SpaceX Starlink spinoff? Why it could be lucrative for Elon Musk

Elon Musk’s space exploration venture, SpaceX , may soon be looking to the public markets to raise capital for its satellite internet project known as Starlink.

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At a private investor event hosted by JPMorgan on Thursday, SpaceX president Gwynne Shotwell said Starlink was a prime candidate for a spinoff, according to Bloomberg.

“Right now, we are a private company, but Starlink is the right kind of business that we can go ahead and take public,” Shotwell said. “That particular piece is an element of the business that we are likely to spin out and go public.”

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A spokesperson for SpaceX did not immediately return FOX Business’ request for comment.

The project aims to provide high-speed internet all across the world through a constellation of 12,000 satellites in space. It has already launched more than 200.

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Musk’s SpaceX could be testing the appetite on Wall Street for this type of investment that has already broadly received a lot of interest from private equity, Andrew Chanin, CEO of ProcureAM, which offers the world’s first pure-play space ETF, told FOX Business.

In theory, a spin-off could make a lot of sense for SpaceX. Morgan Stanley has estimated that space exploration could be the next $1 trillion industry, and the most significant near-term opportunity could come from satellite broadband internet access.

A number of other businesses have designs to carry out similar visions, including Jeff Bezos’ Blue Origin and Richard Branson’s Virgin Galactic.

Virgin Galactic shares went public at the end of last year. Shares are up more than 60 percent year to date.

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SPCEVIRGIN GALACTIC HOLDINGS INC.21.97-6.78-23.58%

That being said, time could be of the essence for satellite launches. An increasing number of scientists are raising alarm about the possibility of collision and other complications, meaning there could come a point where the government puts a moratorium on satellite launches.

An IPO would allow Starlink to raise capital and launch a bunch of satellites into orbit as quickly as possible, likely positioning it very competitively for a long period of time, Chanin said.

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And given the high interest in satellite broadband specifically, it may make sense to ultimately keep SpaceX,  which has a variety of other ambitions, private.

Further, timing could be beneficial for Musk. Shares of Tesla are up more than 78 percent so far this year, after the electric carmaker generated its second straight quarterly profit in the fourth quarter. That may add to the “credibility” of his vision and ideas, Chanin said.

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TSLATESLA INC.679.00-99.80-12.81%

However, when Starlink would go public, if it even were to happen, is not known.

When it comes to competitiveness, Chanin noted that SpaceX is uniquely positioned to conduct satellite launches. While its primary mission is to lower overhead costs, it is not only a satellite company, but it has communication and launch capabilities, which increases synergies and limits the need to deal with third parties.

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