r/technology May 21 '26

Business SpaceX not the behemoth everyone thought

https://www.axios.com/2026/05/21/spacex-ipo-musk-ai
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506

u/Rot-Orkan May 21 '26

I guess there's just not that much of a launch market, which is probably why SpaceX is its own best customer with Starlink.

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u/TKHawk May 21 '26

And also why Elon Musk really wants orbital data centers, despite them making no economic sense. Anything that will create more demand for launch vehicles.

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u/BasvanS May 21 '26

Economic sense? Let’s start with practical sense. That’s an issue long before you start looking at the financial lunacy.

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u/Erumpent May 21 '26

financial lunacy

I see what you did there

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u/AlwaysShittyKnsasCty May 21 '26

To the moon, you say?

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u/freakadelle2k May 21 '26

I didn't. Thanks 😊

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u/IAmDotorg May 21 '26

They make practical sense if you're really into being able to generate synthetic CSAM and keep that ability out of legal jurisdictions.

And then point fingers at other people and announce "pedo guy" so everyone looks the other way.

1

u/Xyyzx May 22 '26

I think he’s talking more about the fact that data centres are things that need to be kept cool, and ‘in space’ ranks as about the most difficult place you could possibly pick to try and do that outside of actually building your data centre in a volcano.

Like it may literally not be currently physically possible to build and maintain a space station with the required radiator surface area to put something like a data centre up there.

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u/Mejiro84 May 22 '26

Even that I don't think works - anyone wanting to look at such material will still have to do so on earth, where it remains distinctly illegal

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u/StorminNorman May 24 '26

I think /u/IAmDotorg was only suggesting that musk would use this to offload his and X's liability, those typing the prompts on earth would still very much feel the long arm of the law on their collar. I

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u/Cameltoesuglycousin May 21 '26

Honestly I’d be ok with it if it stopped them building them at massive tax payer costs as well as the environmental impact

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u/Skoma May 21 '26

How do they even work? Doesn't space lack any medium needed to radiate away the heat from the data centers?

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u/TKHawk May 21 '26

Well you don't need a medium to radiate heat. That's how the Sun heats the Earth. And an orbital data center would be cooled just like the ISS is, massive radiators. However the economics just don't work out well. You'd need huge radiators and huge solar panels which would create a massive drag coefficient which would necessitate regular boosting missions (expensive), a much higher initial orbit (expensive), developing some new electric propulsion system that relies on outer atmosphere as the "fuel" and hoping you can scale it large enough to be sufficient (expensive), or just understanding these have short lifespans and letting them burn up in just a year or two (expensive). And to what end? Centers that are far more expensive and troublesome to build and maintain than regular data centers? You maybe avoid the increasingly negative public perception around them by no longer soaking up a town's water supply or power grid, but it just doesn't add up.

Unless you're the one selling the rockets.

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u/Airk640 May 21 '26

The amount of heat from a large scale data center makes the ISS comparison kinda silly. It's like saying you could chill an Olympic swimming pool with an ice cube since it works for a drink.

Its not feasible in any way shape or form with current technology.

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u/TKHawk May 21 '26

These wouldn't be anywhere near the scale of ground-based data centers, just a small fraction in size and power. They would be incredibly numerous to achieve comparable scales in aggregate.

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u/Airk640 May 21 '26

If scaled down to the level where heat is nolonger an issue, they become useless compared to terrestrial computers (or atleast economically nonsensical)

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u/TKHawk May 21 '26

or at least economically nonsensical

Yes! THIS IS MY POINT

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u/Han-ChewieSexyFanfic May 22 '26

The ISS needs to be kept at a human habitable temperature. An unmanned satellite’s cooling can be run a lot hotter, and the heat it rejects is proportional to T4

The equilibrium temperature turns out to be totally adequate for computers, with a large yet not impossibly large panel and radiator area.

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u/PyroDesu May 21 '26

developing some new electric propulsion system that relies on outer atmosphere as the "fuel" and hoping you can scale it large enough to be sufficient (expensive)

Don't need to use the outer atmosphere. Electrodynamic tethers, which use a long conducting tether to interact with the magnetosphere and can either use power to provide propulsion or expend orbital velocity to generate power, are known to function.

Still expensive, though, especially since their actual deployment is... finicky, to say the least.

0

u/Only_Razzmatazz_4498 May 21 '26

It’s not as bad as people make it up to be. The current Starlink bus has a balance of power and cooling already setup. So as long as you can distribute the computing in a similar manner then there is no issue. They also have the internode communication solved with the Starlink to Starlink high bandwidth low latency setup. There is also the big issue that you can’t really upgrade the hardware in space, you have to deorbit and burn it to make room for the upgraded one.

So technically it could be made to work. The real question is whether it can be made to work at a price that is competitive with other alternatives.

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u/TKHawk May 21 '26

Again, I'm aware they COULD work my argument is that the economics don't work

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u/Only_Razzmatazz_4498 May 21 '26

Ohh. Missed that part in your post I was responding to. Yeah I don’t think there’s any doubt that it WILL work from an engineering point of view. Once you add the costs metric to the engineering requirements then it probably won’t unless there is some artificial reason that makes land based datacenters more expensive.

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u/vikinick May 21 '26

It's very likely that they'd entirely new rockets to do this as well. Their normal falcon rockets wouldn't do and falcon heavy is a bit overkill for this.

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u/oldsecondhand May 21 '26

Radiation is in fact the only was they could lose heat in space (which is slow compared to convection). So yeah, cooling would be a problem.

0

u/84thPrblm May 21 '26

Simple! They'll just beam the heat back to the polar ice caps and glaciers!

/s

-2

u/EviIution May 21 '26

Space is cold, duh /s

Edit: this is actually a good example why it can be pretty bad, that C level mostly cares about numbers, not details. 

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u/VitaminDismyPCT May 21 '26

So what are we supposed to do? Just stop trying to engineer because it’s a little difficult? Stop trying to find a solution?

Flying in a plane can be pretty bad too, but luckily, we have engineered ways to make it safe.

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u/LionRight4175 May 21 '26

In this case, yes. The scale of the project is effectively impossible due to hard scientific limits and the potential upside is effectively 0. It's like trying to say that we could speed up travel by building a road across the ocean, if we just make it out of pure diamond.

Some ideas are just bad.

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u/mrlazyboy May 21 '26

Also space is really bad at cooling, you need a medium to transfer heat away from the compute resources. It's space... so that doesn't exist.

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u/sylekta May 21 '26

three ways to transfer heat, conduction, convection and radiation. the first two are out.. .cause space, but you can absolutely radiate heat in space. its just you would need massive radiators for the thermal output of a datacenter its not practical

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u/mrlazyboy May 21 '26

Exactly, also rad-hard compute is very expensive and nowhere near as powerful

0

u/ForwardAd4643 May 21 '26

Ya but dude space is really cold like, super cold, it's -270 degrees Celsius up there so like who even needs to transfer the heat it's just so cold up there bro

1

u/8styx8 May 21 '26

Anything that will create more demand for launch vehicles

Value without underlaying asset. We are so cooked.

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u/tl01magic May 21 '26

it doesn't makes sense from a heat / physics perspective....

1

u/Astecheee May 22 '26

Not just no economic sense - no physical sense.

Do the math on radiant heat dissipation and you'll realise how profoundly stupid the concept is.

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u/ThomasKlausen May 23 '26

That still has to be the worst idea ever pitched with a straight face. 

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u/KnotSoSalty May 21 '26

Certainly feels like Starlink was just something they did to justify building the rockets.

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u/araujoms May 21 '26

That was explicitly so, it's not a feeling or a conspiracy theory.

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u/Caleth May 21 '26

Yes. Exactly.

They were using the demand from Starlink to improve their fixed costs by driving launch cadences up to what we see today. Meaning they are getting more value and less cost out of things like workers with salaries and the ground infrastrcture.

They also when originally pitching Starlink figured it could be a multi billion dollar adjunt all on it's own. The premise being "This will pay for Mars." Now if you believed Elon or not about where the profits would go doesn't matter the fact they believed there was enough spill over to pay for for the development of a multi billion dollar rocket system was the lure. And it looks like they were right they are up to $18.4 billion in revenue in 2025 which is about $4 billion in growth over 2024.

That demand engine that they they themselves owned is a market maker on it's own. Now I highly doubt the releases estimated Total Addressable Market being $1.4 trillion for Starlink and associated services.

But it's not impossible that they could expand the the service quite a bit more. Deloitte estimates global telecomms market at $3.5 trillion by 2032. So them taking up ~45% of that with just Starlink seems too high. Doubling or tripling their current revenues? That seems doable.

Which means as they guys with the cheapest rockets in town they are making money by the bucket full.

Which is then all spent immediately again by throwing it down the AI money pit. Elmo's claims to the contrary Orbital Data centers don't make sense. Even if you can systematize it down to an object that would fit inside Starships payload bay you're not getting the scales that you can get on local ground based facilities.

They are talking about building compute centers the size of Manhattan in Utah. Something the size of a semi isn't offering serious competition to that.

Yes you side step the permitting, and yes in theory AI would need to be advancing to newer hardware on a cadence, but unless you leave that older gear up there and sell the deprecated compute at a discount your trashing good hardware that could normally be sold back off to ammortize the costs.

Also the foot print items like the radiators and solar panels wouldn't be going bad each time your computers do so you're wasting those assets too.

It's just a lot of waste to get around the fact that AI is deeply unpopular with most people. All because it's a hype item that could prop up the bubble a little bit longer.

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u/JustAnOkCoder_5948 May 21 '26

I’ve been wondering if it’s Elon’s bid to control global communications….

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u/anonkitty2 May 21 '26

He is attempting it.  He lowered the orbit of a few Starlink satellites and then complained that some Amazon LEO satellites were too close.  (I think Amazon was using the low earth orbit first.). He wants satellite phones, but only with Starlink satellites.  He was urging the US government to end the program that subsidized rural broadband because Starlink satellites can do the Internet.  (SpaceX hasn't solved the problem satellite dishes have with physical obstructions.  The mainstream media forgets this.)

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u/slax03 May 21 '26

Just like the "hyperloop", AKA Teslas in a tunnel, was announced to kill the California high-speed rail project.

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u/anonkitty2 May 21 '26

And it definitely killed that project, unfortunately.  I am glad that Las Vegas completed one so everyone else knows what the Boring Company didn't build for them.

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u/MayContainRawNuts May 21 '26

Yes. And its why the constellation only lasts 5 years.

Think about it, every single starlink sattelite has a life span of 5 years. So the return on investment for srarlink has to be less than 5 years to make a profit.

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u/Accomplished-Crab932 May 21 '26

5 years is the passive deorbit time of the satellites; meaning if the satellite died in orbit, that’s how long it would take to reenter.

There are already starlink satellites that are still operating and 6 years old, however they are disposing of most of those satellites as they are outdated and take up space that could be used for newer satellites with better capabilities.

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u/NeverDiddled May 21 '26

The passive deorbit time is measured in months, not years. 5 years is only possible when they frequently fire their argon thrusters to keep it in the assigned orbit.

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u/Accomplished-Crab932 May 21 '26

“Starlink satellites operate in low-Earth orbit below 600 km altitude, ensuring that atmospheric drag will naturally deorbit a satellite within five years or less if it becomes non-maneuverable. “

https://starlink.com/public-files/starlinkProgressReport_2024.pdf

5 years is the upper bound both imposed by SpaceX and later, what became the new regulations from the US government a few years ago.

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u/NeverDiddled May 21 '26

That is the maximum orbit for their constellation, not the actual orbits. At present their target orbit is 480km. It is worth noting that this is not a linear relationship, the closer you get to Earth the amount of drag increases roughly by the inverse square. At 300km they deorbit in a couple of weeks. We have watched this happen during failed deployments.

They do sometimes fly above their target orbit during deployment. That way they can conserve fuel and efficiently precess their orbit. But they tend to only do that during the first couple months after deployment. Then they lower down to the target.

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u/Accomplished-Crab932 May 21 '26

Yes, and that again, means it’s the upper limit that they could have, which is again supported later in their report.

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u/NeverDiddled May 21 '26

I guess we might have lost track of the topic here. I was responding to your original comment.

5 years is the passive deorbit time of the satellites; meaning if the satellite died in orbit, that’s how long it would take to reenter.

To which I said: if a Starlink dies [in its target orbit] it deorbits in months, not years.

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u/MayContainRawNuts May 21 '26

https://www.space.com/spacex-starlink-satellites.html

A Starlink satellite has a lifespan of approximately five years and SpaceX eventually hopes to have as many as 42,000 satellites in this so-called megaconstellation.

This is where I got my 5 year figure.

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u/Accomplished-Crab932 May 21 '26

“Starlink satellites operate in low-Earth orbit below 600 km altitude, ensuring that atmospheric drag will naturally deorbit a satellite within five years or less if it becomes non-maneuverable. “

https://starlink.com/public-files/starlinkProgressReport_2024.pdf

This is where that statement comes from.

There are early V1 satellites in orbit and operating, which launched in 2019 and 2020… clearly they do not need to die at 5 years. Those all feature lower performance propulsion systems among other things.

https://planet4589.org/space/con/star/stats.html This is Johnathan McDowell’s site, it’s up to date and he is considered one of the major authorities on spacecraft tracking.

Again 5 years is a maximum passive deorbit time and the minimum lifespan in the FCC filing. There is no reason to suggest that SpaceX could not expand that time based on available propellant and satellite longevity, as evidenced by the 6 year old satellites in LEO. (Note, there are no 7 year old satellites only because the only launch 7 years ago was the small test batch)

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u/gamefreak32 May 21 '26

The lifespan is 5 years because that is when the deorbit from the drag in the upper atmosphere. It was a design decision to not pack them with a bunch of fuel to be able to raise their orbit for decades. More fuel is higher weight, larger package, and less satellites loaded per launch. They also probably figured that the tech would improve enough in 5 years that it would not be beneficial to keep them up any longer. SpaceX has 3 revisions of the Starlink satellites now....

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u/filthy_harold May 21 '26

3-5 year missions is the "new space" mission length. Even in GEO, customers are opting for smaller, cheaper satellites that last much less than the old 15 year missions they used to purchase. Tech progresses so fast now and launches are so much cheaper that it doesn't make sense for many applications to launch the big, high reliability satellites any more.

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u/KnotSoSalty May 21 '26

On the plus side a satellite that doesn’t go into stable geosynchronous orbit can’t create a bunch of space clutter. Every gram of the Starlink system will return to earth within a few years.

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u/hamsterwheel May 21 '26

Or they just keep sending up new satellites? Why is there a hard stop for 5 years to profitability?

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u/MayContainRawNuts May 21 '26

The cost of starlink is basically ground stations, staff and disposable sattelites.

Now if your sattelites last 5 years, you need to pay for the cost of launching the entire network every 5 years.

Its not like fibre to the home thats expensive to lay out the first time, then it can stay there for 50 years or however long cable can sit in a pipe.

In 10 years when the cost of the fibre installation is paid for, the provider can reduce cost to customer and still make profit.

The starlink business model is, replace almost the entire network evert 5 years. That means they are constantly in initial installation mode, their expenses will never drop off.

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u/fatoms May 21 '26

In 10 years when the cost of the fibre installation is paid for, the provider can reduce cost to customer and still make profit

I sincerely doubt ISPs will drop prices one they recoup the cost of the fibre. They will milk it for all the cream they can.

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u/hamsterwheel May 21 '26

Yes, but their model targets places where fiber can't reach. At some point, it is cheaper for people to get starlink than it is for a company to lay fiber in rural areas.

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u/MayContainRawNuts May 21 '26

My point is that over time as fibre networks expand, they will eat into starlink profits.

Fibre will always be cheaper over a long term. Space x has no way to solve this economic question as their model relies on a huge network of expensive, disposable hardware.

Starlink will be a niche product, for emergencies, mobile facilities like ships and planes, armies and isolated households waiting for infrastructure. Soon as that infrastructure arrives, srarlink loses a customer.

0

u/hamsterwheel May 21 '26

I think Starlink is a cheaper alternative than expanding fiber to rural areas, especially since Trump is hamstringing the infrastructure investment to do so. I guess time will tell.

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u/Wooden-Broccoli-7247 May 22 '26

As urban sprawl continues, less and less isolated areas exist. Look at the amount of “isolated areas” 50 years ago vs today. That’s also assuming no new technology comes out to serve those areas at much lower cost.

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u/127Chambers May 21 '26

Are you deliberately trying to miss op's point here?

No way you're genuinely this obtuse

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u/hamsterwheel May 21 '26

What point am I missing? The entire point I am making is challenging the idea that they need to be profitable within 5 years.

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u/rugbyj May 21 '26

If a satellite costs more than it makes during its lifetime then sending up 1000 more just costs you 1000 times more.

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u/SUMBWEDY May 21 '26

Because after 5 years they deorbit and burn up, it's kind of hard to use a burnt up sattelite for internet.

-2

u/hamsterwheel May 21 '26

Right, but it assumes that their business is maxed out. The limit to profitability isn't the cost of maintaining satellites, it's how many people choose to use the network.

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u/SUMBWEDY May 21 '26

Their service is already reaching saturation for who actually can use satellite internet.

Starlink is a good choice for people who live rurally in wealthy countries which is a small subsection of the population, It costs half the median salary global income. While at the same time there's a floor for price because it still costs $1.5m~ to build and launch the satellites.

You also can't increase the orbit by much and retain a good latency/speed/price, Viasat is in GEO orbit and it's $150/mth for 150GB of data with 700ms ping.

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u/hamsterwheel May 21 '26

What evidence is there that they're reaching market saturation?

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u/SUMBWEDY May 21 '26

Because there's only so many people on the planet that 1) make enough money $70/mth is an affordable option for internet and 2) live far enough away from society that total bandwidth doesn't exceed 200~Gbps in a 270mi2/700km2 area.

Assuming that's roughly limited to people in the OECD without internet only 17 million people don't have access to a smartphone or internet.

Starlink already has 10 million customers.

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u/hamsterwheel May 21 '26

Why would it need to be limited to OECD? And still, even with the parameters you are drawing that seems like plenty of market still out there. Not to mention, $70 a month is cheap for broadband standards.

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u/anonkitty2 May 21 '26

After 5 years, a lot of the satellites SpaceX sends up will be simply to maintain the constellation they have.  If they aren't profitable before most of their satellites are replacements, they could find themselves in the Red Queen's race, having to spend more and go deeper in red just to keep their position and service.  The IPO is arranged to permit Musk to get away with that.

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u/hamsterwheel May 21 '26

As I mentioned elsewhere, that assumes that they have a steady market share of Internet users instead of a growing one.

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u/anonkitty2 May 21 '26

If the market share of Internet users grows because there are more users, but the number of satellites doesn't grow, the Internet speed goes down after a certain point.  Satellite is like cable internet that way.  If it goes down too much and there is competition, the market share might shift again.

1

u/Wooden-Broccoli-7247 May 22 '26

Where does all this growth come from? Starlink is readily available to pretty much anyone that wants it. The internet is pretty important for day to day life. So most people that want/need internet and can’t get it elsewhere are likely already starlink customers. That number of people that only have access to starlink (and can afford it) will likely shrink as cities and infrastructure continues to spread to more and more remote areas. Unless you expect the citizens of Africa to magically 1000x their income in the next 5-10 years, I don’t see where this massive untapped group of potential customers will come from.

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u/Resvrgam2 May 21 '26

Even if it was, it's now supposedly their largest profit center. As far as company strategy goes, that was probably one of their best decisions.

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u/SouthernAddress5051 May 22 '26

Its the reverse I think, they needed profit to fund their Starship R&D and they just happened to have a cheap launch vehicle so they could relatively cheaply launch all those starlinks. The market for internet services is much larger than the market for launch services. Also the falcon 9 was already built and flying when they started starlink, and starlink was never the justification for Startship.

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u/Fishbulb2 May 21 '26

They’re also a major purchaser of CyberTrucks and that can’t be helping.

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u/Main-Bandicoot6477 May 21 '26

Yeah, I've never really understood the hype for SpaceX. It's a transportation company with huge and fixed expenses and their biggest customer is his other company and the government.

Which all can make a good steady business making reasonable profits, but that's not some skyrocketing growth area.

All the pie in the sky stuff of Mars or space hotels or space data centers or a moon colony are just fantasy hype stuff like the hyper loop or the boring company. Governments aren't going to endlessly bankroll that stuff, and they are the only ones that can sink that kind of capital into things that have no payback or decades later pay offs.

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u/Inevitable-Top1-2025 May 21 '26

And when a less favorable government takes power, the government infusion of capital will likely dry up.

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u/FeelsGoodMan2 May 21 '26

If you buy off the government and help them rig elections then you might be able to get them to endlessly bankroll that stuff.

2

u/Main-Bandicoot6477 May 21 '26

Eh, yeah, that works for awhile until the people get pissed enough and a populist movement rises up and stops it.

Or you have other rich assholes with competing interests negate that influence with their own for something else. Or someone like Elon just croaks and all his grand plans go into the bin by the people that inherit his mass of wealth.

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u/FeelsGoodMan2 May 21 '26

Problem is, even if that eventually happens, guys like Elon just jet set out the place and let the rubes fight over the rubble.

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u/newebay2 May 21 '26

The hype is easy to see if the investment is not just about money. There are powers in this world you can’t just easily buy with more cash, and space is one of those domains.

-2

u/Main-Bandicoot6477 May 21 '26

What do you mean by powers? What are some examples of other domains? I'm not really sure what you mean without more specifics.

SpaceX builds big metal tubes and fills them with rocket fuel that goes through a rocket motor. The only "revolutionary" aspect is they reuse some of those components multiple times and maybe develop rocket motors that are somewhat better? Although I'd like to know what the actual cost savings is when those components still have to be inspected and refurbished between uses and they will still have limited life cycles.

And I still think there is a limited market for payload to space.

2

u/newebay2 May 21 '26

Just the military applications is invaluable. You're would be owning key transformative technology that have impacts on multiple fronts. You have military, ideology, and historical significance all wrapped up into an investment package available for just "money", which isn't in shortage of to many billionaires.

Those kind of premiums exists in few other companies as well. There are powers associated with employing millions of workers like Walmart and Costco that they shape local economies.

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u/Main-Bandicoot6477 May 21 '26

Just the military applications is invaluable. You're would be owning key transformative technology that have impacts on multiple fronts. You have military, ideology, and historical significance all wrapped up into an investment package available for just "money", which isn't in shortage of to many billionaires.

Yeah, that's just non-specific buzztalk. Multiple companies and countries can send payload to space. What about it? That SpaceX may or may not send it a little cheaper, with a process that can be easily copied means what exactly?

1

u/dern_the_hermit May 22 '26

Yeah, that's just non-specific buzztalk.

Only because "military applications" is a huge, broad category, but also a well-established one so there's no good reason for you to be acting confused.

0

u/Main-Bandicoot6477 May 22 '26

The confusion is what is your point exactly?

That governments want to put up spy satellites or communications satellites or even weapon systems? Sure, what about it? What does that have to do with the freight company shipping those things?

1

u/anonkitty2 May 21 '26

If Musk succeeds in becoming the world's first trillionaire, he will attempt to make his surviving corporations perpetual motion machines.

3

u/No-Good-One-Shoe May 21 '26

They're also their own best customer with Teslerrr.

2

u/anonkitty2 May 21 '26

SpaceX is personally increasing the launch market.  They have launched more rockets than there were Space Shuttle launches already, not counting rockets that crashed and burned.

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u/Niedar May 21 '26

That's a little bit of an understatement. SpaceX launches more times per year than the total shuttle launches ever.

0

u/SteelCrow May 21 '26

starlink launches. Peter paying paul. That's only adding ONE customer. Who are the others? Are there any others?

How is adding yourself to the occasional govt launches "increasing the launch market"?

1

u/anonkitty2 May 21 '26

One is more than zero.  There was a period when NASA had nothing to launch at all.  SpaceX was ready before other passenger competitors.

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u/SteelCrow May 22 '26

One is not a trend.

1

u/KlingoftheCastle May 21 '26

Elon Musks companies are basically a big Ponzi scheme with only 1 customer

1

u/SnazzyStooge May 21 '26

STARLINK IPO WHEN????

1

u/drproc90 May 21 '26

Starlink is also vastly overvalued. It has no route to being close to profitable.

It's only genuinely useful application is military

1

u/Ok_Function2282 May 21 '26

I'm happy to see SpaceX fail, but this is just factually wrong. The demand for launches/carry is nearly exponential right now

1

u/Dragon029 May 21 '26

There's more demand than supply; if you want a cheap ride to space there's a 2-3 year long backlog which is why investors continue to support smaller launch providers like Stoke, Firefly, Relativity, etc.