SpaceX Changed the Economics of Spaceflight. Now It's Doing the Same Thing to Satellite Cost.

Viasat (VSAT) successfully launched its ViaSat-3 F2 satellite, a crucial development following the failure of its predecessor, aiming to restore 1 Tbps capacity for the Western Hemisphere. However, the article underscores Viasat's severe competitive disadvantage against SpaceX's Starlink, which can deploy 900 times more satellite internet capacity for the same launch cost due to significantly lower build ($1.2M vs. $800M) and launch ($10M for 60 satellites vs. $150M for one) expenses. This economic disparity, combined with Viasat's ongoing financial losses ($118M YTD, projecting a third consecutive annual loss), raises substantial concerns about its long-term market viability and investor attractiveness.

Analysis

United Launch Alliance (ULA) successfully launched Viasat's (VSAT) ViaSat-3 F2 satellite, the second of three planned, into geostationary orbit following two prior scrubs. This launch is crucial given the 2023 antenna malfunction of the first ViaSat-3 F1, which rendered its $700 million investment largely inoperable and impacted expected revenue streams. The F2 is projected to deliver 1 Tbps of data throughput for the Western Hemisphere, aiming to restore critical capacity.

However, Viasat's cost structure presents a severe competitive disadvantage against SpaceX's Starlink. The ViaSat-3 F2 is estimated at $950 million ($800 million build by Boeing, $150 million launch by ULA). SpaceX's V3 Starlink, also 1 Tbps, costs $1.2 million to build and can be launched 60 at a time for $10 million per Starship mission. This allows SpaceX to deploy 900 Tbps for the $150 million Viasat spends on a single 1 Tbps launch.

This economic disparity significantly impacts Viasat's financial outlook. The company has reported nearly $118 million in year-to-date losses, tracking for its third consecutive annual loss and fourth in five years. The analyst highlights Viasat's inability to compete effectively with SpaceX's superior economics, raising substantial concerns about its long-term market viability and investor attractiveness.

Key Decisions for Investors

• Investors should critically reassess Viasat's long-term competitive viability given the overwhelming cost and efficiency advantages of SpaceX's Starlink.
• Monitor Viasat's future earnings reports for any signs of improved profitability or a revised strategy to address its significant cost structure and market position.
• Consider potential downside risks to VSAT stock due to sustained financial losses and the analyst's pessimistic outlook on its ability to compete in the satellite internet market.