A new analysis of SpaceX’s plans to have revenues of $30 billion per year for its global satellite Internet project is “too optimistic” and could damage the industry’s credibility by creating unrealistic expectations. It also claims that SpaceX CEO Elon Musk has repeatedly manipulated financial analysts with “totally unrealistic” schedules and projections.
Here’s an excerpt from the story. [Emphasis original]
WSJ’s [Wall Street Journal’s] article notes that SpaceX expects to attract over 40 M subscribers by 2025. The largest satellite Internet network today is operated by HughesNet, which has slightly above 1M subs after nearly a decade of operation. Combining ViaSat’s Exede and HughesNet, the year with the highest number of new subscribers was in the 300-350,000 range, which hints at how difficult it is to build the distribution channels for this kind of service. Of course, cheap, self-installation terminals and a global operation infrastructure could accelerate service take-up, but it appears very difficult to reach the 40M installed base in just 5 years. Compounding all of the above, one must not forget regulatory barriers as SpaceX would need to pursue landing rights in each and every country it wants to operate….
The best way to predict the future is building it, and NSR will only be pleased to see the satellite industry growing to the levels forecasted by SpaceX, as it would be beneficial for everyone. While it is true that forecasting revenues for such innovative ventures has a significant level of uncertainty, NSR nonetheless believes the $30 billion revenue projection is too optimistic no matter what assumptions are made and could stoke unrealistic expectations undermining the industry’s credibility.
One must also consider that SpaceX are masters of strategic communications and have repeatedly made extravagant announcements to push analysts, the financial community, the industry and employees in its favor. It is its CEO managing style, the day after he announced a totally unrealistic schedule and sales target for Tesla’s Model 3, auto analysts universally moved their own estimates up satisfying what probably was the original goal, shifting the paradigm. SpaceX has said very clearly that it plans a step deployment of the constellation starting commercial operations with a “modest” 800 satellite constellation (compared with the 4,420 of the full deployment), which hints at the venture having different growth scenarios with more reasonable assumptions. When analyzing SpaceX projections, being an investor, a competitor or an industry watcher, one must keep its independence and not fall in this expectations trap. Otherwise, industry’s credibility would be at risk.
Read the full story.