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Waiting for SpaceX to IPO? Try This Instead

Written by Jason Stutman
Posted March 19, 2017

In November of last year, Elon Musk announced a rather ambitious business venture.

With the help of his own space transportation company SpaceX, Musk planned to launch a low-Earth orbit (LEO) satellite constellation composed of over 4,400 satellites to deliver high-speed Internet anywhere in the world.

That's about three times the 1,400 or so satellites that are currently operating in space today.

Alongside Elon’s announcement came an application to the Federal Communications Commission (FCC) to set up over 800 satellites in the U.S. to start commercial broadband services.

In total, SpaceX is projecting this proposed Internet end of its business would be generating more than $30 billion in revenue by 2025. This is according to SpaceX documents obtained by the Wall Street Journal.

The projections might seem a bit far-fetched, but considering the capabilities of such a network, it’s actually not all that overly optimistic.

An LEO constellation of this size would connect remote locations across the world and serve maritime industries with high-speed Internet — a task that cable broadband could simply never accomplish.

This kind of satellite network could also achieve latency as low as 30 ms, which is significantly faster than any satellite provider today.

For perspective, the average latency for conventional satellite Internet is 888 ms, according to the FCC’s "Measuring Broadband America" report. That’s about 30 times slower than an LEO network like the one Elon is proposing

The mechanism behind this speed is pretty easy to understand on a basic level. LEOs are much smaller than your average satellite (about 15 times lighter), so it’s far more cost-effective to get them up in the air, and at higher numbers.

Further, low-Earth orbit satellites, as the name would imply, orbit at a much lower altitude.

What this ultimately all means is a broader network with satellites grouped closer together and also closer to the ground, allowing signals to travel less distance and get where they need to go faster.

The demand for a robust LEO network like this is pretty straightforward: while most people in the U.S. may be well connected, there are still many places around the world that don't have high-speed Internet.

Rural areas, remote islands, undeveloped regions such as Africa and much of China... nearly 50% of the world’s population, believe it or not, still isn’t connected to the Web.

Yet a constellation of this magnitude would be accessible to every single one of those people, and at speeds comparable with modern-day cable broadband.

Of course, you can’t actually invest in SpaceX unless you’re incredibly rich or well connected. The company is private and Elon has given no indication that the company would IPO in the foreseeable future.

In fact, according to man himself, investors will likely have to wait until the company is colonizing Mars to get a shot at buying SpaceX shares on the open market:

SpaceX IPO

Yet while investing in SpaceX isn’t a viable option, there's an incredibly interesting twist to this story that could end up being big news for Main Street investors who want to invest in such a constellation today:

Elon wasn't the first guy to come up with this plan...

As a matter of fact, he might have even stolen it.

You see, in 2014, a couple of Google employees, including a guy by the name of Greg Wyler, left Google to start their own satellite company... a company to connect the entire world to the Internet over a single network.

At the time, the Wall Street Journal was reporting that Wyler was working closely with Elon Musk. According to internal sources, the two were in talks about building a factory in either Florida or Colorado to mass-produce LEO satellites using automated processes.

The Wall Street Journal called it "Elon Musk's next mission" at the time...

But at some point or another there was a falling-out between Wyler and Musk. Wyler eventually managed to woo a number of other big-name investors — including SoftBank, Coca Cola, Airbus, and Richard Branson, among others, with funding in the billions — and Elon seemed to fall out of the picture.

Then in April 2016, it was revealed that Wyler had sealed the deal on that Florida factory, but with no mention of SpaceX or Elon. It wasn't until over six months later that Elon announced plans of his own.

So while Elon is playing catch-up and isn’t projecting revenue until as far out as 2025, Wyler and company have been at this for years. The group already plans to start satellite production within a few short months, to start launching by early next year, and to be operational as a soon as 2019.

Most importantly, though, Wyler made arrangements late last month to open this new business to everyday investors. I’ll be sharing all the details, exclusively, with Technology and Opportunity subscribers in our March issue. 

You're free to join us in that venture today.

Until next time,

  JS Sig

Jason Stutman

follow basic @JasonStutman on Twitter

Jason Stutman is Wealth Daily's senior technology analyst and editor of investment advisory newsletters Technology and Opportunity and The Cutting Edge. His strategy for building winning portfolios is simple: Buy the disruptor, sell the disrupted.

Covering the broad sector of technology and occasionally dabbling in the political sphere, Jason has written hundreds of articles spanning topics from consumer electronics and development stage biotechnology to political forecasting and social commentary.

Outside the office Jason is a lover of science fiction and the outdoors, and an amateur squash player at best. He writes through the lens of a futurist, free market advocate, and fiscal conservative. Jason currently hails from Baltimore, Maryland, with roots in the great state of New York.

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