When Elon Musk first fired off Starlink satellites, most regarded it as a good idea. Bridging the “digital divide” and getting internet access to places where it was difficult—if not impossible—to provide it was a potentially huge and mostly untapped market. Now, Amazon (NASDAQ:AMZN) is getting into the game itself and sending up its own satellites to offer internet access where it’s not always available. Amazon investors were reasonably happy, sending shares up modestly in Friday afternoon’s trading.
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The e-retailing giant refers to its satellite internet system as Project Kuiper and will be the first part of an eventual 3,236 satellites that’ll encircle the globe and provide internet access pretty much anywhere. The prototypes have been heavily tested in the lab, but as the vice president of technology for Project Kuiper, Rajeev Badyal, noted “…there’s no substitute for in-orbit testing.” Amazon is prepared to shell out big to get Kuiper up and running, too; it’s set to invest as much as $10 billion.
While Starlink was expecting much better response numbers than it ultimately got, it still delivered a hefty shot of revenue for SpaceX. In fact, one set of estimates looks for Starlink to equal 40% of SpaceX’s revenue for all of 2023. And with it celebrating its two millionth subscriber back in late September, it’s clear that Starlink means big money. If Amazon can deliver comparable service to Starlink and beat Starlink on price—which it might; Starlink’s services are fairly pricey—then Amazon may have a real winner on its hands.
Is Amazon a Buy, Hold, or Sell?
Amazon stock is currently rated a Strong Buy, supported by 40 Buy ratings and just one Hold. With an average price target of $176.02, Amazon stock offers investors 37.39% upside potential.
