SpaceX’s latest IPO and Starship rocket take a look at flight delivered two large knowledge factors that supply a sensible imaginative and prescient for the approaching years — and one which will disappoint each the corporate’s boosters and its critics.

Hidden behind the implausible expectations for AI enterprise earnings and plans for a moon base is a extra grounded actuality: An expendable Starship might hold SpaceX in enterprise, however doesn’t obtain the fee reductions — or frontier enterprise fashions — Elon Musk is betting on.

SpaceX is many companies, however proper now just one is producing vital income. Starlink, its satellite tv for pc communications community, is the tent pole of the agency’s public providing. The highest line is pretty unimaginable; SpaceX’s connectivity enterprise generated $11.4 billion in income final yr, the majority of the corporate’s earnings.

However beneath, you possibly can see the capital expenditure treadmill that scared earlier entrepreneurs away from this mannequin. SpaceX wants to switch a few fifth of its satellites yearly simply to keep up its present degree of service. It has invested extra in its satellite tv for pc enterprise ($11.4 billion) for the reason that starting of 2023 than it has constructing Starship and its launch infrastructure ($8.4 billion).

SpaceX’s S-1 submitting with the U.S. Securities and Alternate Fee predicts prices will proceed rising, however expects that enhancements to its expertise will permit it to cut back them as a proportion of its income.

Musk has stated that Starship is the important thing to maintaining Starlink’s prices underneath management, even saying that SpaceX might go bankrupt with out the automobile’s potential to switch these satellites cheaply. In that context, a notice that stood out in SpaceX’s S-1 was the primary acknowledgment that full reusability of Starship isn’t essential to launch the brand new technology of Starlink satellites. However with out full reusability, the fee will go up, making the enterprise much less enticing.

“If this reusability isn’t achieved then the price of launch on Starship is probably not a lot decrease than Falcon 9, even when the complete 100 ton functionality is realized (which is not at all a foregone conclusion),” satellite tv for pc market analyst Tim Farrar wrote in a notice to shoppers final week. “The price per launch could also be as a lot as $100M (i.e. $1000 per kg) whereas tempo stays constrained by the speed at which second phases could be manufactured and first phases could be refurbished.”

Final week’s take a look at flight of the third model of Starship and its booster bore these considerations out. The most recent rocket’s maiden flight noticed points with a key functionality for reusability — relighting the Raptor rocket engines on each the booster and Starship as a way to make a managed return to Earth. Starship did, nonetheless, deploy a set of dummy satellites and two take a look at autos in house.

That helps sq. SpaceX’s prediction that it’s going to start launching a brand new technology of higher-throughput Starlink satellites 60 at a time, a twentyfold enhance in capability in comparison with a single Falcon 9 launch, later this yr. At first look a traditional instance of Musk’s timelines, it could really be an expectation that preliminary launches will expend the Starship. If that’s the case, SpaceX won’t be capable of depend on as a lot free satellite tv for pc money as anticipated, and its plans to launch house knowledge facilities will turn into untenable till the rocket is reusable.

On the similar time, SpaceX’s S-1 exhibits that Starlink’s progress is slowing.

SpaceX’s complete addressable market calculation relies on its potential to supply service to each fixed-broadband subscriber or cellular handset on the earth. That’s unlikely, although, as a result of Starlink isn’t competing on worth with terrestrial fiber. The remainder of the doc suggests SpaceX continues to see direct-to-device as a complement, somewhat than a alternative, for terrestrial cellular suppliers.

Starlink has simply over 10 million subscribers, greater than another satellite tv for pc communications community. However Farrar notes the speed of person progress fell over the course of the primary quarter of 2026. Quilty Area, an area consulting agency, projected earlier this yr that SpaceX would finish the yr with 16.8 million subscribers. That might require the corporate’s quarterly progress charge to roughly double from the place it’s now, which can be tough after latest worth will increase.

Progress issues for SpaceX as a result of its new Starlink customers are paying lower than earlier ones. Starlink’s common income per person has fallen from $99 in 2023 to $66 within the first quarter of 2026 — a change propelled by its growth into new worldwide markets the place it could’t cost as a lot because it does in developed economies. With no fast-growing person base, every new satellite tv for pc launched is making much less cash.

Elevated competitors additionally threatens Starlink. Amazon’s Leo community is approaching the dimensions required to place strain on SpaceX, though it’s ready for the Federal Communications Fee to increase a deadline that requires it to launch 1,600 web satellites by July.

Information within the SpaceX submitting presents a dark progress forecast for the corporate in addition to rivals like Blue Origin. Farrar says that if SpaceX — a lot additional forward than another firm — is seeing slowing demand, which will sign the marketplace for house broadband is smaller than the gamers anticipated.

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