SpaceX Faces Major Challenges Building Mobile Network After Spectrum Purchase

SpaceX Faces Major Challenges Building Mobile Network After Spectrum Purchase ©@Kmeel_com from pixabay via Canva, @3DSculptor from Getty Images via Canva
SpaceX Faces Major Challenges Building Mobile Network After Spectrum Purchase ©@Kmeel_com from pixabay via Canva, @3DSculptor from Getty Images via Canva

Key Stats for SpaceX Stock

  • Price change for SpaceX stock in last 1 month: -4%

  • $SPCX Stock Price as of Oct. 16: $146

  • 52-Week High: $226

  • $SPCX Stock Price Target: $223

What Happened?

SpaceX (SPCX:NASDAQ) has bought 800 MHz of spectrum licenses from Grain, and a source put the price at nearly $8 billion.

SpaceX called it a “critical next step” for Starlink Mobile. But a real rival to AT&T, Verizon and T-Mobile will take more than airwaves.

Reuters reports that SpaceX will likely need a ground network, plus years of work and billions more.

TD Cowen estimates the build would cost more than $80 billion, which adds to what SpaceX is already spending on Starship, AI infrastructure and its Terafab chip factory.

Cities are a big hurdle. Phones have small antennas and limited power, while satellites orbit hundreds of kilometers up, much farther than a cell tower.

Anshel Sag of Moor Insights & Strategy said there are too many pitfalls for satellites to be the only source of data.

SpaceX knows this. Its plan is a hybrid one and has approval for up to 15,000 Starlink Mobile satellites and plans to add antennas on towers and rooftops.

Sag also said nobody is likely to offer SpaceX wholesale access to their networks, so it looks set to build its own.

Rivals are not worried yet. T-Mobile’s CTO said the spectrum is not enough to match established networks. Verizon said airwaves are “empty” without a network to use them.

SPCX Stock Revenue, EBIT and Free Cash Flow Estimates in Billion USD (TIKR)
SPCX Stock Revenue, EBIT and Free Cash Flow Estimates in Billion USD (TIKR)

Management sounded confident. On the August call, Gwynne Shotwell said the company also has 65 MHz of EchoStar spectrum, which the FCC has approved.

SpaceX plans to launch its next mobile satellites next year and start service by the end of next year.

She said the EchoStar spectrum has terrestrial parts, so SpaceX will build ground hardware. Her idea is small base stations attached to Starlink dishes, which could keep costs down.

What the Market Is Telling Us About SpaceX Stock

The business behind SpaceX stock is growing fast. Revenue nearly doubled in Q2, and the company’s net loss shrank. SpaceX also has $100 billion in cash after its IPO and bond sale.

But the money is going out quickly. Of the $18.4 billion in Q2 capital spending, about $15.8 billion went to AI compute.

Julie Zhu of MoffettNathanson noted that the big three carriers spent about $650 billion on networks in the decade before 2023.

She finds it hard to imagine SpaceX finishing a rival network within a decade.

SPCX Stock Street Target (TIKR)
SPCX Stock Street Target (TIKR)

For investors, the risk to SpaceX stock is not the technology. A mobile network would compete with Starship and AI for cash.

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