SpaceX's Starlink could pose 3 big risks to Apple, BofA warns

Apple’s (AAPL) top and bottom lines may look vastly different years from now if SpaceX’s (SPCX) Starlink becomes a major player in the wireless industry.

Elon Musk’s rocket business said late last week that it acquired a nationwide low-band spectrum portfolio. This positions Starlink, Musk’s satellite business, to challenge legacy wireless giants such as AT&T (T), Verizon (VZ), and T-Mobile (TMUS) across the US.

The challenge could pose a key threat to Apple, BofA analyst Wamsi Mohan said.

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“The key implications for Apple are (1) risk to carrier subsidy model, (2) potential for a competitive device that takes share, (3) Integration with Tesla/SpaceX ecosystem including Grok creates an end-to-end competitor including AI capabilities,” Mohan explained in a new note on Monday.

Mohan estimated that about 53 million iPhones a year move through the Big 3 wireless providers, with a blended promotional credit of $800 a unit. Subscribers who switch to Starlink potentially lose the subsidy, which could lengthen their replacement cycle or lead to a trade down to lower-end phones.

A 10% shift of Big 3 postpaid phone subscribers to SpaceX could cost Apple about 5 million units, or $6 billion in revenue, Mohan said.

“A shift with a successful Grok-powered low-cost SpaceX phone and carriers retrenching promos across their remaining base could be potentially higher,” Mohan said. “We see the bigger risk as the valuation multiple where the debate becomes US iPhone pricing power and the durability of the US premium mix with lower carrier subsidies.”

He added, “Near term, carriers are likely to defend with heavier promotions, a tailwind for upgrades. Starlink Mobile works on unmodified handsets, so most switchers keep or buy iPhones.”

Brian Sozzi is Yahoo Finance’s Executive Editor, host of the Sozzi Unleashed morning show and the Power Players with Brian Sozzi podcast, and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email [email protected].