Jefferies sees Starlink on 23% of aircraft by 2028 on scale advantage

According to Jefferies, Starlink satellite internet service is currently installed on 9% of aircraft and is projected to be on 23% of aircraft by 2028. This projection is attributed to SpaceX's scale advantage in the aviation connectivity market. SpaceX, valued at $2.24 trillion, generated $23 billion in revenue last year, with analysts forecasting a remarkable 145% revenue growth this year.

Starlink's constellation of 11,200 satellites far surpasses competitors like Amazon LEO's approximately 390, Intelsat's 120, and Viasat's 36. The lightweight phased array antenna used by Starlink, weighing around 75 pounds, is a significant advantage over legacy systems weighing approximately 300 pounds, which require larger radomes.

This design allows for quick installation in days rather than the three to four weeks often needed for legacy retrofits, thereby reducing aircraft downtime and lowering switching costs. SpaceX's scale advantage, coupled with its in-house manufacturing and launch capabilities, supports a denser network buildout and a faster refresh cycle.

Currently, Starlink is installed on 40% of United Airlines' fleet, with plans to install it on 100% of the fleet by the end of 2027. SpaceX's projected revenue is estimated at $100 billion by the end of 2026, driven by AI growth and cloud service agreements with companies like Anthropic and Alphabet. SpaceX's recent acquisitions, such as the purchase of a nationwide 800 MHz spectrum portfolio from Grain Management for approximately $8 billion, and the authorization for 15,000 direct-to-device satellites, are seen as strategic moves to enhance its market position in both mobile and AI sectors.

These developments have been positively received by analysts, with price targets set between $190 and $230. However, SpaceX is currently considered overvalued relative to its Fair Value.