SpaceX, the rocket manufacturer, boasts an internal valuation of $350 billion, positioning it as one of the most valuable private startups worldwide. However, this figure is still significantly lower than the $1 trillion market capitalization of its CEO Elon Musk's electric vehicle company, Tesla as reported by Tesla. By 2025, it is expected that SpaceX's aspirations will reveal that earthly pursuits cannot compete with its cosmic ambitions.
SpaceX embodies Musk's approach: innovate and then reduce costs to eliminate competition. While Tesla's 2006 "master plan" similarly aimed to create a high-end vehicle and reinvest profits to target the lower market, SpaceX's expansion is more rapid and challenging to rival.
Central to this growth is Starlink, SpaceX's satellite broadband network. Its success stems from two main factors. First, the development of larger, reusable rockets has drastically reduced launch costs. Second, Starlink's superior service compared to competitors generates a revenue stream that supports increased launch frequency. Currently, the company operates approximately 7,000 satellites in orbit and is adding around 60 each week. From 1965 until the early 2010s, the number of manmade objects sent into space saw minimal growth, but Starlink has dramatically changed that trend.
In the past decade, the volume of objects launched into space has surged nearly tenfold. SpaceX is emerging as a dominant player, accounting for over 85% of all orbital payloads in the first quarter of 2024, according to estimates from BryceTech. This rapid vertical integration, which includes rockets, satellites, and user terminals, places potential competitors like Amazon at a disadvantage.
While Tesla contends with strong competition from new entrants such as China's BYD and affordable fossil-fuel vehicles, SpaceX operates in a less contested environment. Starlink currently serves 5 million users across 114 countries and is expanding into cellphone services with ample capacity. Musk's ties to President-elect Donald Trump may also facilitate access to previously unattainable subsidies, such as $42 billion for rural broadband in the U.S.
The potential for growth from the current $6.6 billion is significant, as consultancy Quilty Space anticipates new revenue streams for Starlink in 2024. The projected EBITDA stands at $3.8 billion, reflecting an impressive 58% margin. TMF Associates estimates that revenue could reach $24 billion by 2030, translating to approximately $18 billion in EBITDA at the current profitability levels. With high fixed costs, an increase in user numbers could further enhance profitability.
So, what is the valuation of Starlink? Tesla is currently trading at 68 times its EBITDA, despite experiencing sluggish growth. If Starlink maintains its projected growth trajectory and is valued using Tesla's multiple, the communications division could exceed a valuation of $1 trillion by the end of the decade. This estimate does not even take into account the additional valuable ventures of SpaceX, such as its rocket operations.
Ultimately, the disparity in valuation between SpaceX and Tesla remains unclear, as does the overall worth of both companies. As the reality of self-driving technology unfolds and the competitive landscape of space exploration evolves, it will become evident that Musk's true frontier lies among the stars.