SpaceX may be a $120 billion company if its Starlink global internet service takes off, says Morgan Stanley Research

In May, Musk said if Starlink can get a few percent of the global telecommunications market, SpaceX could net $30 billion to $50 billion in annual revenue.
Financial analysts at Morgan Stanley Research said in a report sent to Business Insider on Tuesday they now consider SpaceX's base case or moderate valuation to be $52 billion.
However, the report notes a wide margin of error: If SpaceX is wildly successful with Starlink , their "bull case" suggests the company could be worth $120 billion or $5 billion if it falters in a "bear case."
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How much could SpaceX, the fast-moving private rocket company founded by Elon Musk, actually be worth?

After SpaceX's successful launch of 60 experimental Starlink internet satellites in May, CNBC reported the company's estimated value was about $33.3 billion. This barely eclipsed the valuation of Tesla, the electric car company Musk heads. This was a roughly $10 billion jump in valuation compared to estimates from 2017.

But a new report by Morgan Stanley Research sees a lot more potential for disruption of the internet industry with SpaceX's planned constellation of nearly 12,000 Starlink satellites.

Titled "SpaceX, Starlink and Tesla: Moving into Orbit?" and sent to Business Insider on Tuesday, the document gives SpaceX a base valuation of $52 billion an increase of more than 50% compared to the latest reported number.

"This assumes that expanding access to the internet drives broadband penetration from 50% to 75% of the global population, with SpaceX able to capture ~10% of the incremental broadband subscribers," the analysts wrote.

However, that's just the middle-of-the-road estimate: The firm's range in possible value for SpaceX is roughly 100-fold.

If you're a pessimist, and Starlink either struggles to turn its first few hundreds satellites into a working internet service or fails to get many customers the analysts say ther "bear case" for SpaceX is just $5 billion. Their "bull case," on the other hand, is a staggering $120 billion.

If that rosy pans out for SpaceX, the company may be pulling in as much as General Electric , Verizon , Fannie Mae , or even JPMorgan Chase .

The analysts shared their summary and methodology ahead of the 2nd Annual Morgan Stanley Space Summit in New York on December 10.

Why Starlink could be so disruptive and make SpaceX and Musk a lot of money

spacex starlink internet satellite spacecraft solar panels arrays earth orbit illustration 00002 SpaceX

Traditional satellite internet relies on spacecraft that are larger, older, more expensive, and about 22,236 miles away from Earth. This limits coverage, latency, and throughput. Starlink, meanwhile, would hug Earth at hundreds to 1,000 miles away with more and newer satellites. What's more, they'll link together into a floating internet backbone, providing a faster alternative to fiber-optic cables that span the world .

According to current government documents, Starlink may consist of nearly 12,000 satellites by the end of 2027. If that happens, SpaceX may own and operate more than six times the number of all operational spacecraft currently in orbit .

The goal is to cover Earth with high-speed, low-latency, and affordable internet access. Even partial deployment of Starlink would benefit the financial sector and bring pervasive broadband internet to rural and remote areas.

Completing the project may cost $10 billion or more, Gwynne Shotwell , the president and chief operating officer of SpaceX, said in May 2018. That gambit launching thousands of custom-built, desk-size satellites sent into space, 60 at a time, with perhaps 200 different Falcon 9 rocket missions could be massive. Musk said during a call with reporters on May 15 of this year that it could net the company perhaps $30 to $50 billion per year.

starlink train Vimeo/SatTrackCam Leiden

"For the system to be economically viable, it's really on the order of 1,000 satellites," Musk said in May, "which is obviously a lot of satellites, but it's way less than 10,000 or 12,000."

He added: "I think within a year and a half, maybe 2 years if things go well SpaceX will probably have more satellites in orbit than all other satellites combined."

More recently, as Eric Berger at Ars Technica first reported , SpaceX asked the US government to spread out its Starlink satellites to cover more of Earth's surface sooner.

SpaceX does have competition from other companies that are launching or plan to launch global satellite internet constellations, such as OneWeb and Amazon's forthcoming Project Kuiper .

But Mark Handley , a computer-networking researcher at University College London who's studied Starlink, previously told Business Insider that SpaceX's "is the most exciting new network we've seen in a long time," adding that the project could affect the lives of "potentially everybody."

One thing Morgan Stanley Research's report does not seem to account for, though, is SpaceX's planned Starship launch system. If realized, according to Musk, it may reduce the cost of access to space 100- to 1,000-fold by being fully reusable. Mass estimates also suggest the towering 400-foot-tall system could launch hundreds of Starlink satellites into orbit at a time.

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