Here is why SpaceX’s Starlink is not growing as Musk hoped

Starlink, SpaceX's satellite Internet service, is not growing as Elon Musk's aerospace company had predicted.

The fast-growing network of low-earth orbit satellites, Starlink, generated $1.4 billion in revenue last year, the Wall Street Journal revealed. According to the Journal, this is an increase from $222 million in 2021, but $11 billion less than the original projections.

Interestingly, the WSJ report comes on the same day that SpaceX executive Jonathan Hofeller said at a conference that he will no longer suffer losses from the production of Starlink satellite antennas, Cnbc reports.

According to documents viewed by the Journal, SpaceX’s profitability took a hit in 2022. But a report last month claims SpaceX managed to turn a profit in the first quarter of 2023.

To date, SpaceX has launched more than 5,000 Starlink satellites and continues to grow. Last June, it signed a contract with the U.S. Department of Defense for its satellite services.

In 2021, before the war in Ukraine, the U.S. billionaire said SpaceX will price Starlink when its cash flow is reasonably predictable.

Musk’s projections in 2015

In a 2015 presentation to investors, the company founded by Elon Musk initially projected that Starlink would make $12 billion and $7 billion in operating profit in 2022. Last year, Starlink reported a more than six-fold increase in revenue to $1.4 billion, but below its target.

Furthermore, in October 2022, Musk tweeted that Starlink was losing about $20 million a month to maintain its services before saying, “Even though Starlink is still losing money and other companies are getting billions of taxpayer dollars, we will continue to fund the Ukrainian government for free.”

About the production of the terminals

At the same time, Hofeller said the company is no longer absorbing the cost of the Starlink antennas it sells with its satellite Internet service.

When SpaceX first began selling its Starlink service, the company’s leadership said it cost about $3,000 each to produce the terminals.

The company improved that value to about $1,300 per terminal by early 2021, Cnbc recalls. Hofeller’s comments indicate that the terminals now cost less than $600 each. This is a savings on mass production that Hofeller acknowledged as “one of our keys to success.”

Profit achieved in 2023

SpaceX president and chief operating officer Gwynne Shotwell said earlier this year that Starlink “had positive cash flow in the quarter” in 2022. Also according to a Wall Street Journal report last month, the company as a whole made a profit in the first quarter of 2023.

Founded in Hawthorne, California, in 2002, SpaceX has carved out a near monopoly in the global rocket launch market.

Its Falcon 9 rocket flies the skies almost weekly from Florida, carrying humans to the International Space Station and carrying Starlink satellites into orbit.

Yet in 2021, Musk had said that Starlink was crossing “a deep chasm of negative cash flow” before it could become “financially sustainable,” Cnbc still reports. Although it reached a valuation of about $150 billion this summer, SpaceX’s rocket, spacecraft and satellite businesses remain capital-intensive.

Read also: China challenges Elon Musk’s Starlink: ready to launch 13,000 satellites

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