(This story is for CNBC PRO subscribers only.) Morgan Stanley on Monday updated its long-term valuation estimate for Elon Musk's SpaceX, in a deep-dive research report that says the company's value could soar if its ambitious satellite internet network succeeds. SpaceX's valuation could reach as high as $175 billion in Morgan Stanley's most optimistic "bull case" scenario, the firm said. The private space company currently has a valuation at about $36 billion and Morgan Stanley expects that to reach $50 billion in its "base case," or most likely, scenario. But, if the wheels fall off SpaceX's several current projects, the Morgan Stanley team of analysts say the company's valuation would fall as low as $200 million in a "bear case" scenario. "The future of the company is predicated on Starlink, the satellite internet business; and Starship, which is critical for Earth to Earth travel, deep space exploration, and can accelerate the deployment of the Starlink network," Morgan Stanley said. Three years ago, Morgan Stanley published a similar report on the industry as a whole, predicting the global space economy is going to triple in size. Additionally, the firm has begun hosting annual space summits for investors in New York City, with the most recent one at capacity. Morgan Stanley said it views SpaceX as four combined ventures, separating it as rocket launches, Starlink satellite internet, hypersonic point-to-point travel and deep space exploration. The second of those, Starlink, represents SpaceX's plan to build an interconnected network of about 12,000 small satellites to beam high-speed internet to anywhere in the world. In addition to getting the satellites in orbit, SpaceX will need to build a vast system of ground stations and affordable terminals if it is going to connect consumers directly to its network. "Starlink [is] the most significant and variable driver of the valuation," Morgan Stanley said, noting that it is worth $40 billion of the $50 billion in its base case and $130 billion of the $175 billion in its bull case. The firm expects SpaceX will continue to need significant capital in order to fund the growth of its four businesses. Morgan Stanley noted that SpaceX has raised about $3.5 billion in capital to date. Over the next four and a half years, the firm expects it will need about $4 billion to continue to develop Starlink and between $2 billion and $10 billion to build Starship, its next-generation rocket. Starship is under development, with the goal of launching as many as 100 people at a time on missions to the moon and Mars. In June, Musk declared that Starship is the company's top priority now , as he wants SpaceX to even further accelerate the rocket's development development. Starship has suffered a few dramatic setbacks even as the company has made progress, with its most recent prototype exploding shortly after an engine test on May 29. SpaceX's rocket business The current core of SpaceX's business, launching spacecraft and satellites on its Falcon 9 and Falcon Heavy rockets, is worth just about $1 billion in the long run, Morgan Stanley said. That's in part due to a lower than expected launch rate, the firm said. Morgan Stanley expects SpaceX's rocket business revenue to rise from about $2 billion a year currently to about $3 billion a year by 2040. Starlink's myriad of outcomes Morgan Stanley emphasized that Starlink's success "is dependent on the price of the service," with a change in price of $5 per month representing about $20 billion to SpaceX's valuation. The cost curve of the user terminal — the piece of hardware that would be installed at a house or business to connect to the satellites — is also key. Morgan Stanley said that a $100 difference in the price of the user terminal represents an additional $25 billion or so to SpaceX's valuation. "For the business to be successful, we assume a scenario where the service is priced ~$25 / month, consistent vs. the cost of global fixed broadband, with the cost of the user terminal getting to $100 by 2040," Morgan Stanley said. Moreover, the firm expects Starlink to burn through about $50 billion in cash from now until 2032, with Starlink's first free cash flow generation not expected until 2033. In addition to to the hurdles SpaceX faces in the financial cost of the system, regulatory uncertainty and competition, Morgan Stanley noted that Starlink's risks also include greater data supply, such as from terrestrial 5G networks, and lower than expected data demand, such as delays to the development of autonomous cars. Based on Starlink's expected ability to process data, Morgan Stanley says the network could handle as many as 234 million subscribers. But that will depend on the price of the service, as well as if its technical performance is as strong as expected. Although SpaceX is a private company, there are several publicly-traded space companies for investors that are interested in the sector. For a complete guide, read more here. – CNBC's Michael Bloom contributed to this report. Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
