In response to a tweet by Dave Lee (@heydave7), a Tesla stakeholder and owner of a YouTube channel on investing, Elon Musk mentioned that, as much as he might like to, taking Tesla private would be “impossible”. In his comments, he said that he would like to spend more time on innovation rather than capital allocation, which is apparently difficult when stockholders who care about quarterly reports are involved.
Engineering, design & general company operations absorb vast majority of my mind & are the fundamental limitation on doing more.
Capital allocation is important, but low CPU load. Tesla public company duties are a much bigger factor, but going private is impossible now (sigh).
— Elon Musk (@elonmusk) December 25, 2020
Elon Musk was likely referring to how much he would have to spend to take Tesla private. Such a task would likely have been a challenge even for Musk, who recently passed Facebook CEO Mark Zuckerberg to become the second wealthiest person on Earth. Tesla stock has rallied by more than eight times its January market cap and was recently listed in the S&P 500 index.
Despite his apparent dislike of running a publicly traded company, Musk may also be considering an initial public offering (IPO) for SpaceX’s Starlink once its earnings become more predictable. Although other satellite Internet providers do exist, Musk does not seem interested in competing with them and has set the goal of competing with “traditional,” land-based Internet service providers instead. Starlink has recently received FCC approval to bid on broadband services and licenses to operate in Canada and Australia. Competing with land-based ISPs on a serious level would require low latency and high speeds that are impossible with geosynchronous satellites, so its satellites have regulatory approval for a low-Earth orbit instead.
It will most likely make sense for Starlink to go public once the revenue growth is reasonably predictable
— Elon Musk (@elonmusk) December 25, 2020
SpaceX president Gwynne Shotwell confirmed that its leadership is definitely considering it at an investor event:
“Right now, we are a private company, but Starlink is the right kind of business that we can go ahead and take public.”
Starlink will be able to deliver Internet connectivity to most places on Earth once its full constellation is deployed, even regions that have previously been neglected by traditional ISPs. Starlink already has more than 800 satellites in orbit and is currently in its public beta phase.
An IPO may make it possible to raise the funds needed to bring that number of satellites up to the 42,000 that Starlink has planned and slice through some of the regulatory red tape required to bring more reliable Internet service to regions that have been hurt by the “digital divide” that makes it difficult for them to access online services like virtual learning and telehealth.
Washington State’s Hoh Tribe and some low-income students at a Texas school district have gotten boosts by being able to gain early access to Starlink, for instance. So there does appear to be an untapped market for fast satellite Internet like Starlink’s, which may be attractive to investors if and when it opens an IPO.
Which may take some time, especially since Elon Musk seems to regret doing the same for Tesla, which may explain why he has made noise about a possible merger with another automaker and mentioned that Apple could have bought Tesla at one point when Tesla was nearly broke. However, he does seem to realize that the bird has flown on that one.
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