Finance

Elon Musk said at SpaceX that “we never think about this quarter” and that he is in no rush to spin off Starlink considering that a listing like Tesla would be “a huge distraction”


Space businesses and public markets may not be a match made in heaven. Consider the highly anticipated Starlink IPO. Elon Musk Space Exploration Technologies Corporation It is the most valuable private company in the United States and its largest source of revenue by far is Starlink, which provides broadband connectivity around the world through a series of low-Earth orbit satellites.

While Musk is excited about the idea, he’s in no rush to spin off Starlink. One important reason is the advantage that private companies have over public companies.

“At SpaceX, we never think about quarters. We never think about it, and we don’t think about stock price,” Musk said at Spaces this week. dialogue Moderated by Cathie Wood, CEO of ARK Investment Management.

According to his leader’s knowledge Tesla“Public companies are under tremendous pressure not to have a bad quarter. So that can actually lead to less efficient operations and you’re doing everything you can to not let people down at the end of the quarter.”

SpaceX Advantages

Asked whether SpaceX is better positioned to take appropriate risks than Tesla, Musk responded: “Absolutely.”

SpaceX has quickly become the dominant launch provider, and Starlink is well ahead of its would-be rivals, especially Amazon’s Kuiper Project. The company has begun talks to sell insider shares, valuing it at nearly $180 billion, according to Bloomberg report December 12th.

Current speculation on the timing of a Starlink spin-off IPO ranges from late 2024 to 2027, although Musk said last month be rejected It will happen next year. In January, venture capitalist Chamath Palihapitiya Predicting Starlink SpaceX will go public this year at a valuation of “at least half of SpaceX’s current private value,” which at the time was about $150 billion.

Starlink revenue soared from $222 million in 2021 to $1.4 billion last year wall street journal report September. But considering that eight years ago SpaceX expected revenue of $12 billion in 2022, this number is still low.Last month, Musk declare Starlink has achieved break-even cash flow.

According to SpaceX, Starlink has more than 5,000 satellites in operation and the service has more than 2 million active users; at the same time, popular retailers Costco Recently on sale its receiver.

But, Musk said this week, “I don’t think it’s worth going public unless you have an extremely stable and predictable revenue stream. At that point, it’s less of an issue because you’re not going to have these big swings.”

At the same time, Musk no problem He welcomed the move given his track record in attracting capitalists to invest in SpaceX. “If other people are prepared to invest at a certain value…that’s an external assessment of the value of the company,” the world’s richest man noted.

Of course, sending satellites into space is expensive, and the payback can take some time. Ashlee Vance wrote an article 2017 Books As for Musk, he told the billionaire earlier this year that he sometimes questions whether the Starlink business case makes sense because “an incredible amount of money” is being spent on things that “may or may not work.” He asked Musk if he had any questions.

“The business case is not subjective, it is objective,” Musk replied“If you can provide a convincing internet connection and the product quality and price are competitive with terrestrial options (or often no terrestrial options at all), then you clearly have a business.”

Tesla’s troubles

Musk added this week that taking SpaceX private also insulates it from analysts. One of the challenges of the public markets, he said, is that “a lot of analysts who follow companies may only have a time horizon of a year or two.” … They don’t care what your long-term results are because their careers depend on your short-term results. Performance. “

At Tesla, “we feel we have a moral obligation not to have a bad quarter and let people down,” he said, adding that he often spent New Year’s Eve until midnight at a delivery center.

He complained, “The legal burden of going public is too high. So if you are public, you are sued non-stop by these class action law firms…The defendant is just a puppet, but the media never mentions it.” This… it drives me crazy. This happens all the time.”

Musk acknowledged the advantages of Tesla going public, most notably greater capital availability and also helping the automaker clean up “a capital structure that was too complex as a private company,” he added.

But, he said, this “also creates a huge disruption.”

At SpaceX, by contrast, Musk and his company are largely free from these worldly distractions.

This story was originally published on wealth network





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