SpaceX: The Problem With Starlink’s Next 10 Million Users

SpaceX is set to go public in a few days at a valuation north of $1.7 trillion. The narrative has quite a few big, futuristic bets: Starship, orbital data centers, and ambitions that stretch far beyond Earth. But the business doing much of the heavy lifting today is Starlink. The satellite internet network has become SpaceX’s primary profit engine, but it also carries some very real risks. Average revenue per user is falling, capital requirements remain heavy, and each new wave of customers appears less valuable than the last. For investors, the question is whether Starlink can remain as profitable as it becomes larger.

Starlink Cash Engine

The connectivity segment booked $11.39 billion in revenue in 2025, up 50%, with operating profit of $4.42 billion and adjusted EBITDA of $7.17 billion at a 63% margin. That margin climbed from 41% in 2023 to 50% in 2024 and reached 63% in 2025. Starlink now supplies more than 60% of SpaceX’s $18 billion in 2025 revenue and feeds the cash that funds Starship and xAI. Subscriber growth has been close to vertical, running from 2.3 million in 2023 to 10.3 million by the end of March 2026 across more than 150 countries. See how SpaceX’S financials compare with other publicly listed Space stocks such as Redwire (RDW) and Rocket Lab (RKLB)

Falling ARPUs

Underneath the growth sits a softer number. Average revenue per user fell from about $99 a month in 2023 to $66 by the end of March 2026. The cause is the mix. Most new growth comes from lower-income regions that pay GDP-adjusted prices, so average pricing has been going down. The base is mostly residential devices, increasingly outside the United States, with the rest spread across portable users, business sites, ships, and aircraft. While SpaceX raised some plan prices by between $5 to $10 a month in May 2026, the trend of per-user revenues remaining under pressure could continue.

The first wave of Starlink users were the ones who needed it most. Remote homes, ships at sea, aircraft, and operations far from any tower had no real alternative and paid a premium for coverage. The mainstream market is harder. Competition is now a factor on two fronts. New satellite players such as Amazon could also eventually put pressure on the company. Moreover, fiber, cable, and fixed wireless companies are also extending into areas that once had little or no coverage. Most new customers in developed regions can already buy ground-based service at lower prices, which sets a ceiling on what Starlink can charge. The mission-critical buyer who tolerates a high bill gives way to a price-sensitive one with options.

Satellite Replacement Costs

Starlink satellites are built to last around five years, after which they reenter the atmosphere and burn up. A fiber line laid once can serve for decades. Starlink rebuilds its network on a rolling five-year clock. With more than 10,400 satellites in orbit as of June 2026, roughly 2,000 reach the end of life every year and have to be rebuilt and relaunched just to hold the network in place. SpaceX deorbited 472 of them between December 2024 and May 2025. The division spent around $4.2 billion on capital in 2025. A large share of capex here is recurring maintenance, not growth. Plenty of businesses run this way, yet it could keep real cash generation below the headline profit.

Looking Beyond Home Broadband

The risks to the satellite Internet business are real, but there could be upside from other areas. Government and defense offer the clearest support. Starshield, the secure version of Starlink built for the military and federal agencies, already holds a $537 million defense contract through 2027, and the FAA is deploying roughly 4,000 terminals to upgrade the network managing U.S. airspace. Direct-to-cell adds another lane, letting ordinary phones connect to satellites where no tower reaches, sold via mobile carriers such as T-Mobile. These businesses also tend to be less price-sensitive than residential broadband customers and could help lift revenue over time.

While SpaceX is a highly innovative company, at a valuation in the neighborhood of close to 100x revenue, SpaceX is asking investors to back a communications, AI, and space infrastructure thesis priced for perfection, with little room for the unexpected. Balancing speculative bets like this against proven cash-generating platforms becomes critical. A disciplined portfolio approach helps you stay invested by limiting the impact of market shocks. While consistently beating the market is a challenge, the Trefis High Quality (HQ) Portfolio is designed to make it a more achievable goal. The HQ strategy has consistently outperformed its market benchmark since inception, delivering cumulative returns of over 105 percent.