SpaceX Starship May Change Investor Expectations

The Starship 20 prototype will be installed on the Super Heavy Booster 4 on August 6, 2021.


Elon Musk’s SpaceX has become one of the most valuable private companies in the world, and Morgan Stanley believes the Starship rockets it is developing will have far-reaching implications.

Starship is a massive next-generation rocket that SpaceX is developing for reusable use to launch cargo and people in flight to the Moon and Mars. The company is testing prototypes at a plant in South Texas and has completed several short test flights.

“This technological development could change the expectations of investors in the space industry,” Morgan Stanley analyst Adam Jonas wrote in a note to investors on Monday.

“As one client said,“ Talking about space before Starship is like talking about the Internet before Google, ”added Jonas.

Morgan Stanley noted that its latest views on SpaceX came in response to a CNBC report that the company’s valuation reached $ 100 billion.

“What SpaceX is doing on the shores of South Texas is challenging any preconceptions about what was possible and possible time frame in terms of rockets, launch vehicles and supporting infrastructure,” said Yonas.

According to Morgan Stanley, Musk’s company has created a “twin flywheel” of technology development with its reusable rockets and Starlink satellites. The company is basing much of SpaceX’s estimate on the potential revenue from the Starlink satellite internet network, which Musk previously stated could generate up to $ 30 billion in revenue a year.

“We view SpaceX and Starlink’s launch opportunities as inextricably linked, whereby improvements in launch power / throughput (both in frequency and in flight payload) and launch cost improve the economics and path to scaling the LEO Starlink constellation,” said Jonas. “At the same time, the development of Starlink’s commercial capabilities provides a thriving ‘repeat customer’ to start a business, enabling symbiotic development.”

Notably, Morgan Stanley expects Starlink to burn about $ 33 billion this decade and generate positive cash flow in 2031.

Morgan Stanley predicted last year that SpaceX would become a $ 100 billion company – at a time when SpaceX’s estimate was approaching $ 44 billion.

“More than one customer has told us that if Elon Musk becomes the first trillionaire … it won’t be because of Tesla. Others said SpaceX could end up being the most highly regarded company in the world – in any industry, ”said Jonas.

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