SpaceX's S1 Is Out
SpaceX's S-1 is public. The valuation is high. The audit is gone. The disclosure window just got longer. The party has begun. Read the footnotes.
Today, three things happened. None of them were announced together. All of them belong to the same thread.
Disclaimer: All analysis here is speculation and speculation only. Written for fun and intellectual curiosity. Not financial advice. Not an accusation of anyone, any organization, or anything. Just someone connecting dots and asking questions when there is nothing better to do.
Before we get started, I'd suggest you read this article: https://posts.ejsays.com/the-landlord-the-exit-and-the-ghost-of-houston/
It sets the baseline of what we knew about the S1 then. Today, we know just a little more. Let me tell you one by one.
One.
The S-1 went public. According to some reports, the valuation is no longer $1.75 trillion. Market chatter now puts it above $2 trillion, an intriguing signal of where the market wants this to go. The retail allocation reportedly remains 30%. The party invitation is still in your inbox. The price of the ticket went up while you were reading the menu.
Some of the names holding tickets have been holding them since 2022, when everyone agreed Elon Musk had overpaid for Twitter. They were wrong, or rather, they were early. Through a series of mergers nobody fully anticipated, those early Twitter backers now collectively own five percent of SpaceX. In a $2 trillion scenario, that is $100 billion. The article calculated a nearly 200 percent return on what once looked like a disaster. The names are in the article. Read the footnotes.
Now, think about those who got in after these names, and suddenly $2 trillion sounds much more reasonable.
For the underwriters, there was never really a choice. No, not really.
Two.
Starlink made $11.4 billion in revenue last year. $4.4 billion in operating profit. A 63% EBITDA margin that analysts called extraordinary. What the S-1 does not tell you cleanly is what SpaceX charged itself to put those satellites up there. 75% of its launches last year were internal Starlink deployments. The launch division is both a business and the infrastructure provider for the only business that makes money. When the landlord sets the rent for his own tenant, the profit margin is a choice, not a result.
Starlink is real. The number needs someone more experienced than me to decode.
About a month ago, this column noted that Starlink's moat was already narrowing. I called out Amazon's Kuiper as the key competitor it will have to face. Today, Delta confirmed I wasn't hallucinating. Delta Air Lines chose Amazon's Kuiper over Starlink for its fleet. Musk criticized the decision publicly, which is quite rare. Usually CEOs will pretend they are civilized and may even congratulate their competitors, stressing it is for the greater good of the entire industry. Let's consider it just a little bit more. Aviation is Starlink's highest-ARPU segment. It generates around $300,000 per aircraft per year. Delta is one of the world's largest airlines. The default choice of wi-fi provider is no longer default. I'd say this was always going to happen, because the moat was never as wide as the margin suggested.
And wait for the upcoming HAPS stories. Yes humans are unleashing new tech to get people connected anywhere, any time. It is a greater good for the entire industry.
Three.
Also today.
According to the Guardian, the Justice Department amended an agreement to permanently bar the IRS from auditing Trump’s past tax returns, extending to his family, company, and related entities for pre-agreement filings. The word "related" has no defined boundary in the filing.
And separately, the SEC announced that large companies will receive a five-year on-ramp before stricter disclosure rules apply. SpaceX goes public in June. For five years after that, the details we most want to see may remain the details we cannot find.
The audit that cannot happen will not happen. The disclosure that was already thin just got a longer runway.
The door is closing. The champagne is opened. Let the party start.
You! Hold the door open!