Starship’s path to reusability looks murky after SpaceX’s S-1

SpaceX’s recent IPO and Starship rocket test flight provided two big data points that offer a sobering view of the coming years — and one that may disappoint the company’s supporters and critics.

Behind the impressive earnings forecasts for AI companies and plans for a base on the moon is a more ingrained reality: An expendable spacecraft could keep SpaceX running, but it doesn’t achieve the cost reductions — or frontier business models — that Elon Musk is betting on.

SpaceX is like many companies, but right now there’s only one that’s generating significant revenue. Starlink, its satellite communications network, is the tentpole for the company’s IPO. The top line is pretty incredible. SpaceX’s communications business generated $11.4 billion in revenue last year, the bulk of the company’s profits.

But underneath, you can see the capital spending loop that scared previous entrepreneurs away from this model. SpaceX needs to replace about a fifth of its satellites each year just to maintain its current level of service. It has invested more in its satellite business ($11.4 billion) since the start of 2023 than in building spacecraft and launch infrastructure ($8.4 billion).

SpaceX’s S-1 filing with the US Securities and Exchange Commission expects that costs will continue to grow, but expects that improvements in its technology will allow it to reduce them as a percentage of its revenue.

Musk has said Starship is key to keeping Starlink costs under control, and he even said SpaceX could go bankrupt without the vehicle’s ability to replace those satellites cheaply. In this context, SpaceX’s S-1 observation was the first acknowledgment that a complete reuse of the Starship is not necessary to launch the new generation of Starlink satellites. But without full reusability, the cost will rise, making the business less attractive.

“If this reusability is not achieved, the launch cost on a Starship vehicle may not be much lower than a Falcon 9, even if the full 100-ton capability is achieved (which is by no means inevitable),” satellite market analyst Tim Farrar wrote in a note to clients last week. “The launch cost could reach $100 million (i.e. $1,000 per kilogram) while the tempo remains constrained by the rate at which second stages can be manufactured and first stages refurbished.”

The test flight of the third version of the spacecraft and its booster last week confirmed these concerns. The maiden flight of the newest rocket saw issues with key reusability — restarting the Raptor rocket engines on both the rocket and spacecraft in order to achieve a controlled return to Earth. However, the spacecraft deployed a group of dummy satellites and two test vehicles into space.

This helps meet SpaceX’s expectation that it will begin launching a new generation of high-throughput Starlink satellites 60 at a time, a twenty-fold increase in capacity compared to a single Falcon 9 launch later this year. At first glance, this is a classic example of Musk’s timelines, and may actually be a prediction that the initial launches will consume the spacecraft. If so, SpaceX may not be able to rely on the expected amount of free satellite money, and its plans to launch space data centers will become unviable until the rocket becomes reusable.

Starlink’s growth is slowing

Meanwhile, SpaceX’s S-1 shows that Starlink’s growth is slowing.

SpaceX’s total addressable market account depends on its ability to provide service to every fixed or mobile broadband subscriber in the world. But this is unlikely because Starlink does not compete on price with terrestrial fiber. The rest of the document notes that SpaceX continues to view direct device connectivity as a complement, not a replacement, to land-based mobile providers.

Starlink has just over 10 million subscribers, more than any other satellite communications network. But Farrar notes that the rate of user growth declined over the course of the first quarter of 2026. Quilty Space, a space consulting firm, predicted earlier this year that SpaceX would end the year with 16.8 million subscribers. This would require the company’s quarterly growth rate to roughly double what it is now, which could be difficult after recent price increases.

Growth is important for SpaceX because new Starlink users pay less than previous users. Starlink’s average revenue per user fell from $99 in 2023 to $66 in the first quarter of 2026 — a change driven by its expansion into new international markets where it can’t charge fees as it does in developed economies. Without a rapidly growing user base, each new satellite launched generates less money.

Increased competition also threatens Starlink. Amazon’s Leo network is nearing the size needed to pressure SpaceX, though it is waiting for the FCC to extend a deadline that requires it to launch 1,600 Internet satellites by July.

The data in SpaceX’s filing offers a bleak growth outlook for the company as well as competitors like Blue Origin. If SpaceX — which is far ahead of everyone else — sees a slowdown in demand, it could indicate that the space broadband market is smaller than players expected, Farrar says.