WEBVTT - Best and Final: WBD, IPO, BNPL 0:00:02.720 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, Radio News. Hello. Hi, welcome to 0:00:10.560 --> 0:00:13.440 The Money Stuff Podcast, your weekly podcast where we talk 0:00:13.480 --> 0:00:17.880 about stuff related to money. I'm Matt Levian and I 0:00:17.920 --> 0:00:20.000 write The Money dot Com for Bloomberg Opinion. 0:00:20.520 --> 0:00:23.079 And I'm Katie Greifeld, a reporter for Bloomberg News and 0:00:23.120 --> 0:00:24.640 an anchor for Bloomberg Television. 0:00:35.760 --> 0:00:39.720 I like Apostle merger fight, but like, yeah, I don't 0:00:39.760 --> 0:00:42.640 like a media deal because everyone pays attention to the 0:00:42.680 --> 0:00:47.640 media deals, and the Warner Brothers merger fight has been 0:00:48.560 --> 0:00:51.159 wall to wall coverage everywhere, including the Money Stuff newsletter, 0:00:51.680 --> 0:00:54.320 and it's like, I don't know, I can't keep up 0:00:54.360 --> 0:00:54.520 with it. 0:00:54.640 --> 0:00:56.080 Yeah, it was going to say, when we were talking 0:00:56.120 --> 0:00:58.840 about topics and I suggested Warner Brothers, it seems like 0:00:59.600 --> 0:01:01.480 you were not psyched, and it's like, I don't know 0:01:01.600 --> 0:01:05.360 your column that you write would suggest differently. I agree 0:01:05.360 --> 0:01:09.120 with you, though I don't really get jazz talking about media, 0:01:09.160 --> 0:01:11.880 and obviously we're covering it on Bloomberg Television as well. 0:01:12.280 --> 0:01:16.400 This one. The fact that it's become this bidding war 0:01:16.520 --> 0:01:18.440 does make it kind of fun and interesting. 0:01:18.520 --> 0:01:20.240 Oh yeah, right, Like I merge your bidding war is 0:01:20.240 --> 0:01:23.200 interesting although it's like a strange bidding war. Yeah, recruiting 0:01:23.280 --> 0:01:26.320 is on like Thursday afternoon, who knows. But basically the 0:01:26.319 --> 0:01:28.280 deal is that on Friday, Warner announced they signed a 0:01:28.280 --> 0:01:32.679 merger agreement with Netflix fair price, let's call it like 0:01:32.840 --> 0:01:35.920 twenty nine or thirty dollars in a mix of cash 0:01:36.000 --> 0:01:39.920 and two different flavors of stock, mostly cash, but a 0:01:39.959 --> 0:01:42.040 fair amount of the value comes from two flavors of stock. 0:01:42.319 --> 0:01:45.040 And then on Monday, Paramot Skydance jumped in with a 0:01:45.080 --> 0:01:49.520 thirty dollars cash tender offer. And one thing that's worried 0:01:49.520 --> 0:01:51.560 about the bidding war is that, like those bids are 0:01:51.600 --> 0:01:54.680 pretty close, and a Warner's board did determine that the 0:01:54.680 --> 0:01:57.800 Netflix bid was higher because they valued some of the 0:01:57.840 --> 0:01:59.680 stock higher. So I think that the bid is our 0:01:59.680 --> 0:02:01.760 thirty one on our thirty two dollars to share. But 0:02:01.840 --> 0:02:06.040 also like they did an auction, they head advisors, they 0:02:06.040 --> 0:02:11.320 took bids, Netflix bid whatever the number, and Paramount bid 0:02:11.600 --> 0:02:14.679 thirty dollars in cash, and Warner looked at that and 0:02:14.760 --> 0:02:16.919 we're like, we're gonna take the Netflix bid because we 0:02:16.960 --> 0:02:20.560 think it's higher. And Paramount went to shareolders with the 0:02:20.600 --> 0:02:22.880 same bid that got rejected. It's like kind of an 0:02:22.919 --> 0:02:26.120 unusual move, Like you normally you raise your bid to 0:02:26.280 --> 0:02:28.560 like to be like, look at how great this bid is. 0:02:29.160 --> 0:02:32.360 And here they're like going with the same bid and 0:02:32.600 --> 0:02:36.919 arguing the value of the stub stock on the Netflix pid. It's, 0:02:36.960 --> 0:02:38.839 I guess, strange way to connect a bidding. More. They've 0:02:38.840 --> 0:02:40.520 also gone on TV. I mean like this is not 0:02:40.560 --> 0:02:42.720 our best and final offer, which is a crazy way 0:02:42.720 --> 0:02:45.560 to connect a shipping more Like, ordinarily you don't negotiate 0:02:45.600 --> 0:02:47.840 against yourself, and if you do negotiate against yourself, you 0:02:47.919 --> 0:02:50.120 do it. You know, You're like like I haven't got 0:02:50.120 --> 0:02:51.680 to raise the bid, but instead they're like, we're not 0:02:51.680 --> 0:02:52.840 going to raise the bid, but this is not our 0:02:52.840 --> 0:02:55.240 best and final offer. Like how could you tender to that? 0:02:55.360 --> 0:02:57.359 How could you be like, okay, you can have it 0:02:57.440 --> 0:02:58.800 for not your best and final offer. 0:02:59.120 --> 0:03:03.239 Well you too that. It's also an interesting strategy since 0:03:03.680 --> 0:03:06.959 they need this to be a friendly situation with Warner 0:03:06.960 --> 0:03:07.959 Brothers as well. 0:03:07.840 --> 0:03:10.320 And they don't like strictly need it, but like they 0:03:10.400 --> 0:03:13.120 kind of need it, like they've conditioned their offer on 0:03:13.200 --> 0:03:15.280 it becoming a friendly Yeah, it's not that weird, Like 0:03:15.840 --> 0:03:19.880 people don't usually do hostile deals all the way through 0:03:20.160 --> 0:03:22.480 in twenty twenty five, you know, like you do a 0:03:22.480 --> 0:03:24.280 hostile deal, the pressure of the board into coming to 0:03:24.320 --> 0:03:25.920 the table with a friendly deal like this is you know, 0:03:26.000 --> 0:03:27.919 this is kind of how Twitter worked out, right, It's 0:03:27.960 --> 0:03:31.200 like a normal playbook. Yeah, but they're not doing a 0:03:31.200 --> 0:03:33.880 pure hostile deal. They're not tendering to share elders and saying, 0:03:33.960 --> 0:03:36.080 you know, give us your shares and we're clothing and 0:03:36.240 --> 0:03:38.160 never mind what the board says. They need the board 0:03:38.200 --> 0:03:40.360 on side, and so it is a negotiation where they 0:03:40.360 --> 0:03:44.160 are like waging a public pressure campaign on the Warner board, 0:03:44.160 --> 0:03:46.240 but they're not just like doing a pure hostile offer. 0:03:46.960 --> 0:03:50.520 So what happens here? I mean, does Netflix now raise 0:03:50.600 --> 0:03:51.160 their bid? 0:03:52.000 --> 0:03:54.880 I don't know who has to move first. Yeah, right now, 0:03:55.880 --> 0:04:00.640 Warner has said they're sticking with the Netflix deal. Paramount 0:04:01.200 --> 0:04:03.000 can close it thunder and it's all just sort of 0:04:03.000 --> 0:04:06.240 like a limbo and you could imagine Netflix just waiting 0:04:06.280 --> 0:04:10.640 it out. But I think given that Paramount has said 0:04:10.680 --> 0:04:12.680 things like this is not our best and planal offer, 0:04:12.840 --> 0:04:15.920 probably the next move is for Paramount to raise. But 0:04:15.960 --> 0:04:17.680 I don't know. I think they're sort of seeing what 0:04:17.720 --> 0:04:19.839 the shaholders said, if all of the shareholders are tendering 0:04:19.880 --> 0:04:22.360 into their offer and like calling up warners bored and 0:04:22.400 --> 0:04:26.440 saying the Paramount deal is so much better, then maybe 0:04:26.520 --> 0:04:28.240 Paramount can get away with it. But it's just hard 0:04:28.240 --> 0:04:30.240 to imagine them paying thirty dollars a share when they 0:04:30.320 --> 0:04:32.560 said they'd pay more. Yeah, so I think they have 0:04:32.600 --> 0:04:34.359 to raise. But then Netflix has there ra is you know, 0:04:34.400 --> 0:04:35.520 it's like and forth. 0:04:35.720 --> 0:04:40.080 There's also the detail that Paramount is for the entirety 0:04:40.200 --> 0:04:43.800 of Warner Brothers Discovery, including the cable networks, whereas the 0:04:43.800 --> 0:04:47.599 Netflix offer is not. It excludes the cable networks including CNN, 0:04:47.760 --> 0:04:50.760 So I mean it also depends on how you value 0:04:51.040 --> 0:04:52.039 the cable networks. 0:04:52.200 --> 0:04:54.839 Yeah, this is why the Netflix deal is of uncertain 0:04:54.960 --> 0:04:57.839 value because like in that deal, the cable networks stay 0:04:57.880 --> 0:05:01.039 with Warner shareolders, which Yeah says is worth about a 0:05:01.080 --> 0:05:04.240 dollar per share, and you know the board thinks it's 0:05:04.279 --> 0:05:05.600 worth three four. 0:05:05.800 --> 0:05:09.039 Yeah, it seems like consensus would say that one dollar 0:05:09.120 --> 0:05:11.440 shares low on the lower end. 0:05:12.240 --> 0:05:14.240 Yeah, Like I think if you add it up, the 0:05:14.320 --> 0:05:17.159 Netflix bit is worth right around thirty dollars, is like 0:05:17.200 --> 0:05:19.200 kind of market consensus and then like the board is 0:05:19.200 --> 0:05:21.760 a little high and Paramoun's a little low, but like 0:05:21.800 --> 0:05:24.360 it's not like vastly more, right, It's like around thirty. 0:05:24.480 --> 0:05:28.240 There's also the Ellison of it all because Paramount is 0:05:28.279 --> 0:05:30.520 a pretty small company. 0:05:30.560 --> 0:05:33.080 It's like it's an LBO. Right, It's like it's like 0:05:33.120 --> 0:05:35.200 there happens to be a Paramount attached to it. But 0:05:35.240 --> 0:05:37.800 like basically it's like we're going to borrow a lot 0:05:37.800 --> 0:05:40.919 of money against the Warner assets. Paramount does not on 0:05:40.960 --> 0:05:43.479 its own have the capacity to raise like, you know, 0:05:43.520 --> 0:05:45.760 fifty billion dollars of debt, right, Yeah, it would raise 0:05:45.800 --> 0:05:48.840 fifty billion dollars a debt against Warner, and then it 0:05:48.880 --> 0:05:53.080 would have a big equity check from you know, they 0:05:53.120 --> 0:05:56.159 have like commitments lined up from Jared Kushner and like 0:05:56.200 --> 0:06:00.760 some Middle Eastern investors. But it seems that owner's board 0:06:01.520 --> 0:06:05.680 expressed uncertainty about the quality of those commitments, and so 0:06:05.920 --> 0:06:09.200 they also have a backstop from Larry Ellison's personal trust 0:06:09.680 --> 0:06:11.960 or like he'll pay the equity check with his PA 0:06:12.000 --> 0:06:12.520 if he has to. 0:06:12.839 --> 0:06:15.880 Yeah, there's been a lot of good succession flavored memes 0:06:15.960 --> 0:06:17.560 on social media about this situation. 0:06:17.800 --> 0:06:20.880 It is very weird to have your dad by several 0:06:20.880 --> 0:06:23.000 companies for you, whatever it's it. 0:06:23.200 --> 0:06:24.680 Is, I think it's cool. 0:06:24.880 --> 0:06:26.880 An expression like, of course my dad would. 0:06:26.680 --> 0:06:30.960 Buy that was an editorial comment by. 0:06:30.839 --> 0:06:34.680 Matt You didn't see the expression. Yeah it's weird. Yeah, 0:06:34.839 --> 0:06:37.240 it's weird to be the CEO of a public copany 0:06:38.040 --> 0:06:40.520 and feel like my company is going to buy this 0:06:40.800 --> 0:06:44.040 prized asset with my dad's tech book. I don't know. 0:06:44.960 --> 0:06:48.240 There's also I mean, so Larry Elson's check book is 0:06:48.279 --> 0:06:50.960 a factor here, but also Larry Ellison's relationship with the 0:06:50.960 --> 0:06:51.560 White House. 0:06:52.040 --> 0:06:53.720 I don't know. I try to write about this too much, 0:06:53.720 --> 0:06:56.120 but it is like the very depressing backdrop to this 0:06:56.279 --> 0:06:59.680 is that like Donald Trump does not like CNM, he 0:06:59.720 --> 0:07:03.800 would like his friends to buy CNN and change it 0:07:03.839 --> 0:07:08.440 to be friendlier to him. And the way merger regulation 0:07:08.800 --> 0:07:10.840 in the United States in twenty twenty five works is 0:07:10.880 --> 0:07:14.880 that to get a merger done, you have to commit 0:07:14.920 --> 0:07:17.760 to making television news friendlier to Donald Trump. 0:07:18.040 --> 0:07:19.400 Yeah, it's really bad. 0:07:20.440 --> 0:07:23.240 Yeah, it's not like, that's not how it used to be. 0:07:23.840 --> 0:07:27.080 I'm trying to find exactly what Trump said on Wednesday 0:07:27.520 --> 0:07:28.640 as it relates to CNN. 0:07:28.960 --> 0:07:30.520 I mean, Trump is he doesn't like CNN. 0:07:30.760 --> 0:07:33.040 Yeah, well he said, like when it comes to a 0:07:33.080 --> 0:07:36.040 potential deal here, I believe he said that CNN needs 0:07:36.080 --> 0:07:37.120 to be included. 0:07:37.240 --> 0:07:39.360 I don't think he really like has been paying attention 0:07:39.440 --> 0:07:40.840 to the mechanics of this merger. 0:07:41.040 --> 0:07:43.800 Yeah, you don't think he's like following along reading money 0:07:43.840 --> 0:07:46.160 stuff and like watching me on Bleep. 0:07:48.200 --> 0:07:52.000 He's watching you on gleen Berger. He's reading money's too. 0:07:53.320 --> 0:07:56.240 I mean he wants changes at CNN, right, and so 0:07:56.920 --> 0:08:02.160 if the Paramount deal, then Paramount will own CNN and 0:08:02.200 --> 0:08:05.320 we'll make it, you know, twenty four hour praise Donald 0:08:05.360 --> 0:08:09.240 Trump network, because like that's a small price to pay 0:08:09.280 --> 0:08:11.000 to get the deal done, right. I mean they're valuing 0:08:11.880 --> 0:08:15.000 They're valuing not CNN. They're valuing the entire cable package, 0:08:15.040 --> 0:08:17.800 including CNN, at like one dollar per share. It's like, yeah, yeah, 0:08:17.880 --> 0:08:20.480 turn CNN into the propaganda channel. Who cares, it's not 0:08:20.520 --> 0:08:22.880 a major part of the business investment. If the Netflix 0:08:22.880 --> 0:08:27.040 still gets done, then CNN will be part of Discovery Global, 0:08:27.040 --> 0:08:29.600 which will be a much smaller, more leveried public company 0:08:30.480 --> 0:08:36.400 run by you know, existing Warner Discovery Management. But is 0:08:36.400 --> 0:08:39.480 that going to be an acquisition target? Jared Kushner by 0:08:39.520 --> 0:08:42.840 that it's not obvious that CNN remains independent and with 0:08:42.920 --> 0:08:45.400 the same editorial posture that it has now even in 0:08:45.440 --> 0:08:48.120 the Netflix deal. Yeah, it just doesn't go to Netflix. 0:08:48.400 --> 0:08:50.839 And by the way, like you know, a lot of 0:08:50.840 --> 0:08:53.000 the reporting on this is that, like Larry Ellison is 0:08:53.000 --> 0:08:56.920 friendlier with Trump, and therefore we'll win, right, And by 0:08:57.040 --> 0:08:59.520 will win, I mean like Trump will tell the Justice 0:08:59.559 --> 0:09:01.920 Department you have to find an anti trust pretext to 0:09:02.000 --> 0:09:07.040 prevent the Netflix deal from closing, and therefore the only 0:09:07.040 --> 0:09:08.960 way to get the deal done is to sell the 0:09:08.960 --> 0:09:12.640 paramam because the Netflix deal can't close. But there's also 0:09:12.679 --> 0:09:15.480 been reporting that Netflix's management have done a good job 0:09:15.480 --> 0:09:19.520 of closing after Trump, Like, is one possible outcome here 0:09:19.559 --> 0:09:24.040 that like Netflix says, fine, fine, we'll buy a CNN 0:09:24.080 --> 0:09:26.840 two and make it into the Trump propaganda channel. Maybe 0:09:28.120 --> 0:09:30.880 change the deal. I should say, Also, like I said, 0:09:31.520 --> 0:09:34.720 it feels like, because like this is so much about 0:09:34.800 --> 0:09:37.760 Trump's feelings about CNN that he could tell the Justice 0:09:37.760 --> 0:09:39.720 Department to find a pretext, to find an antro trust 0:09:39.720 --> 0:09:42.840 reason to start the deal. Separately, everyone thinks they're like 0:09:42.840 --> 0:09:45.840 real assyss problems, Like yeah, it's not like you don't 0:09:45.880 --> 0:09:48.000 need a pretext, like it's a real concern when like 0:09:48.040 --> 0:09:51.840 the biggest streamer buys HPOE And it's also a real 0:09:51.880 --> 0:09:53.960 you know, people in the media industry have real concerns, 0:09:54.040 --> 0:09:56.360 you know, about both, but especially about the idea of 0:09:57.120 --> 0:10:00.000 Netflix taking over like all these iconic films. 0:10:00.240 --> 0:10:04.680 Yeah. No, it's fascinating, I mean relative to most media 0:10:04.760 --> 0:10:07.320 news because we've been discussing the media angle on Bloomberg 0:10:07.320 --> 0:10:12.199 TV heading up into the Netflix deal getting announced. And 0:10:12.240 --> 0:10:15.960 for Netflix, i mean, Netflix is so dominant in streaming, 0:10:16.040 --> 0:10:17.920 you know, talking to analysts about this, they were like, 0:10:18.200 --> 0:10:21.400 this is really a nice to have for Netflix, you know, 0:10:21.480 --> 0:10:24.680 versus paramount. This is more of a need to have. 0:10:25.400 --> 0:10:27.760 So it's an interesting move by Netflix to even pursue this. 0:10:27.840 --> 0:10:30.200 But you think about the anti trust concerns. It's also 0:10:30.720 --> 0:10:33.400 built into the deal that they announced, like they accounted 0:10:33.400 --> 0:10:36.400 for a lot of time to work through all the. 0:10:36.320 --> 0:10:38.360 Different time right, I'm sure you. 0:10:38.240 --> 0:10:41.120 Know whether or not at all. And then well that's 0:10:41.200 --> 0:10:48.160 part of the record breakup fee, rights fee. 0:10:49.280 --> 0:10:51.280 It's like two miks of share you want a deal, 0:10:51.280 --> 0:10:51.760 they get done. 0:10:51.960 --> 0:10:56.440 Yeah, it's a nice consolation prize though, Okay. 0:10:56.240 --> 0:10:58.240 No, Warner Schralder is going to be like, let's take 0:10:58.280 --> 0:11:00.320 the Netflix deal because at least we'll get two bucks 0:11:00.320 --> 0:11:02.959 to share in eighteen months when the deal falls apart. 0:11:03.040 --> 0:11:05.960 Like they want certainty, right, like Netflix, part of their 0:11:06.040 --> 0:11:08.000 job here is to get on sherolders that their deal 0:11:08.000 --> 0:11:12.120 will close and like that's not. Yeah, it's like some 0:11:12.240 --> 0:11:15.360 amount of like you know, economic analysis and some amount 0:11:15.360 --> 0:11:17.320 of like photo ops with Trump. 0:11:17.600 --> 0:11:20.840 Yeah, I do wonder, like just to bring it back 0:11:20.880 --> 0:11:23.120 to the employees, like in a situation where your company 0:11:23.200 --> 0:11:25.880 is in this deal limbo for eighteen months, I have 0:11:25.920 --> 0:11:28.920 to imagine that the company is kind of in suspended animation. 0:11:29.080 --> 0:11:31.839 Like things will get done obviously, but that's a lot 0:11:31.840 --> 0:11:33.520 of uncertainty to hang over there. 0:11:33.559 --> 0:11:35.600 I don't know about suspended animation, but yeah, it's. 0:11:35.520 --> 0:11:37.679 Depressing, slightly dramatic. 0:11:38.280 --> 0:11:41.199 I think if you work in media, you're work in media. 0:11:41.360 --> 0:11:43.200 Like the time between now and eighteen months from now 0:11:43.559 --> 0:11:46.280 is it's a perilous time, whether or not you're at 0:11:46.320 --> 0:11:46.920 Warner Brothers. 0:11:47.280 --> 0:12:04.000 The only sure thing is podcasts. It's true, shall we 0:12:04.040 --> 0:12:05.440 talk about SpaceX? 0:12:05.920 --> 0:12:08.920 Yeah, another eighteen month. Remember it's not eighteen months. It's 0:12:08.960 --> 0:12:11.240 like they wouldn't an ip it's. 0:12:11.280 --> 0:12:14.160 Twenty If it's in twenty twenty six, it will be 0:12:15.080 --> 0:12:18.240 six months fewer than eighteen months. I just remember, you know, 0:12:18.280 --> 0:12:20.640 we spent so much time talking about how private markets 0:12:20.640 --> 0:12:23.640 are the new public markets. But now all these mega 0:12:23.800 --> 0:12:27.320 companies that were the poster child of staying private forever 0:12:27.640 --> 0:12:28.880 potentially coming public. 0:12:29.240 --> 0:12:30.559 Yeah. First of all, it hasn't happened. 0:12:30.640 --> 0:12:32.880 Right, Yeah, it hasn't happened. 0:12:32.520 --> 0:12:35.560 But it's an I don't like, the private markets are 0:12:35.600 --> 0:12:41.520 the new public markets like thesis. I mean, look, I 0:12:41.520 --> 0:12:45.800 have said in my column on this podcast, Yeah you 0:12:45.800 --> 0:12:48.600 can stay private forever, right, and like why not? Why not? 0:12:49.240 --> 0:12:55.800 But if it is the case that SpaceX, Open Air, Anthropic, 0:12:56.559 --> 0:13:01.440 other names go public in twenty twenty six, then that 0:13:01.880 --> 0:13:05.240 might suggest that you count they private forever. But it 0:13:05.320 --> 0:13:10.359 will be like really different from previous I p honly 0:13:10.520 --> 0:13:14.920 ye going public at a one point five trillion dollar valuation, 0:13:14.960 --> 0:13:18.040 which is like the number that SpaceX is banding around. 0:13:17.840 --> 0:13:20.720 Depending on what second you're checking, it's bigger than Tesla. 0:13:20.960 --> 0:13:24.400 Yeah, but like that's not how was used to work 0:13:24.920 --> 0:13:28.200 back when public markets were the public markets. Go public, 0:13:28.240 --> 0:13:32.600 when you were like you know, there was there was 0:13:32.679 --> 0:13:35.400 growth still to come, but like going public at a 0:13:35.400 --> 0:13:39.319 one point tried trillion dollar valuation is like, okay, it's 0:13:39.320 --> 0:13:43.160 wild in two ways. One is that ordinarily you go 0:13:43.280 --> 0:13:48.080 from zero in a garage to one hundred million or 0:13:48.080 --> 0:13:49.960 a billion or a ten billion dollar valuation, and then 0:13:50.000 --> 0:13:53.400 you go a public and then the next leg up 0:13:53.440 --> 0:13:57.200 to like becoming a trillion dollar company, public investors capture, right, 0:13:57.559 --> 0:14:02.200 So public investors can invest not early, but like you know, 0:14:02.880 --> 0:14:05.719 in like the growth trajectory of a company that will 0:14:05.760 --> 0:14:08.000 eventually become large, right, Like that's part of the promise 0:14:08.000 --> 0:14:10.400 of an IPI was like, this is a fairly immature 0:14:10.400 --> 0:14:13.000 company and you can get in not on the ground floor, 0:14:13.000 --> 0:14:14.960 but on like the third floor. You can public get 0:14:14.960 --> 0:14:19.000 a one point five trillion dollar valuation, so much of 0:14:19.040 --> 0:14:21.920 the upside has been captured already, I mean by private 0:14:21.960 --> 0:14:22.720 market investors. 0:14:22.880 --> 0:14:25.280 Maybe you're just thinking small you know, no, I know, 0:14:25.320 --> 0:14:25.680 I hear. 0:14:25.600 --> 0:14:28.440 You, right, Like then this is like every elon musk 0:14:28.480 --> 0:14:30.800 com package, right, Like, well, it's really one hundred trillion 0:14:30.800 --> 0:14:32.600 dollar company, so like going probably at one point. 0:14:32.480 --> 0:14:34.160 Five tracking the final frontier. 0:14:35.120 --> 0:14:37.160 But the other thing, and this is related in the 0:14:37.200 --> 0:14:41.760 SpaceX case, is like if SpaceX goes public next year 0:14:41.800 --> 0:14:44.480 at a one point five trillion dollar valuation. In one sense, 0:14:44.520 --> 0:14:46.720 the private markets have captured most of the upside. In 0:14:46.720 --> 0:14:51.320 another sense, it is not a mature company. Blomberg reported 0:14:51.360 --> 0:14:54.400 that they're expecting twenty two to twenty four billion dollars 0:14:54.440 --> 0:14:57.280 in revenue in twenty twenty six, which is a lot 0:14:57.280 --> 0:14:59.680 of money. It's a big company to go public or whatever. 0:14:59.720 --> 0:15:04.840 But like they can public it at what seventy times revenue? Yeah, 0:15:05.440 --> 0:15:09.440 like that's really big. That is what has happened here 0:15:09.480 --> 0:15:11.920 is not they've grown into an enormous company and then 0:15:11.960 --> 0:15:14.560 gone public at their enormous valuation. What happens is they've 0:15:14.840 --> 0:15:17.720 not grown into an enormous company and they've they're going 0:15:17.760 --> 0:15:21.600 public at a huge valuation that reflects the next ten 0:15:21.680 --> 0:15:24.400 years of growth, which is a crazy thing to do. 0:15:24.520 --> 0:15:27.960 Yeah, well, let's talk about why they potentially need to 0:15:28.000 --> 0:15:31.360 do it, Like why now do they need to do it? 0:15:31.400 --> 0:15:32.680 I mean, you think about some of the things that 0:15:32.760 --> 0:15:33.160 they're going to. 0:15:33.160 --> 0:15:35.120 Build data centers in space, So they need thirty billion 0:15:35.160 --> 0:15:36.240 dollars to build. 0:15:36.080 --> 0:15:38.360 Data centers on the moon, not actually on the moon, just. 0:15:38.400 --> 0:15:40.080 Sustainable data centers. 0:15:40.160 --> 0:15:42.920 Yeah, that's great. It's such a sign of the times. 0:15:43.920 --> 0:15:46.800 Like one theme of the financial markets this year is 0:15:46.840 --> 0:15:51.440 that everyone is building data centers and they have tapped 0:15:51.440 --> 0:15:54.360 every possible source of financing for data centers, and at 0:15:54.360 --> 0:15:57.920 some point, selling thirty billion dollars of SpaceX stock is 0:15:58.000 --> 0:16:01.320 one way away to fill the whole of need for 0:16:01.400 --> 0:16:04.080 building data centers. And so like space I can raise 0:16:04.080 --> 0:16:05.720 a lot of money staying private. And by the way, 0:16:05.760 --> 0:16:07.640 it's like cash flow positive and doesn't need to raise 0:16:07.640 --> 0:16:10.520 a lot of money to shoot rockets into space. But 0:16:10.600 --> 0:16:15.520 the capital expenses are required to build data centers on 0:16:15.680 --> 0:16:19.040 every inch of the Earth, and also in space is 0:16:19.120 --> 0:16:22.040 so enormous that even space like has to go public. Yeah, 0:16:22.080 --> 0:16:22.880 and even open eyes. 0:16:22.960 --> 0:16:25.240 But maybe, well that's the thing, like I feel like, 0:16:25.680 --> 0:16:28.680 you know, when we really do think big and you 0:16:28.680 --> 0:16:31.120 don't really put our thinking caps on in terms of 0:16:31.160 --> 0:16:33.600 how ridiculous things could get, there is a limit to 0:16:33.800 --> 0:16:35.400 how long you can stay private. 0:16:35.360 --> 0:16:38.280 Yeah, right, right, Like one possibility is that, like I've 0:16:38.280 --> 0:16:40.400 been writing about you know, private markets or the new 0:16:40.400 --> 0:16:43.160 public markets for you know, a decade or whatever. And 0:16:44.240 --> 0:16:49.880 that was in the context of the biggest, hottest like 0:16:50.160 --> 0:16:54.520 most sort of household name tech companies were kind of 0:16:54.560 --> 0:16:57.480 at bottom, like capital light consumer tech right, Like, it's 0:16:57.520 --> 0:17:00.360 a lot of Like you wouldn't have said Face had 0:17:00.360 --> 0:17:02.560 a lot of CAPAX needs because it was a website. 0:17:02.640 --> 0:17:04.919 Right now, Facebook has a lot of CAPEX, but like 0:17:05.160 --> 0:17:07.520 for a long time it didn't. You know, Uber is like, yeah, 0:17:07.560 --> 0:17:09.720 we're going to match drivers and writers. We don't have 0:17:09.760 --> 0:17:11.760 to have anything, you know. Yeah, it was a real 0:17:11.840 --> 0:17:15.399 like capital light model. And now in that context it 0:17:15.520 --> 0:17:18.800 was fairly you know, you have capital light and very scalable. 0:17:18.880 --> 0:17:22.640 It's very easy to stay private. You need to spend 0:17:22.680 --> 0:17:25.240 a trillion dollars a year putting data centers on the moon. 0:17:25.520 --> 0:17:29.200 You have to, like, the private markets are really big, 0:17:29.240 --> 0:17:30.199 but they're not big enough for that. 0:17:30.320 --> 0:17:32.240 And even before we get there, like before we get 0:17:32.280 --> 0:17:35.399 to the moon, SpaceX has a lot of rockets to build. 0:17:35.440 --> 0:17:35.800 That's right. 0:17:35.840 --> 0:17:38.560 They're not capital light, and yet they've but they've managed 0:17:38.600 --> 0:17:40.600 the private markets to be large and build a lot 0:17:40.600 --> 0:17:41.240 of rockets. You know. 0:17:41.240 --> 0:17:42.919 The point that has been made is the fact that 0:17:43.000 --> 0:17:45.760 you know, they have been able to raise large amounts 0:17:45.800 --> 0:17:50.040 of money in the private markets. We cover rocket launches 0:17:50.040 --> 0:17:52.159 on Bloomberg TV all the time. A lot of the 0:17:52.240 --> 0:17:56.200 rockets blow up, a lot of the tests fail. If 0:17:56.240 --> 0:17:59.920 SpaceX is a public company, it's going to be really 0:18:00.160 --> 0:18:03.240 interesting to have, you know, a split screen of the 0:18:03.359 --> 0:18:07.440 rocket of a test launch potentially failing and also the stock. 0:18:07.600 --> 0:18:09.879 That's so true, right, Like you know, I write all 0:18:09.920 --> 0:18:11.720 the time that every bad thing that happens to a 0:18:11.720 --> 0:18:13.520 public company of security is for it. But like every 0:18:13.520 --> 0:18:15.720 time a rocket blows up and they it, it's really 0:18:16.680 --> 0:18:17.680 awesome to think about. 0:18:17.840 --> 0:18:20.640 We didn't talk about the wrinkle of Elon Musk potentially 0:18:20.640 --> 0:18:22.680 being the CEO of two public companies too. 0:18:22.840 --> 0:18:24.960 Yeah, but you can do that. I mean whatever the 0:18:25.160 --> 0:18:28.720 er companies, they're big, now, I know. I'm just like, 0:18:28.840 --> 0:18:32.639 I'm I'm I'm curious, like what the dynamic is of 0:18:32.840 --> 0:18:35.399 pricing at one point five trillion dollar IPO because on 0:18:35.400 --> 0:18:39.000 the one hand, it's like so big, right, and it's like, 0:18:39.040 --> 0:18:41.000 you know, like the talk is like they'd raise thirty 0:18:41.000 --> 0:18:43.320 billion dollars. That's the trades, like thirty billion dollars or 0:18:43.320 --> 0:18:45.600 stock good day, right, Like at some level, like you 0:18:45.760 --> 0:18:48.640 just suspend disbelief and you're like, this is not an IPR. 0:18:48.800 --> 0:18:50.800 This is just like an Elon Msk public company that 0:18:50.840 --> 0:18:53.320 happened to not be public and now it's public and 0:18:53.359 --> 0:18:55.119 then like you know, they work it out in a 0:18:55.160 --> 0:18:57.640 couple of days, Like it's not I don't know. There's 0:18:57.640 --> 0:19:00.280 something like when you get to this level of bigness 0:19:00.440 --> 0:19:08.199 and constantly doing tender offers and price transparency, it's like 0:19:08.359 --> 0:19:11.400 no one needs a deck to be introduced to SpaceX. 0:19:10.920 --> 0:19:15.320 Like yeah, it's just like yeah, yeah, the roadshow. 0:19:15.080 --> 0:19:18.680 Owns it in like weird vehicles anyway, it's like it's SpaceX, man. 0:19:18.880 --> 0:19:23.280 Yeah, I hope it does go public because yeah, it's cool. 0:19:23.359 --> 0:19:23.960 That would be fun. 0:19:24.040 --> 0:19:25.919 There was a thing where he tried to take Tesla private, 0:19:25.960 --> 0:19:28.359 right and like he complains about the public markets and 0:19:28.400 --> 0:19:32.679 it'll be interesting to the Yeah, it'll be interesting to 0:19:32.720 --> 0:19:37.600 see what like a public SpaceX looks like. It'd be 0:19:37.600 --> 0:19:39.280 interesting when he gets sued for the fourth time at a. 0:19:39.280 --> 0:19:41.200 Rocket plank, I mean, to be fair, it happens. 0:19:41.560 --> 0:19:45.840 Yeah, I'm not saying that it's actually a securities route 0:19:45.840 --> 0:19:47.280 to blow up a rocket, or that he should be 0:19:47.320 --> 0:19:50.120 sued for blowing up a rocket, and like the investors 0:19:50.119 --> 0:19:54.760 in the current private SpaceX understand that that's part of 0:19:55.280 --> 0:19:58.240 the deal and they don't sue him when he blows 0:19:58.280 --> 0:20:16.240 up a rocket. All that's wrong. Should talking about private 0:20:16.280 --> 0:20:20.639 credits and new public credit. Yeah, there's this fascinating Wall 0:20:20.640 --> 0:20:23.960 Street Journal story this week about how it is harder 0:20:24.000 --> 0:20:28.919 to know how consumers are doing because the way you 0:20:29.000 --> 0:20:33.440