SpaceX Could Soon Be Worth $2 Trillion. This $66 Metric Is the One to Watch

Many investors are chomping at the bit to buy shares in a slew of upcoming IPOs, including OpenAI, Anthropic, and SpaceX. The recent debut of the artificial intelligence semiconductor company Cerebras, which raised $5.5 billion from its IPO and saw its share price surge 68% on the first day of trading, shows just how eager some investors are for new tech stocks.

SpaceX -- which is run by Tesla (NASDAQ: TSLA) CEO Elon Musk -- is rapidly approaching its June 12 IPO and could raise up to $75 billion in the offering. That would give SpaceX a valuation of about $1.75 trillion to $2 trillion -- making it the biggest IPO ever.

And while those are unfathomable numbers, potential SpaceX investors may want to focus their attention instead on one declining number in the company's recent S-1 filing: The $66 in average revenue per user (ARPU) for the company's Starlink internet service.

Here's why.

Image source: Getty Images.

Most companies try to expand ARPU, but SpaceX has other plans

While SpaceX is a rocket company with lofty ambitions to colonize Mars, it generates the vast majority of its revenue from its Starlink satellite internet business -- more than 60% in 2025.

Companies often work hard to improve their ARPU because higher revenue per user can mean more sales, potentially more profitability, and a higher return on their cost of acquisition. But in SpaceX's S-1 filing, the company showed that ARPU was declining and said it could fall further. Take a look:

Source: SpaceX S-1 Filing.

From 2023 to the first quarter of this year, ARPU is down 33%. Usually, this would be a somewhat concerning trend. Explaining the decline, SpaceX's management said it expects ARPU to continue falling as it expands outside of the U.S., but that efficiencies will eventually balance out the decline:

"[W]e expect these dynamics to be offset by increased scale and technological advancement in our launch, satellite, and user terminal operations, ultimately supporting overall revenue growth and cost reduction."

In short, SpaceX is focusing on international customer expansion, which has lower ARPUs because the plans cost less. And the company is OK with that because it plans to increase efficiency to grow its margins.

I should mention that the company could stabilize, or even improve, its ARPU by expanding enterprise deals for its Starlink service. For example, the company has a growing list of airlines that pay for Starlink access to offer their passengers, and the U.S. government also has contracts for Starlink service.

But, at least for now, revenue per user is expected to fall.

Can SpaceX deliver on subscriber growth and efficiencies?

Investors only have a snapshot of SpaceX's finances, and while there are certainly some concerns about its spending, the company is making operational efficiency gains.

Consider that in 2025, SpaceX's Connectivity segment (which includes Starlink) saw its operating income spike 120% to $4.4 billion, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 86% to $7.1 billion. All of which occurred as Starlink ARPU was declining.

Additionally, the company's new Starship rocket can deploy 60 next-generation V3 satellites at once, a 20-fold increase over the capacity of its Falcon 9 rocket. What's more, SpaceX says its Falcon rockets have reduced launch costs by approximately 85% to 92% compared to historical averages, and the fully reusable Starship could push those reductions more.

Another metric where the company is clearly making progress that helps offset falling ARPU is through expanding Starlink customer numbers. Starlink customers surged 347% from just 2.3 million in 2023 to 10.3 million currently. And Starlink customers more than doubled in the past year alone.

That growth highlights just how good SpaceX is at attracting new customers, and the company believes its total addressable market (TAM) for connectivity is $1.6 trillion, including $870 billion from Starlink broadband and $740 billion from its Starlink mobile service.

Of course, having a large addressable market doesn't guarantee SpaceX will capture it.

Investors will have to keep a close watch

The SpaceX IPO will likely be massive. But if you buy shares, keep an eye on how quickly the company improves its efficiencies and watch Starlink's ARPUs.

If they keep falling and new operational efficiencies don't kick in, that could be a red flag.

So far, SpaceX has grown its customer base quickly, added new enterprise clients, and improved its operations to the point that declining ARPU may not be a big concern right now.

But SpaceX certainly has a lot of work to do to convince potential shareholders that it can eventually turn its growth into profitability.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.