

Trade before the IPO

If a grey market is available, you can get exposure to the company before the listing by trading its predicted market cap

Speculate on Starlink

Buy or sell Starlink shares with leveraged exposure via spread betting or CFD trading

Buy Starlink stock

Invest in Starlink with a share dealing account

When is the Starlink IPO?

Elon Musk has said the Starlink IPO is likely to take place in 2025 or later, according to CNBC. There is no confirmed date for now, but the listing is likely to be a US one, meaning you'd be able to trade or invest on the day of the IPO with us.

How to trade or invest in the Starlink IPO

You could trade the Starlink IPO before the listing if a grey market is available, or after the listing once shares are available.

  • Before the listing
  • After the listing

IG could offer a ‘grey market’ ahead of the Starlink listing. Our grey market price will be based on our prediction of Starlink’s market capitalisation at the end of its first trading day.

With our exclusive grey market, you can:

  • ‘Buy’ (go long) if you think the market cap will be higher than the price indicated
  • ‘Sell’ (go short) if you think the market cap will be lower than the price indicated

What is a grey market and how does it work?

You could buy or trade Starlink shares after the listing.

With us, you can:

  • Buy shares outright via a share dealing account
  • Use leveraged derivatives such as spread bets and CFDs to speculate on share price movement

If, as seems likely, the Starlink IPO is a US listing, the stock will be available to trade on the day of the IPO. As is the case with all brokers, it may take a few hours after the market opens to be tradeable.

With us, you can buy US shares commission-free if you've traded 3 or more times in the previous calendar month. It's £10 commission otherwise. If you choose to trade the shares, you can do so commission-free with spread bets, or from $15 commission with CFDs. Remember that trading shares involves leverage, meaning you stand to gain or lose money much faster than if you invest and own stock.

Trading vs investing in Starlink shares

Trading and investing in company shares differ in a number of ways. With us, you’ll use spread bets and CFDs to trade Starlink shares, speculating on the rising and falling share price. So, you wouldn’t own the underlying company shares. When spread betting or CFD trading you could receive various tax benefits.1

With us, you’ll trade spread bets and CFDs using leverage, which means that you can take a position based on the full value of the trade while only committing a percentage of the amount – this is called margin. However, both your profits or losses will be magnified to the full value of the trade.

Learn more about the impact of leverage on your trading

Leverage isn’t available on investments. When investing in company shares, you’ll gain ownership of the physical shares. As a company shareholder, you’ll have voting rights and be eligible to receive dividends (if the company pays them).

If you sell your shares when the share price is higher than it was when you bought them for, you’ll make a profit. Whereas, if the share price is lower when you sell your shares, you’ll incur a loss, with the maximum amount you can lose capped at your initial outlay.

Trade or invest in similar stocks today

If you want to get exposure to other companies in the satellite and advanced technology industries right now, you can choose between stocks such as Tesla and Virgin Galactic.

Prices above are subject to our website terms and conditions. Prices are indicative only.

What will Starlink’s IPO value be?

Starlink’s IPO value will depend on market conditions at the time of the listing and the performance of its parent company, SpaceX. In 2021, Morgan Stanley said that its base case valuation for StarLink was $81 billion. It is thought that SpaceX's valuation in 2022 could be up to $127 billion.

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What is the Starlink business model?

Starlink is SpaceX’s satellite network aimed at providing worldwide internet access at very high speeds. The network consists of satellites that send information to ground receivers to provide the broadband coverage. There are currently over 2,000 Starlink satellites orbiting Earth. Starlink’s internet service is offered in 32 countries worldwide

Our analysis on the Starlink IPO

By Francisco Riveira

Origin

Starlink is the satellite broadband arm of SpaceX’s, the aerospace manufacture and space transportation company founded by Elon Musk. This enterprise, based on building a massive constellation of low-flying satellites spread out in different orbits, aims to provide more affordable internet services with lower latency and higher capacity than current fibre services. This venture is part of Elon’s ultimate goals: fund interplanetary transportation to Mars and the moon.

Launch

After its first launch in May 2019, Starlink has released several batches of 60 satellites each increasing its consistency over time. Construction efficiency has also been improving, being now able to manufacture at an unprecedented rate of 120 satellites a month, levels never seen before in the satellite sector. This has enabled them to release two batches a month since October 2020, with the overall number of satellites in orbit totalling 904.

With 12,000 satellites approved by the FCC (Federal Communication Commission) and another 30,000 requested, these interconnected networks will be able to beam with ground stations to provide high-speed internet anywhere in the world.

Revenue

With more than half of the world’s population lacking in Internet access, success of this and similar enterprises could bring huge implications, especially for those living in remote locations. As such, Starlink’s initial target will be rural areas where traditional providers are struggled to reach. They have recently been granted a licence to operate in Canada (where 40% of the population lives in rural areas without access to high-speed internet), adding to its previous one million terminals authorized in the US, and planning to expand to near-global world population coverage in 2021.

As they are currently conducting private trials, a public beta is expected to be released in the coming months, moment from which we could start measuring Starlink’s success by its revenues rather than pace of development. Such programme, called ‘Better Than Nothing Beta’, will charge US users a one-off $499 for the equipment and a monthly subscription of $99. Internet broadband is expected to reach 150Mpbs and latency of 20ms (providing capability for gaming and HD streaming) during the first months, claiming those figures will improve as they launch more satellites, install more ground stations, and improve their software. Since nearly 700,000 individuals across the US have already indicated interest in the upcoming service, Starlink has requested to increase the number of authorised terminals to five million.

With regards to expectations, Starlink’s internal documents forecast 40 million subscribers and revenues of $30 billion to $50 billion a year from 2025. In line with company’s outlook, UBS has estimated a $10 billion to $20 billion per year revenue opportunity, while investment bank Morgan Stanley has projected a more optimistic scenario of roughly $34 billion as soon as next year.

Additionally, this megaconstellation project has also drawn attention in the military sector, where the Pentagon awarded a $28.7 million contract over the next three years to study, develop and test possible military applications

Cost and funding

Back in 2018 the cost to design, build, and deploy the constellation was estimated to be about $10 billion.

Several companies which have attempted a similar undertaking in the 90s ended up in bankruptcy. However, the previous satellites weighed several tons whilst the new smaller satellites are around 260 kg (570lb), which is crucial to lower the cost per unit.

As building rockets requires massive amounts of investment, SpaceX has continued to raise capital over the years. After fundraising $3.4 billion since inception, in August 2020 the firm secured an extra $1.9 billion, doubling their initial offering due to strong demand, and likely guaranteeing the health of the expensive programme for 12 to 18 months.

Competitors

Now, as the cost to launch satellites has fallen and demand for accessing the internet has increased globally, there has been an emergence of competition amongst several private firms:

  • Oneweb: the most ambitious project alongside Starlink, the firm was backed from inception by Airbus, Japan’s Softbank and Virgin Group owner Richard Branson. After launching 74 of the 648 planned satellites, financial difficulties forced Oneweb to furlough much its staff and file for bankruptcy in March 2020. However, after securing over $41 billion in new funding (including the UK government, who will hold 42% in the enterprise), in the last few weeks it has emerged from Chapter 11 bankruptcy and resumed the deployment of its constellation.
  • Kuiper: subsidiary of Amazon, in July 2020 announced their intention to enter the race by investing over $10 billion in Project Kuiper, after been approved to deploy over 3,200 satellites internet constellation over the next decade. However, it is yet to confirm whether they intend to sell broadband services directly to consumers.
  • Azure Orbital: funded by Microsoft, the company is designed to compete with Amazon Web Services by allowing external companies to use Microsoft’s ground stations to connect with their satellites.

Challenges

There are a few significant challenges Starlink faces in its bid to revolutionise internet connectivity across the globe:

  • High astronomy pollution: astronomers claim that the number of visible satellites will outnumber visible stars and their brightness will severely impact scientific observations. As by default Starlink’s satellites change their orbits autonomously, observations cannot be easily scheduled to avoid them. Additionally, there are growing concerns that megaconstellations could litter low Earth orbit with hundreds of dead satellites, this is, those which had lost contact with ground control teams.
  • Possibility of satellites colliding: to avoid potential impacts, collision avoidance manoeuvres are performed three times a day, with estimations suggesting this number will increase to eight an hour if all planned mega constellations are launched. If two satellites crash, they could produce thousands of debris pieces which could potentially hit other satellites or even the Earth. In 2019, a near miss took place when a SpaceX satellite did not move and almost collided with a European Space Agency (ESA) one.

As countermeasures to tackle those challenges, Starlink have lowered the altitude of its satellites to about 550 km, changed satellites coating to reduce their albedo (measure of how reflective a surface is) and will provide on-demand orientation adjustments for astronomical experiments.

Potential valuation

Starlink has proved so far to be ahead on the satellite internet race due to its independent building and launching of spacecrafts, with cost efficiency still to be achieved by its competitors. Furthermore, Starlink has safeguarded sufficient funds to ensure the business can operate for the foreseeable future.

By securing a substantial market share, Starlink could become self-sustaining soon. With revenues projected to reach $30 billion to $50 billion by 2025, the initial substantial cost of building the satellite constellation, estimated in $10 billion, could be offset in the coming years.

Recently, investment bank Morgan Stanley has estimated Starlink’s valuation to be around $81 billion dollars, nearly doubling the figures announced during summer, based on a revised outlook of 364 million subscribers by 2040 and an investment of $240 billion required to build out infrastructure.

The key question is, can Starlink fend-off competition, raise additional capital and attract the hundreds of millions of customers needed to achieve its goal?

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How do IPOs work?

IPOs – short for ‘initial public offerings’ – happen when a company decides to list its shares on an exchange. This means the public can then buy or trade the shares. IPOs can create a lot of public interest, especially if the company is doing well. To learn more about IPOs and how they work, watch this short video.

IPO trading and investing risks

Various risks are involved in trading and investing. With IPOs, there are additional risks to be aware of. These include:

  • Not knowing about information that’s critical to a company’s share price, eg ongoing legal cases and intellectual property that isn’t patent protected
  • Factoring in trading history in decision making is limited or not possible with companies with a short trading history, or none at all
  • Market expectations which do not materialise
  • Companies not reaching their target market capitalisation

Having an understanding of all relevant information is crucial in avoiding trading and investment risks. When trading or investing in IPOs, some documents that are useful include company prospectuses and admission documents.

Page last updated: 23/09/2022

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1Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
2Based on revenue excluding FX (published financial statements, October 2022).