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Project Kuiper: A $16bn investment

October 23, 2024

A research note from analysts at Bank of America says that Amazon could invest $16 billion (€14.8bn) to get its Project Kuiper satellite system up and running, with most of that going in rocket launch costs.

Those launches, which were due to start during this fourth-quarter of 2024, will not now start until later in January 2025. Amazon is using a mix of launch providers including their sister business Blue Origin as well as the United Launch Alliance and Arianespace as well as SpaceX.

The bank’s note said that Amazon could spend an estimated $1 billion and $3.5 billion on the network in 2024 and 2025, respectively. However, Amazon could start capitalizing costs in the second half of 2025 to lower estimated operating expenses to $1.8 billion in 2025, according to BofA.

Amazon’s target is to launch 3,236 satellites into low Earth orbit and then to provide global broadband access. Amazon has previously admitted that it was prepared to fund $10 billion on the satellite system. Project Kuiper must orbit at least half of the constellation by July 2026.

Bank of America analyst Justin Post acknowledged the big total addressable market for the project, but said it is “hard to see a lot of Kuiper stock optimism.”

The bank is cautious about the prospects for Kuiper. While admitting that there are some 2.6 billion people globally who do not have broadband access, there are limits for many of them on the amount they could stump up for access to broadband. “Amazon’s satellite service faces established competition (Starlink), requires big upfront investment, and has high recurring costs,” the bank stated.

“With Project Kuiper losses expected to grow, and Amazon’s market cap over $1.8 [trillion], we think it will be years before any Kuiper-related market-cap expansion is possible for AMZN,” says the bank.

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