SpaceX’s recent IPO filing and Starship test flight have delivered two data points that paint a picture far more grounded than the usual Elon Musk hype - one that may disappoint both the true believers and the skeptics.
Hidden behind the usual chatter about AI profits and moon bases lies a more sobering reality: an expendable Starship could keep SpaceX in business, but it won't deliver the cost reductions - or the frontier business models - that Musk is betting on.
SpaceX is many businesses, but only one is making real money right now. Starlink, its satellite internet network, is the star of the company’s public offering, generating $11.4 billion in revenue last year - the bulk of the firm's earnings. But underneath that shiny top line is the capital expenditure treadmill that scared off earlier entrepreneurs. SpaceX needs to replace about a fifth of its satellites every year just to maintain current service levels. It has invested more in Starlink ($11.4 billion) since the start of 2023 than it has in building Starship and its launch infrastructure ($8.4 billion).
SpaceX’s S-1 filing with the SEC predicts costs will keep growing but expects tech improvements to reduce them as a percentage of revenue. Musk has said Starship is key to controlling Starlink’s costs, even warning that SpaceX could go bankrupt without the vehicle’s ability to cheaply replace those satellites. So it was notable that the S-1 acknowledged for the first time that full reusability of Starship isn’t necessary to launch the next generation of Starlink satellites. But without it, costs go up, making the business less attractive.
“If this reusability is not achieved then the cost of launch on Starship may not be much lower than Falcon 9, even if the full 100 ton capability is realized,” satellite market analyst Tim Farrar wrote in a note to clients. “The cost per launch may be as much as $100M (i.e. $1000 per kg) while tempo remains constrained by the rate at which second stages can be manufactured and first stages can be refurbished.”
Last week’s test flight of the third version of Starship bore those concerns out. The maiden flight had issues with a key reusability capability - relighting the Raptor engines on both the booster and Starship for a controlled return to Earth. Starship did, however, deploy a set of dummy satellites and two test vehicles in space.
That helps explain SpaceX’s prediction that it will begin launching a new generation of higher-throughput Starlink satellites 60 at a time - a twentyfold increase in capacity over a single Falcon 9 launch - later this year. At first glance, classic Musk timeline optimism; in reality, it may mean initial launches will expend the Starship. If so, SpaceX can’t count on as much free satellite cash as expected, and its plans for space data centers will remain science fiction until the rocket is reusable.
Meanwhile, the S-1 shows Starlink’s growth is slowing. SpaceX’s total addressable market calculation assumes it can serve every fixed-broadband subscriber or mobile handset in the world - unlikely, since Starlink isn’t competing on price with terrestrial fiber. The document suggests SpaceX sees direct-to-device as a complement, not a replacement, for terrestrial mobile providers.
Starlink has just over 10 million subscribers - more than any other satellite network - but Farrar notes user growth fell over the first quarter of 2026. Quilty Space projected SpaceX would end the year with 16.8 million subscribers, which would require quarterly growth to roughly double from current levels - difficult after recent price increases.
Growth matters because new Starlink users are paying less than previous ones. Average revenue per user has dropped from $99 in 2023 to $66 in the first quarter of 2026, driven by expansion into international markets where SpaceX can’t charge as much. Without a fast-growing user base, each new satellite launched makes less money.
Increased competition also looms. Amazon’s Leo network is approaching the scale to pressure SpaceX, though it’s waiting for the FCC to extend a deadline requiring it to launch 1,600 internet satellites by July.
The SpaceX filing presents a gloomy growth forecast for the company and rivals like Blue Origin. As Farrar puts it, if SpaceX - far ahead of anyone else - is seeing slowing demand, the space broadband market may be smaller than everyone thought.