Elon Musk's Starlink Could Generate Over $20B Cash Flow Annually — If It Doesn't Go Bankrupt First, Says Ark

Tesla Inc TSLA CEO Elon Musk-led high-speed, satellite-based internet service Starlink, a unit of SpaceX, could churn more than $20 billion of cash flow a year, provided it survives the early years, according to Cathie Wood-led Ark Investment Management.

What Happened: The popular investment firm, which counts Tesla among its largest holdings, said it believes Starlink’s cash flows during the first eight years would be negative due to the very high cost of launching the satellites.

As per Ark’s research, the satellites are expected to de-orbit every five years on average and the first global constellation probably will be able to scale up massively if it is able to survive the early days of attracting users.

“SpaceX’s satellite business could generate more than $20 billion of cash flow annually on a constellation that costs roughly $10 billion to launch, as replacement satellites would launch at much higher utilization rates,” Ark analyst Sam Korus wrote in a note.

“If we are correct, Starlink then would be able to acquire a terrestrial internet provider and minimize latency by routing internet traffic, gaining another competitive edge.” 

Musk had last month said Starlink is a few years away from delivering a “reasonably predictable” revenue. 

See Also: Elon Musk's Starlink Can Help Scale Up Dogecoin Without Protocol Changes, Proposes Researcher

Why It Matters: The SpaceX venture is currently in the beta phase and is designed to beam down the internet, especially in remote areas from satellites in orbit to Earth.

Last month, Musk announced Starlink has crossed the "strategically important threshold" of 69,420 simultaneous active users. A February filing revealed it had secured over 10,000 customers since launching the public beta testing late last year. 

The Musk-led company has launched over 1,500 satellites and hopes to have 4,425 in orbit by 2024. The Federal Communications Commission has approved 11,943 satellites to be launched by Starlink.

Price Action: Tesla shares closed 4.38% higher at $685.70 on Monday.

See also: HOW TO BUY STARLINK IPO STOCK

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Photo: Courtesy of SpaceX via Flickr