
Musk’s SpaceX Plans a Spinoff, IPO for Starlink Business - _Microft
https://www.bloomberg.com/news/articles/2020-02-06/spacex-likely-to-spin-off-starlink-business-and-pursue-an-ipo
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Rebelgecko
Can someone who knows more about the finance stuff explain why a company
(especially one like SpaceX that prides itself on being super vertically
integrated) would spin off a part of the business as a public company? Is it
just to help employees whose equity is relatively illiquid? Is it to raise
capital? Insulate the parent company from potential regulatory/legal issues?

Sidenote: SpaceX actually is sorta-kinda publicly traded. Alphabet and
Fidelity bought ~10% of SpaceX. Fidelity has a few mutual funds that are
partially invested in SpaceX (like 0.5% of the fund is SpaceX). I'm kinda
surprised someone hasn't made a FauxSpaceX ETF that buys the Fidelity SpaceX
fund and does some shorts/options to try and cancel out the non-SpaceX parts
of the fund.

~~~
jessriedel
Speculation: SpaceX maintains control by selling less than 50% of Starlink.
This is essentially just asking the public if they would like to invest in the
Starlink business with no change to operations.

~~~
repsilat
I think so.

Starlink is capital-intensive and untested as a business proposition. This
keeps the risk walled off from SpaceX and lets them raise without diluting
ownership of SpaceX. (It also means guaranteed profit for SpaceX from the
pockets of new investors.)

Not sure why they'd go public instead of raising the capital privately,
though.

~~~
martythemaniak
Well, they need to raise around $10B to get it fully operational, so that
might be hard to do privately.

Also, perhaps Musk thinks that having public retail investors is worth it.
After all, even though they contribute approximately 0% to Tesla's funding,
retail investors and owners generate approximately 100% of the hype, online
content and general proselytizing. That is, someone will have to defend
Starlink from accusations that it has ruined the sky, and Musk alone can't do
it.

~~~
swampthinker
Retail investors contribute to Tesla's financing by offering interest free
loans in the form of pre-order deposits.

~~~
the__prestige
Those are customers, not retail investors.

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dang
An announcement of an announcement is not substantive enough to be on topic
for HN:
[https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...](https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=%22announcement%20of%20an%20announcement%22&sort=byDate&type=comment)

Actually, this is an announcement of a possible future announcement. Since
they'll announce the announcement itself at some point, that makes this
article an announcement of an announcement of an announcement. We can call
that a third-order announcement.

If anyone can find an example of a _fourth_ -order announcement, that would be
interesting enough to be on-topic for HN again.

~~~
oska
So does this mean the submission was administratively flagged?

Not criticising, just asking for clarification on what being judged as 'not
substantive enough to be on topic for HN' entails.

~~~
dang
Yes, I moderatorly downweighted it.

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ctdonath
SpaceX & Starlink are symbiotic, but do look like distinctly separate
businesses. Each wouldn't want to be subject to major problems of the other:
if one suffers disasters, other isn't financially impacted. An "at cost"
arrangement would greatly benefit both, former getting $ to cover launches (by
which they can test & commoditize equipment/process), latter getting cheap
transport.

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jiofih
[https://outline.com/7jtePr](https://outline.com/7jtePr)

~~~
_Microft
Directly opening _about:reader?url= <...>_ in Firefox works as well by the
way.

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ogre_codes
This makes a ton of sense for SpaceX. SpaceX is a high risk business with
intermittent revenue and very long term goals. Avoiding the burdens of being
public lets SpaceX do what they need to do without worrying about quarterly
revenue targets and the scrutiny of Wall Street.

Starlink is a relatively low-risk service company with a clear business model,
easily predicted and consistent revenue. Exactly the sort of business which
Wall Street loves. By going public with Starlink, SpaceX can raise a lot of
money on the public markets and give it's investors and employees a way to
cash in on their investments without actually making SpaceX public. They can
also retain controlling interest in Starlink and benefit from the success of
their child company.

TLDR: It's a clever way for Musk and company to finance SpaceX and keep their
investors happy while keeping SpaceX itself private.

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smccully
When Starlink has Class action lawsuits opened by Astronomers SpaceX doesn't
want to be liable. _edited_

~~~
smccully
_Steps on Soapbox_

SpaceX and the ilk are openly planning to destroy the night sky. If allowed to
continue it will literally be the greatest environmental disaster in
generations. While the idea of Fast Internet access unilaterally across the
globe would be a tremendous accomplishment I can not think it is the worth the
cost.

~~~
manicdee
If destroying terrestrial astronomy is what it takes to get astronomers to
recognise indigenous rights, then I will be pouring my money into StarLink.

~~~
smccully
uhm, what?

~~~
manicdee
The biggest telescopes in the world are built on land that is special or
sacred to various indigenous people, or where the land was “leased” with no
intention of paying the rent.

