There Appears to Be a Huge Problem With SpaceX's Starlink

Did Elon Musk fib about the service breaking even?

Balance Sheet

In a brief announcement on his social media platform last year, SpaceX CEO Elon Musk celebrated that the company's Starlink broadband service had "achieved breakeven cash flow."

"Starlink is also now a majority of all active satellites and will have launched a majority of all satellites cumulatively from Earth by next year," he said at the time.

But according to a damning new report by Bloomberg, Musk may have once again rigged the numbers in his favor by greatly underplaying the costs involved in launching the satellites, when in reality the company is losing "hundreds of dollars on each of the millions of ground terminals it ships."

According to Bloomberg's sources, SpaceX's accounting was "more of an art than a science" and the much-hyped system isn't actually profitable, despite Musk's assurances.

The company has kept its financials close to its chest, especially while fundraising. During a March press conference, SpaceX CFO Bret Johnsen appeared cagey, telling reporters in a carefully worded comment that "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."

In short, is SpaceX's Starlink business cashflow positive, as Musk claims, or merely in "profitable territory"? The distinction could make all the difference for Musk's outsize plans for space colonization.

Starkinked

The mercurial CEO has long argued that the internet satellite broadband arm of his space company will provide the funding necessary to get humans to Mars. According to Bloomberg, Starlink represents more than half of SpaceX's revenue this year.

As of now, SpaceX has launched 5,600 satellites into low-Earth orbit and is planning to launch tens of thousands more.

Despite eclipsing the total number of all operating satellites in Earth's orbit, Starlink isn't just struggling to cut even. Experts are concerned that trying to provide the entire globe with internet via satellites — instead of expanding coverage with cell towers where needed — could prove difficult, with speeds already beginning to decrease in 2022.

In other words, SpaceX will have to pump out untold numbers of satellites to keep up with quickly growing bandwidth demands.

That's not all the bad news. According to Bloomberg, all major US airlines have rejected SpaceX's Starlink to provide internet service on flights, though an exact reason as to why remains unclear.

Nonetheless, SpaceX has exceeded expectations when it comes to generating revenue over the years. Sales could grow from $4.7 billion a year ago to $15 billion this year, per Bloomberg's sources.

SpaceX may end up spinning off its internet service with a potential IPO. But that's still years out, according to company officials.

More on Starlink: SpaceX Announces Plans to Set 100 Starlink Satellites on Fire