SpaceX’s Starlink Breaks Even, iPhone 15 Unveiling, and Arm Goes Public. Newsletter #23

SpaceX's satellite internet venture, Starlink, made headlines last week with the announcement that production of the satellites is finally breaking even.

• SpaceX’s Starlink Breaks Even

• ECB Raises Rates to All Time High

• Arm Goes Public

• iPhone 15 Unveiling

• FTX to Sell its Crypto Holdings

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SpaceX’s Starlink Breaks Even

SpaceX's satellite internet venture, Starlink, made headlines last week by announcing that satellite production is finally breaking even.

According to The Wall Street Journal, Starlink raked in $1.4 billion in revenue last year, a significant leap from the $222 million of 2021.

But this figure falls considerably short of its ambitious initial projection of $12 billion outlined in a 2015 investor presentation.

Starlink aims to eventually make the internet accessible to the entire globe.

SpaceX executive Jonathan Hofeller shared at a recent conference that Starlink's satellite antenna production is no longer a loss-making venture, saying:

“We were subsidizing terminals, but we’ve been iterating on our terminal production so much that we’re no longer subsidizing them, which is a good place to be”

Back in 2015, SpaceX had envisioned a more prosperous trajectory for Starlink.

The company had anticipated generating a whopping $7 billion in operating profits by 2022, with a user base of 20 million subscribers by the year's end.

Unfortunately, Starlink reported just over 1 million active subscribers at the close of 2022 but data from May 2023 indicate a growing user base of approximately 1.5 million users.

Still nowhere near the 20 million they anticipated but 50% higher than at the start of the year.

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ECB Raises Rates to All Time High

In a recent move to stabilize consumer prices, the European Central Bank (ECB) raised interest rates to an unprecedented level.

The ECB opted to raise the interest rate by 0.25%, reaching 4% and marking the tenth successive increase.

The ECB is one of the world’s most important central banks and has set policy for the Eurozone since its creation in 1998.

This decision coincided with European officials revising down their growth predictions for the eurozone's economy.

Following the ECB’s rate rise the euro plummeted to a three-month low against the dollar, falling by 0.75% by late afternoon and settling at $1.065.

Euro vs USD

Financial analysts believe that central banks are approaching the end of their rate increases and have largely been successful at lowering global inflation.

In the coming week, meetings are scheduled for both the US Federal Reserve and the Bank of England.

Most seem to believe the Fed will maintain the current rates, despite a surge in US inflation in August.

However, the Bank of England is more likely to increase them with UK inflation persistently exceeding its target of 2%.

The ECB implied that Eurozone interest rates might have now peaked and hopes that recent increases would be the last ones needed in the fight to push inflation back down to its 2% target.

This adjustment propels the Eurozone interest rates beyond their previous record set in 2001, a time when efforts were underway to amplify the value of the newly introduced euro.

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Arm Goes Public

UK based semiconductor design firm, Arm (NASDAQ: ARM) rose nearly 25% on Thursday, following the initial public offering of its shares.

Arm’s price/earnings ratio now exceeds that of Nvidia, which operates at 108 times earnings but has given an impressive 170% year-over-year growth projection for this quarter.

Arm’s revenue declined in fiscal year 2023 compared to 2022, but this doesn’t seem to have put investors off too much.

SoftBank, which acquired the company in 2016, owns about 90% of the outstanding shares.

During an investor presentation, Arm projected the cumulative market value for its chip designs to reach approximately $250 billion by 2025.

This includes an expansion in chip designs tailored for data centers and automotive applications. Despite a slight dip in its annual revenue to $2.68 billion last year, the company maintains a positive outlook for the future.

Arm was founded in 1990 and purchased by Softbank in 2016. It only creates and licenses its chips rather than actually manufacturing and selling them like other chip companies.

Arm's foundational designs, integral to almost every smartphone chip, delineate the fundamental operations of a central processor, encompassing tasks like arithmetic calculations and memory access.

This successful market debut will hopefully lead to a resurgence in technology IPOs, breaking the nearly two-year hiatus and marking the most substantial tech offering in 2023.

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iPhone 15 Unveiling

At its event on Tuesday, Apple revealed that the iPhone 15 would adopt a USB-C cable, recognized as a "universal standard". A new version of the Apple Watch with a superior chip was also unveiled.

Apple announced that its upcoming iPhone will abandon the traditional lightning charging port, a move instigated by the EU's directive to standardize charging cables.

This marks the first time since 2012 that an iPhone has incorporated a different charging port.

Some Apple devices - such as the iPad Pro and Macs - use USB-C (left while the iPhone uses Lightning (right).

However, the absence of significant, attention-grabbing updates this year might leave a segment of consumers feeling underwhelmed.

Considering the matured development of both the iPhone and the Watch, this isn’t hugely surprising. It highlights the complexity of these gadgets and the growing difficulty in unveiling revolutionary updates every year.

To facilitate the transition, Apple has launched a USB-C to lightning port adapter priced at £29 ($36), allowing users to connect accessories accumulated over years to the newly compatible iPhones or iPads.

The company confirmed that the USB-C cable, compatible with several Apple laptops and iPads, will also be functional with the new versions of AirPods Pro and wired EarPods.

This shift, encouraged by the EU to simplify the user experience, economize, and minimize electronic waste through the reuse of chargers, has been met with concerns regarding a potential increase in discarded cables in the forthcoming years.

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FTX to Sell its Crypto Holdings

A US Bankruptcy Court judge in Delaware has allowed FTX to liquidate its crypto assets, valued at over $3.4 billion, to settle debts with creditors.

The decision paves the way for FTX to not only sell, but also stake and hedge its crypto portfolio, to mitigate potential financial risks and generate steady returns.

FTX began to unravel at the end of last year after it was revealed that the value of the exchange’s own token (FTT) was based on nothing.

An attorney representing a group of FTX customers pushed for the move.

FTX had previously sought legal consent in August to manage its assets in this manner, highlighting that such actions would curtail potential losses before the sale of significant assets like Bitcoin or Ethereum.

The sale will allow for the generation of low-risk returns on digital assets that are currently not being utilized, as per the documentation submitted by FTX's legal team.

During the hearing, the judge inquired about the ability of FTX officials to identify the original depositors of the assets.

In response, a representative of the exchange clarified that the digital assets slated for sale are considered the debtor's property and are amassed in a single pool, making it impossible to trace back to individual customers.

FTX holds about 16% ($1.16 billion) of all Solana and about $560 million of Bitcoin, along with many other less well known tokens.

The assets will be sold in batches with sale limits of $50 million for the first week and $100 million in the following weeks.

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