Learn how to invest in Starlink stock if the company spins off of SpaceX for an IPO. Open an account with a broker that provides free IPO access for all customers, such as TradeStation or Webull. for your best chance to participate.
Invest in upcoming IPOs for as little as $100.
Latest Starlink Stock IPO News
11/02/2020: SpaceX’s Starlink internet public beta is giving some users blistering download speeds of more than 160 Mbps, including in rural Montana (paywall)
10/27/2020: SpaceX’s Starlink satellite internet service is priced at $99 per month, according to an email
10/27/2020: Dozens of families in rural Texas will get SpaceX’s Starlink satellite internet for free in 2021 (paywall)
10/22/2020: Morgan Stanley expects SpaceX will be a $100 billion company thanks to Starlink and Starship
02/06/2020: There could be a new Elon Musk stock for investors to bet on: SpaceX’s Starlink
What is Starlink?
Starlink is a business subsidiary of the private company SpaceX. SpaceX intends to build a low earth orbit satellite constellation that provides internet access to the world.
The web of satellites known as Starlink will connect to ground receivers, making it possible to provide internet at competitive prices, especially to underserved global communities. Internet speeds are expected to be 50Mbs to 150Mbs.
Customers will include governments and consumers. As of late 2020, nearly 1,000 satellites have been launched into orbit, and the service’s testing has commenced. The satellites ride the Falcon 9 rocket for insertion into orbit.
Twelve thousand satellites are expected to orbit Earth during the first phase, with the potential to increase that number to 42,000. SpaceX estimates the Starlink business could generate $30 billion by 2025.
Why Would Starlink Stock Spinoff from SpaceX?
Elon Musk has wild ambitions. Perhaps his most aspiring goal of all is to colonize Mars. To do so, he needs lots more money than he already has.
SpaceX serves as both a lower-cost launch service for governments and private companies and a platform for Elon to design rockets for Mars. The company profits from launch services, but it will need much more money to colonize Mars.
As a private company, internal management and the Board of Directors determine what to do with earnings. But if SpaceX were to become a publicly-traded company, it would have to answer to shareowners.
Though a SpaceX IPO would surely raise billions, its goal to colonize Mars would unlikely appeal to investors because it will be a cash drain. Investors want to receive profits through dividends or capital appreciation.
Going to Mars will not be a business venture, at least not at first. It’s a humanitarian mission to hedge against Earth’s inevitable demise.
What Elon Musk needs is a cash cow to fund his vision. Enter Starlink.
Starlink has the potential to generate billions of dollars of revenue. Once the network of satellites is in place, revenues should outpace maintenance costs, generating significant profits.
So why not keep Starlink with SpaceX?
Spinning off Starlink to the public markets would provide a capital raising vehicle for Starlink to invest in growth. As we’ve seen with Tesla, when the stock surges, the company can issue additional shares to raise extra capital.
Not only could it raise significant money in a Starlink IPO, but SpaceX would also likely retain a large ownership percent of the new company in a tailored share class. As Starlink stock rises, SpaceX has an asset that grows in value, allowing it to sell shares or receive preferred payments.
If indeed Starlink could generate $30 billion in revenue as another Elon Musk company, fanboys and investors would salivate to own it, driving up the stock price.
As of October 2020, Tesla generates $28 billion in annual revenue. The stock market cap is nearly $400 billion. If SpaceX could retain 50% or more of Starlink stock, it could raise hundreds of billions to pursue its primary objective.
What is the Starlink IPO Date?
The Starlink IPO is likely several years away. But as reported by Bloomberg in February 2020, SpaceX President Gwynne Shotwell said:
Right now, we are a private company, but Starlink is the right kind of business that we can go ahead and take public. That particular piece is an element of the business that we are likely to spin out and go public.
In September 2020, Musk confirmed this likelihood on Twitter and indicated that retail investors might be able to participate:
We will probably IPO Starlink, but only several years in the future when revenue growth is smooth & predictable. Public market does *not* like erratic cash flow haha. I’m a huge fan of small retail investors. Will make sure they get top priority. You can hold me to it.
— Elon Musk (@elonmusk) September 28, 2020
But considering Elon's urgency to reach Mars to make humans a multi-planet species, I wouldn't be surprised to see a Starlink IPO in the works shortly after the business is operational, or at least post-revenue.
For the Starlink IPO to favor "small retail investors," they'd either need to make it a direct listing or offer shares to customers or other affiliates via a directed share program (usually not disclosed until the SEC S-1 filing is public).
How to Buy Starlink Stock (Hint: You Can't)
You cannot buy SpaceX stock or Starlink stock today — SpaceX is a private company, and Starlink is a business run by SpaceX.
According to CNBC, SpaceX plans to spin off Starlink stock in the coming years. Eventually.
Therefore, the only current way to own a tiny sliver of SpaceX Starlink is to own Alphabet (GOOG) shares, Google's parent company.
Along with Fidelity(private), Google announced a $1 billion investment in SpaceX in January 2016. The investment amounted to 10% ownership of the company ($10 billion valuation) at the time.
SpaceX has endured several additional venture rounds since then, and in 2020, it's estimated to be valued at around $44 billion, according to CNBC. If Google and Fidelity held onto their original shares, the ownership stake could be worth up to $4.4 billion, depending on share dilution.
Owning Alphabet means you would technically own a very tiny portion of SpaceX. But not one large enough to validate an investment decision.
In the event of a Starlink spinoff, Alphabet would presumably retain some ownership of Starlink.
You can buy shares of Alphabet through any low-cost online brokers. My favorites for IPO investing are TradeStation and Webull.
For long-term buy-and-hold investors, I recommend M1 Finance (review).
5 Ways to Prepare to Invest in a Starlink IPO Spinoff
High-profile IPOs, to be clear, are usually challenging to invest in until after the public offering is complete. Meaning, it's hard to get shares before the IPO that spike once the stock begins trading.
For most big IPOs, the investment banks underwriting the deal offer shares to its wealthiest customers (most assets under management). That's because often, the stock price spikes after the IPO, making their best customers even wealthier.
So unless you're wealthy and have investments with one of the big banks or brokers with IPO connections, your options are limited.
But not zero.
Anyone can buy the stock after trading opens. So if you're patient, you can own the stock when it becomes public. Google's stock jumped in price on the first day of trading but soared for many years afterward.
The Uber IPO, on the other hand, flopped. The stock price fell from the IPO and took months to recover. IPO investors lost money!
Considering this, here are a few things you can do to prepare for Starlink stock to begin trading if it ever does.
1. Join the Email List
Go to Starlink.com and join the email list to get updates on Starlink news and service availability in your area. Also, consider subscribing to the SpaceX channel on Youtube to learn more.
Joining the email is the best way to stay informed with official information.
2. Become a Customer
Once SpaceX begins selling internet access to the wider public, become a customer. Signing up for the service will get you on their customer list, at a minimum. You'll become familiar with the service and decide for yourself if the product is a worthy investment consideration.
As we've seen with previous IPOs such as GoPro, LendingClub, and Uber, early customers, and affiliates sometimes receive access to IPO shares through a direct share program.
Direct share programs are usually kept secret until the company releases the S-1 Filing to the public. They enable the company to offer preferred IPO share access, generally to affiliates and family members.
For Uber, drivers who logged a certain number of miles received shares. For LendingClub, it was their note investors. For GoPro, anyone on their email list could apply to acquire shares.
We have no idea at this stage if this would be in the cards for a Starlink stock IPO. But if there is a viable preferential treatment for "small retail investors," early customers would seem to make the most sense because you can't offer IPO shares to everyone.
3. Open a Brokerage Account with Free IPO Access
Most online brokers do not offer small retail investors IPO access. The large brokerages such as Fidelity, Schwab, and TD Ameritrade do, but you must have a large account balance (multi-millions) to receive an allocation.
The only two online brokers I know of that offer IPO share access to all investors, regardless of account size, are TradeStation and Webull. Both have partnered with an investing app called ClickIPO for IPO access.
ClickIPO is an app and API that works to receive IPO share allocations from underwriters and distributes them to their investor base. The distributions are based on a proprietary Investor Score, which rates investors on how likely they are to flip their IPO shares or not.
Investors who tend to hold shares get a higher score, and thus, are more likely to receive shares in higher-demand IPOs when an allocation is available.
ClickIPO has not demonstrated a history of getting large share allocations in high-demand IPOs; however, it's the best option most retailer investors have.
4. Monitor Pre-IPO Markets for Available Shares
Another option is to try to acquire shares of SpaceX on a pre-IPO marketplace.
Founders, early employees, and investors often find themselves in a difficult predicament. They own valuable shares of a company that doesn't trade publicly.
These shareholders might have multi-million dollar net worth's because of their stock holdings, but the stock is not liquid because it doesn't trade on an exchange.
Two platforms have evolved to gives these individuals a way to liquidate their holding before the IPO. The two sites are EquityZen and Sharespost.
Both sites bring liquidity to an otherwise illiquid asset. Accredited investors may join these sites and attempt to buy shares of pre-IPO companies when they become available.
The shares are only offered to accredited investors because their financials are not publicly filed with regulators yet, increasing investors' risk.
For high-profile companies, demand is high, lowering your chances of acquiring shares, even if you're accredited. So I'd approach this strategy to acquire SpaceX shares, knowing there will be others in line to do the same.
5. Learn to Invest and Wait Patiently
If it ever becomes available, your best chance to own Starlink stock is to wait for the IPO buy the stock through a no-fee online brokerage account.
New investors can open an account well before the IPO, then place your first trade in another company to learn how to buy shares.
I recommend starting with a company you know well. If you like Starbucks, for example, buy Starbucks stock.
So what is the best online brokerage for buying stock?
As an individual investor, you'll want to open an account with a commission-free broker. That way, you'll invest most of your money instead of waste it on fees.
I'll go over one of my favorites below. It has very reasonable fees and will make it easy to buy Starlink stock once trading begins.
What is the Best Online Broker to Stock?
I'm a big fan of the online brokerage M1 Finance. M1 Finance is a reliable and robust, no-fee online broker for beginner to intermediate investors. It's easy to get started.
As your investing skills and portfolio mature, M1 is one of the best platforms to scale.
Investing in stocks is 100% free on the platform. They also offer an integrated checking account and low borrowing rates. Read my complete M1 Finance review here.
M1 Finance does not offer IPO access. But it's my favorite for every day investing.
The platform is more intuitive than old school brokers because it's built on a modern technology platform. You create portfolio "pies" that contains all the stocks and ETFs you want to own and in what percentages.
Conclusion - You Cannot Buy SpaceX or Starlink Stock, Only Prepare
It won't be easy for ordinary investors to acquire pre-IPO shares of SpaceX stock or Starlink stock. If you're determined, follow the pre-IPO marketplaces and pay attention to any offerings. You are required to be an accredited investor to invest this way.
Otherwise, you'll need to wait for the IPO date to buy shares.
But that's not necessarily a reason to be disappointed. Google's shares rose 18% on the day of its IPO. Many people probably sold that day. Had they held for the next decade, their holdings would have been up 1,000%.
When the Starlink IPO is near, please perform due diligence on the SEC S-1 filing and don't buy Starlink stock with money you can't afford to lose.
Disclosures: The author is long SBUX. This web page contains affiliate links from our partners. If a reader opens an account or buys a service from a link in this article, we may be compensated at no additional cost to the reader. Opening an account with a broker that provides access to IPOs does not guarantee the customer allocations of specific IPOs.
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