The SpaceX IPO Sends Elon Musk And Trump’s Starlink Cronyism Into The Thermosphere – Techdirt.
Earnings, IPOs, and the like
Last week Elon Musk successfully conned America and U.S. regulators into signing off on his preposterous SpaceX IPO, which immediately generated Musk $75 billion by comically over-stating the value of SpaceX, xAI, and Starlink. Then bone-grafting the entire pile of bullshit to the U.S. economy and your retirement account under the pretense that space data centers and Mars colonization are just around the corner.
A handful of remaining useful journalists have repeatedly explained how xAI and Musk’s racist 5th place chatbot — which comprises the lion’s share of the ridiculous IPO valuation — is a gargantuan loser. Both SpaceX and xAI aren’t profitable and may never be, and the claims of Mars colonization and space data centers are unworkable bullshit designed to distract people with toddler-level critical thinking skills.
Anyway I’m sure it will go fine.
As a multi-decade telecom beat reporter I’d say I’m better positioned to talk about Starlink — the only actually profitable company in the SpaceX IPO prospectus (and that’s assuming Starlink is being honest about their financial numbers in a country too corrupt to have working financial regulators).
I’ve long noted how Starlink is great for people with no other options, but data has shown how it’s too congested to meaningfully scale. It’s also often too expensive for the sorts of Americans struggling with access. There’s also the problem with it ruining astronomical research and degrading the ozone layer. So Starlink is great for RVs or a guy with an extra cabin in the woods, but it’s not a miracle.
In terms of broadband policy, it’s supposed to be a niche solution. The kind of technology you use to fill in the gaps after you’ve pushed fiber, 5G, and fixed wireless out as far as you can into unserved areas.
But as I’ve mentioned previously, folks in the Trump administration and extended Rogan infotainment universe see Starlink as akin to magic. They think it’s just a sort of pixie dust you sprinkle over the entire of U.S. connectivity woes. There was a soggy Bulwark interview last week with Jason Calacanis that kind of reveals how deep the delusion goes in terms of what Starlink actually is:
The SpaceX IPO insists — and Calacanis dutifully believes — that it’s trivial for Starlink to jump from a niche satellite broadband solution with a little over 10 million subscribers to a massive economic powerhouse with 300-500 million subscribers. Calacanis waxes poetic about Starlink providing bandwidth to every phone in the world and surpassing even Netflix in terms of total subscribers.
But in a way that’s highly representative of modern Silicon Valley, Calacanis doesn’t actually care about how the tech works, or even if it works. Calacanis is interested in unchecked wealth accumulation, and propping up the unbridled profit-seeking of a personal friend.
The thing is: to meaningfully grow, Starlink will need to start seriously competing on price to counter competitors (like Amazon) coming into the space. But the cost of endlessly replacing LEO (low Earth orbit satellites) is immense (SpaceX says each satellite has a five year lifespan, but it’s arguably much lower). And ARPU is already dropping for Starlink as the company tries to drum up new subscribers.
Calacanis insists Starlink’s just a hop, skip, and a jump from being even bigger than Netflix. But for Starlink to even sniff those kinds of numbers, it would have to intensely compete with deeply-entrenched and politically-powerful telecom monopolies, and fiber optic broadband and 5G/6G networks less constrained by the rules of physics. They’ve also got to compete with a rising tide of community-owned fiber.
As Starlink grows its subscriber base, it’s not only going to see its ARPU drop faster, but data shows it’s going to run into new capacity constraints. That means more annoying network management practices that throttle video, limit services, and generally degrade performance. We’re already starting to see the impact of this with network slowdowns and “congestion fees” ranging upwards of $750 in some areas.
And this is, so we’re clear, a company that’s never seen fit to meaningfully invest in customer service, so as these problems grow, it’s unlikely they’ll be able to handle customer annoyance well.
Anybody claiming that Starlink is the ticket to vast riches is either lying to you or doesn’t understand how the technology actually works. Even if it can maintain its success as a viable niche connectivity option useful in rural markets and global battlezones, the high cost of maintenance means this is never going to be a major money maker. Though they clearly hope it will prove to be a semi-useful backbone for a major pump and dump scheme.
The ace Elon Musk is holding is corruption and cronyism leading to regulatory favors and massive new subsidies, but it’s not clear even that’s going to be enough.
Cecilia Kang at the New York Times has an interesting article about how the Trump FCC has been doing cartwheels trying to prop up the Musk IPO — especially as it pertains to Starlink. That has included not just abandoning any meaningful regulatory oversight of “space junk” and orbital safety, but launching dodgy investigations into companies that hold spectrum Musk wants for himself.
Elon Musk bought himself a Presidency, and it continues to pay off handsomely:
“Carr has taken multiple actions for which Musk was the prime beneficiary,” said Blair Levin, an adviser to New Street Research, an investment research firm, and a former chief of staff at the F.C.C. He added that Starlink “has gotten a huge amount from the Trump administration and Carr.”
Carr has tried to justify his favoritism of Musk by saying he’s also rubber stamped the LEO satellite policy interests of Jeff Bezos and Amazon. But as we’ve consistently established around here, nothing Carr does is driven by any sort of good faith concern about the public interest.
The funny part is that the New York Times doesn’t even mention that the Trump administration has also hijacked the 2021 infrastructure bill to redirect potentially billions of dollars to Elon Musk and Jeff Bezos (I should have an upcoming feature on this over at The Verge). This is money being directed away from affordable fiber and toward two billionaires — for networks they already planned to build.
More specifically, the Trump NTIA under former Ted Cruz staffer Arielle Roth changed the language of the $42.5 billion Broadband, Equity, Access, and Deployment (BEAD) program so that Musk and Bezos would be the prime beneficiaries. They also stripped out any language requiring that internet access built with taxpayer money had to be affordable or equitably deployed with an eye on fairness.
Musk and Calacanis types try to brush functional oversight for taxpayer spending as unnecessary “wokeness.” But the ongoing BEAD saga involves an historic hijacking of Congressionally-mandated funds by bad faith actors; so it’s curious the New York Times didn’t think it was worth mentioning in a story about how unethically cozy the Trump administration and Musk are.
Like most of the SpaceX IPO this will all be proven out over time. Long after people have had their retirements account raided, or small towns have had their infrastructure hopes hijacked. Consumers, taxpayers, and labor will, as is usually the case, be left holding the bag. And the folks that made it possible will already be off to the next big thing leaving people of conscience to clean up the mess.
Filed Under: competition, corruption, cronyism, elon musk, fcc, leo satellites, spacex ipo, taxpayers, telecom
Companies: spacex, starlink, twitter, x, xai
The fun thing is that significant expansion of Starlink would be detrimental to SpaceX and vice versa.
That kind of IPO bonanza is like giving both Tom&Jerry nuclear weapons in the hope of getting longer episodes.
Subscribers are due to disappointment.
Oh yea of little faith, Karl. I can’t wait for the day I am on my Made-in-America Trump phone talking with people on Mars! You will eat crow then, that’s for sure!!
Well, it “Starlink” is really about linking stars, we have no idea how much people around Alpha Centuri are willing to subscribe to it.
One billion, maybe one trillion, or even one quadrillion?
Investors are certainly already making projection from the 200 billions stars in our galaxy.
If I wanted backup internet, personally I would just subscribe to an unlimited 5G Fixed Wireless plan.
It’s telling that you deep dive on why Starlink’s dreams of becoming a major telecom are silly. It’s not even that Starlink can’t scale. Even if it did, even if you waved the magic pixie dust of rewriting reality to a universe where Starlink was as big and profitable as… say, Verizon, SpaceX still would make no financial sense.
Starlink, as the only profit earning arm of SpaceX, earned between 4-4.6B in revenue the last two quarters. Verizon earns a pretty consistent 34B per quarter. So we have one company with a -90% profit margin and a Tuesday morning P/E of *snirk*… -288 vs the entrenched telecom oligopoly with a profit margin of 14% and a P/E of 11.47. Even if you assume that Starlink were able to scale perfectly, it will never make the kind of money that Verizon is and it will never erase the massive plethora of boondoggles that the SpaceX umbrella contains. This is a company that cannot possibly be profitable, ever, and yet it has a valuation six times over 14 times that of Verizon.
Investors should ask themselves if they really think SpaceX is going to be multiple times more valuable than the entire US telecom sector. This is smelling more and more like the South Sea Company all over again.
Right, but you have to remember that the TAM for Starlink is the entire human population and the TAM for the AI tools in general is like one-third of the global economy.
/s for sarcasm, but legit in the marketing materials.
But see. If and when it is allowed to fail it will be on the consumers, workers, and taxpayers to pay the cost while the investors walk out with whatever profits they could get over time.
while the investors walk out with whatever profits they could get over time
What profits? SpaceX is never going to pay a dividend. You must make a profit to pay dividends. Unless Donald Trump literally hands control of the US treasury to SpaceX this company will never turn a profit. It is like rolling a fully-loaded mile-long freight train full of bricks down a runway and expecting it to spontaneously take off.
If you just mean investors riding the hype and selling to other rubes investors then sure, I guess. A sucker is born every minute, but holy fuck. I suppose some congratulations are in order for Mr. Musk. He has somehow, improbably, managed to sell some terminally stupid idiots a bridge.
I sense a federal bailout coming soon.
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“Oh, look, this very successful guy amd the first trillionaire is actually really dumb and all those investors are idiots, actually. Oh and he’s racist to!”
Sure, ok, Mr. failed ex-VICE reporter.
Okay but Elon Musk is an idiot and a racist, though.
He’s neither of those things, actually.
Hey remember when you guys pretended a wave was a nazi salute, and then like 2 years later you nominated a literal fuucking nazi for senate like it was no big deal?
Pepperidge farm remembers.
If what Elon did was a wave, why didn’t he wave?
And as usual, you cannot comprehend the fact that just because you have tied your whole identity to the MAGA-cult most other people can actually think for themselves which means every time you accuse “you guys” for doing something its you dumbing the world down to the most complex thing you can understand – a binary solution that is “us vs everyone else”.
He’s neither of those things, actually.
Yes. Yes, he is.
remember when you guys pretended a wave was a nazi salute, and then like 2 years later you nominated a literal fuucking nazi for senate like it was no big deal?
Remember when you could spell common words like “fucking” without issue? Also, I didn’t personally nominate Platner, and I still have plenty of reservations about him—not the least of which is his supposed years-long incuriosity around his totemkompf tattoo—but as far as I’m aware, he doesn’t actually hold or express any Nazi ideals. By comparison, Elon Musk has espoused support for eugenics, cancelled financial aid to African nations based on “anti-DEI ‘principles’ ”, and expressed plenty of bigoted opinions on Twitter (including his calling one of his children a “murderer” because she’s transgender).
Also, who the fuck waves their hand like you say Elon did? That shit looked like a Nazi salute from every conceivable angle you could find. I’m sorry that it’s hard for you to accept that he’s not even at all subtle about his white supremacist ideology, but that’s your problem. I don’t gotta worry about defending Nazi salutes because anyone who does that shit gets on my shit list forever, and Elon was there well before he did a sieg heil in support of Trump.
“Oh, look, this very successful guy amd the first trillionaire is actually really dumb and all those investors are idiots, actually. Oh and he’s racist to!”
Point out the lie.
You can be successful in a corrupt system while still being hateful and stupid. Success doesn’t depend on intelligence. It depends on ruthlessness and collaboration with other corrupt individuals and systems, which isn’t the same thing as being smart. Every random tech bro seems to think he found the cheat codes to success and innovation by just ignoring the human costs or ethical constraints of their strategies.
And note that Musk is only the first trillionaire via valuation based on a very stupid IPO propped up by bullshit and government subsidies. Or maybe just read the article again?
Point out the lie.
I did, already? Pretty much the whole thing, actually.
Hot DAMN you are not smart.
Normal people don’t smear shit on the wall, but you do thinking it proves everything. A 12 year old have better arguments than you do, are you getting dementia or something?
Hot DAMN you are not smart.
Every accusation, a confession.
I did, already? Pretty much the whole thing, actually.
Actually, what you did was present a hyperbolic strawman, and then light it on fire.
You have yet to point out any lies in the article.
more of a paraphrase, actually
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