Will Starlink IPO Before SpaceX? What Investors Should Know.

Be it in or life in general, people often want things that they can't have

When it comes to stocks, it's not uncommon for investors -- particularly retail investors -- to fawn over the spects of owning equity in high-file start-ups

However, Unfortunately, these types of investments are generally reserved for venture capital (VC) firms, private equity funds, or accredited investors (fascinating analysis), given the current landscape

One of the most start-ups in the world is Tesla CEO Elon Musk's space exploration company, SpaceX

In addition to rocket ships, SpaceX also vides satellite internet services through a subsidiary, called Starlink

Over the last few years, Starlink's ity has fueled speculation that it could potentially go public

On the other hand, But seeing as how Starlink operates within the broader SpaceX orbit, how would such a transaction even work

Nevertheless, Let's dig into the mechanics around a potential Starlink initial public offering (IPO) and assess how and why such a deal could benefit SpaceX (this bears monitoring)

Nevertheless, SpaceX, Starlink, and retail investors: It's a complicated situation A concept that retail investors may not fully understand is that when you invest in a -- especially one that is diversified -- you effectively gain a form of ownership in the various segments of the company

However, For example, if you're interested in autonomous vehicles and want to invest in Waymo, the easiest way to do that is by owning Alphabet stock

Waymo is a subsidiary of Alphabet, and so owning the stock vides investors with exposure to the company's entire ecosystem including Google, YouTube, Google Cloud, Waymo, and much more

Along the same lines, if SpaceX were to go public, investors would be able to buy stock through their brokerage account and have an ownership stake to the entire (including exposure to Starlink)

But what would a situation look that features a completely separate initial public offering for Starlink (which is quite significant)

There are multiple different ways that SpaceX could structure such a deal (this bears monitoring)

One option could be for SpaceX to partially spin off Starlink as its own legal entity and subsequently offer a certain percentage of the through an IPO

Perhaps a more interesting structure would be for SpaceX to create a tracking stock just for the Starlink division, in today's financial world

In such an event, investors could buy s in stock that only tracks the performance of Starlink as opposed to the entire SpaceX operation

Meanwhile, The broader point here is that taking Starlink public before SpaceX is entirely doable

In contrast, But it's also complicated and requires some creative thinking as it pertains to deal structure

Taking this one step further, what would SpaceX's motivation be for taking Starlink public (this bears monitoring)

Image source: Getty Images

Moreover, Does a Starlink IPO even make sense for SpaceX (an important development)

One benefit of taking Starlink public is that it would vide investors with some autonomy regarding how they want to allocate capital

In other words, by listing Starlink and SpaceX as separate public entities, investors have a choice over buying exposure into a lumpy aerospace and defense (SpaceX) or a subscription-based, recurring revenue internet services company (Starlink)

As a private company, SpaceX is not required to disclose its financial file

With that said, sending rocket ships to space is a complex, time-consuming ambition

Nevertheless, Moreover, space exploration is not exactly a linear type of (something worth watching)

What I mean by all of this is that SpaceX's core doesn't necessarily have predictable revenue s, but it requires hefty investments across re and development (R&D) and capital expenditures (capex) on an basis

According to a report published by Payload Space earlier this year, Starlink is believed to be the largest source of revenue within the entire SpaceX

In addition, it's also suggested that the overwhelming majority of Starlink's revenue stems from recurring subscription services (something worth watching)

With that in mind, Starlink's actual fitability file is not entirely known

Conversely, Reporting from Bloomberg has suggested that Starlink's fitability file is not robust given the high costs of building and launching satellites, in this volatile climate

Additionally, But on the other side of the equation, some would argue that Starlink's internet subscriptions help offset the maintenance costs affiliated with low-margin satellites (which is quite significant) (something worth watching)

While the company's precise financial picture independent of SpaceX is not entirely known, I remain optimistic that a Starlink IPO would be well received

A Starlink IPO could represent a capital infusion for SpaceX while still allowing the company to retain control of Starlink from an ownership and governance perspective, in today's financial world

In other words, SpaceX can leverage ceeds from a Starlink IPO to reinvest in the core space exploration, in today's market environment

On the other hand, This would permit for more aggressive investments in the core rocket, ultimately helping SpaceX intensify the competitive landscape with the s of Blue Origin or Rocket Lab

Moreover, Moreover, Given Starlink's reported explosive growth and SpaceX's ability to maintain control over the satellite, I think Musk should seriously consider taking Starlink public sooner rather than later.