2023 was a groundbreaking year for SpaceX’s Starlink satellite broadband internet service, surpassing revenue from rocket launches. Payload Research’s analysis revealed Starlink reaped $4.2 billion in revenue, outshining the $3.5 billion from rocket launches.
The latest report from Payload projects Starlink’s revenue for 2024, envisaging a meteoric rise compared to SpaceX’s core rocket business. Starlink is anticipated to outpace SpaceX’s Launch division, with a 62% year-over-year growth, eclipsing the 57% growth in the Launch division.
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Stellar Starlink Growth in 2024
Exiting 2023, SpaceX Starlink boasted 2.3 million paying subscribers worldwide, primarily in the U.S. As Starlink broadens its horizons, international customers will play a more significant role in the business landscape.
Entering 2024, Starlink is projected to increase its user base by 65% to 3.8 million subscribers, generating about $6.8 billion in revenue, resulting in an average revenue per user (ARPU) of $1,789, down from $1,826 in 2023.
Despite the decline, Starlink’s ARPU remains notably higher than that of traditional broadband providers like Comcast and AT&T, showcasing the lucrative potential of SpaceX’s satellite internet service.
So, why the dip?
The Quandary of International Subscribers
The U.S. subscriber base surged by 90% in 2023, while international subscriptions tripled. In 2024, growth is expected to moderate as SpaceX taps into maximum potential markets for high-speed internet access in regions underserved by traditional broadband providers, with international subscribership doubling and U.S. customers growing by 45%.
By year-end 2024, Starlink subscribers are estimated to split equally between U.S. and non-U.S. users, around 1.9 million each, presenting a new challenge for SpaceX.
International subscribers contribute less to ARPU than U.S. users, with French customers paying only $45 a month, down from $109 in 2021, indicating a shift towards a more global clientele at lower price points.
Strategic Considerations for Investors
While the ARPU decline is manageable currently, SpaceX needs to adapt as ARPU dips steeper over time. As users transition from device purchases to subscription-only models, ARPU is expected to decrease by 10% in 2024, emphasizing the importance of monitoring this trend.
Investors eyeing SpaceX’s anticipated Starlink IPO should heed this evolution closely, as international expansion alters revenue dynamics and profitability.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
