Venture capitalist Chamath Palihapitiya made a surprising prediction about the biggest business deal of 2023, suggesting that Elon Musk’s SpaceX will spin off its satellite internet service, Starlink, and take it public.

This statement contradicts Musk’s previous remarks to SpaceX employees in 2022, where he stated that a Starlink IPO was unlikely until 2025 or later.

Palihapitiya, known for his involvement in the space industry, believes that Starlink’s valuation will be at least half of SpaceX’s current private market value of $75 billion. In a recent podcast, he described the potential IPO as “yummy and delicious,” emphasizing its significance.

Throughout his career, Palihapitiya has been associated with the space industry. He notably took Virgin Galactic public in 2019 but later sold his stake in the company. His firm, Social Capital, also led the Series A funding round in Relativity Space.

While it remains unclear whether Palihapitiya’s prediction is based on inside knowledge or speculation, it has garnered attention due to his prior involvement in space-related ventures.

Palihapitiya’s forecast is controversial as it contradicts the statements made by Musk regarding the timing of a Starlink IPO. Musk has previously stated that the IPO would be painful before the predictability of Starlink’s revenue, indicating a likelihood of it happening no earlier than 2025.

According to an audio recording obtained by CNBC, earlier this month, Musk updated his company’s employees in an all-hands meeting and stated:

“I’m not sure exactly when that [IPO] is, but maybe it will be like — I don’t know, just guessing — three or four years from now.”

The prediction stems from Palihapitiya’s analysis of the current situation surrounding Musk’s businesses. He stated:

“Musk talked about this on our pod, about the difficulties and the dangers of margin loans and all of that stuff. He’s going to create breathing room for himself. This is the simplest and most obvious way for him to do it. It’ll give him a ton of more dry powder.”

Additionally, with Tesla’s share price declining and the Twitter deal not looking good on the books, Musk’s leverage is increasing. Palihapitiya suggests that an IPO would provide Musk with financial flexibility, potentially prompting him to spin off Starlink sooner than initially planned.

SpaceX’s Starlink internet service comprises of a ground terminal (right) and antenna for high-speed satellite internet. (Source: Starlink)

Starlink’s growth has been noteworthy. As of the end of 2022, the service had reached the 1 million milestone in terms of users worldwide, with significant user growth witnessed in recent months. In June 2021, Starlink reported 69,420 active users, up from just 10,000 subscribers in February 2021.

However, the growth rate had slowed by the end of 2021, raising concerns about the future of the space company. Yet, Starlink rebounded and surpassed 145,000 users in early 2022, reaching 1 million users within a year. In a May 6 tweet, the company stated that it had over 1.5 million customers worldwide.

Starlink’s involvement in the Ukraine conflict and its announcement of Starshield, a satellite model for military and government payloads, have garnered considerable media attention. Furthermore, CNCB reported that SpaceX recently raised $750 million in funding, valuing the company at $137 billion.

Palihapitiya believes that if Starlink does go public in 2023, its valuation would represent at least half of SpaceX’s total value.

Source: Invest in The Web

According to Invest In The Web, the firm’s revenue estimates showed steady growth: $12 million in 2021, $300-$660 million in 2022, and a significant jump to $1.2 billion in 2023. These projections reflect the increasing adoption and potential market success of Starlink’s satellite internet service.

Should Starlink proceed with an IPO this year, it could have significant implications not only for the space industry but also for the broader financial market. Growth companies have faced challenges over the past year, and a successful Starlink IPO might signal a potential rebound and bring about more optimistic times for such companies.

While the prospect of a Starlink IPO in 2023 remains speculative at this point, Palihapitiya’s prediction has sparked interest and anticipation among industry observers.

The spiral shape in the Starlink constellation (Research Gate)

Starlink is a satellite internet constellation developed by SpaceX, the aerospace company founded by Elon Musk. It aims to provide global broadband connectivity by deploying thousands of small, low-earth orbit (LEO) satellites in space. The primary objective of Starlink is to bring high-speed internet access to areas of the world that are underserved or completely unserved by traditional terrestrial internet infrastructure.

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