Burning through cash: Starlink profits more elusive than investors think

Spacex’s prized Starlink satellite business is still burning through more cash than it brings in.

People familiar with the finances of one of the world’s most valuable private companies say Starlink has — at times — lost hundreds of dollars on each of the millions of ground terminals it ships, casting doubt on claims by Chief Executive Officer Elon Musk and the company’s top brass that the business is in “profitable territory.”

Starlink, which provides space-based internet service to more than 2.6 million customers, often strips out the hefty cost of sending its satellites into space to make the non-public numbers look better to investors, these people said, asking not to be identified discussing private information. They describe the company’s accounting as “more of an art than a science” and say it’s not actually profitable based on an operational and ongoing basis.

Closely held companies don’t have to publicly release their financials and often massage their numbers while fundraising. Many operate for years by subsisting on financing while burning through cash. But people with knowledge of Starlink’s balance sheet say money-making quarters have been less consistent than Musk suggested to investors when he celebrated having achieved “breakeven cash flow” in a post last year on his social media platform, X.

When pressed further about Musk’s comments at a Washington conference last month, Spacex Chief Financial Officer Bret Johnsen said, “I don’t know that I want to quantify those numbers, but we are in positive cash flow and profitable territory for our satellite business now.”

Much as Musk’s electric car manufacturer, Tesla Inc., upended the global auto industry, Spacex is remaking the market for rockets and satellites. It has slashed rocket launch costs with its reusable boosters — largely made inhouse. And with Starlink now accounting for a majority of all active satellites around the world, the company’s global profile is rising.

Space Exploration Technologies Corp. in December was valued near $180 billion, putting it on par with corporate behemoths like Verizon Communications Inc. and General Electric Co. It’s now integral to the US government space program and has become a major player in national security. But the company is relying, in part, on Starlink to pay the bills.

As Spacex tells it, there’s a limit to how much money rocket launches can make. Musk is counting on the rapidly growing satellite business to bankroll the billionaire’s lifelong ambition to reach Mars. According to some investors, Starlink accounts for more than half of Spacex’s 2024 revenue.