1 00:00:02,720 --> 00:00:10,600 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the 2 00:00:10,600 --> 00:00:14,560 Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am 3 00:00:14,600 --> 00:00:17,880 Speaker 1: Eastern on Apple, Coarclay, and Android Auto with the Bloomberg 4 00:00:17,920 --> 00:00:21,040 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,360 --> 00:00:23,560 Speaker 1: or watch us live on YouTube. 6 00:00:24,200 --> 00:00:27,560 Speaker 2: Getting back to the stock market earnings coming in here, 7 00:00:27,600 --> 00:00:30,000 Speaker 2: we had Delta put up some decent numbers. You're better 8 00:00:30,040 --> 00:00:33,000 Speaker 2: than decent numbers, and a stock's trading up about seven 9 00:00:33,080 --> 00:00:35,199 Speaker 2: and a half percent here today. So we want to 10 00:00:35,200 --> 00:00:36,720 Speaker 2: break it down what it means for Delta, what it 11 00:00:36,760 --> 00:00:39,560 Speaker 2: means for the airlines, how are they dealing with higher 12 00:00:39,600 --> 00:00:41,839 Speaker 2: fuel costs, and what it might look like as we 13 00:00:41,920 --> 00:00:44,760 Speaker 2: get ready for the summer travel season. George Ferguson helps 14 00:00:44,840 --> 00:00:48,720 Speaker 2: us out here. He's a senior aerospace, defense and airlines analyst, 15 00:00:49,040 --> 00:00:51,640 Speaker 2: amateur sailor as well for Bloomberg Intelligence. 16 00:00:52,080 --> 00:00:53,040 Speaker 3: Joining us in Princeton. 17 00:00:53,520 --> 00:00:57,160 Speaker 2: George, what'd you learned today from Delta? 18 00:00:57,280 --> 00:00:59,640 Speaker 4: Well, I guess what we learned first is that as 19 00:00:59,680 --> 00:01:03,120 Speaker 4: we inspected, capacity probably has to come out of this market. 20 00:01:03,160 --> 00:01:06,800 Speaker 4: I think if fuel prices stay where they are, the 21 00:01:06,880 --> 00:01:11,920 Speaker 4: airlines all have to drive affares higher and at higher fares, 22 00:01:12,200 --> 00:01:14,640 Speaker 4: you're going to have to start to cut capacity. Delta 23 00:01:14,959 --> 00:01:17,320 Speaker 4: was adding some of the least capacity in two Q. 24 00:01:18,319 --> 00:01:21,160 Speaker 4: We were looking at Syrium databases to get sort of 25 00:01:21,520 --> 00:01:24,640 Speaker 4: total number of seats they're adding to their network. They're 26 00:01:24,640 --> 00:01:27,640 Speaker 4: adding a little bit less than two percent. So they're 27 00:01:27,640 --> 00:01:31,280 Speaker 4: talking about going to zero growth in two Q and 28 00:01:31,360 --> 00:01:33,880 Speaker 4: not be able to recoup all of what they need 29 00:01:33,920 --> 00:01:36,920 Speaker 4: in fares to get profitability back to what it was 30 00:01:37,080 --> 00:01:40,640 Speaker 4: last year. The challenge here will be American growing at 31 00:01:40,760 --> 00:01:45,600 Speaker 4: three percent according to Syrium, and United growing at eight 32 00:01:45,720 --> 00:01:49,800 Speaker 4: ish nine percent, high single digits. So interesting to see 33 00:01:49,840 --> 00:01:52,840 Speaker 4: what their competitors say about knocking capacity out of the 34 00:01:52,840 --> 00:01:54,680 Speaker 4: marketplace to try to get pricing power. 35 00:01:54,480 --> 00:01:57,840 Speaker 5: Air What does that effort usually look like, George, when 36 00:01:57,880 --> 00:02:01,200 Speaker 5: they reduce capacity? Is it I assume it's not from 37 00:02:01,240 --> 00:02:04,280 Speaker 5: the most profitable routes, but you know, maybe some routes 38 00:02:04,280 --> 00:02:08,040 Speaker 5: that are less frequently used or is it regional routes 39 00:02:08,200 --> 00:02:10,360 Speaker 5: how or does every airline approach this differently? 40 00:02:11,600 --> 00:02:13,160 Speaker 4: I think you're I think you've got it right right. 41 00:02:13,200 --> 00:02:15,560 Speaker 4: The Delta already talked about that on the call as well. 42 00:02:16,040 --> 00:02:18,680 Speaker 4: They'll start to knock out the least profitable routes, right, 43 00:02:18,680 --> 00:02:22,320 Speaker 4: And we would imagine that means routes where you're competing 44 00:02:22,480 --> 00:02:25,480 Speaker 4: against you know, one of your rivals in the marketplace, 45 00:02:25,560 --> 00:02:28,600 Speaker 4: and so the consumer gets less choice and then ends 46 00:02:28,680 --> 00:02:32,680 Speaker 4: up having to pay a bit more. Uh, you know, 47 00:02:32,720 --> 00:02:35,360 Speaker 4: I think Look, I think some of their international routes 48 00:02:35,400 --> 00:02:41,080 Speaker 4: are performing pretty well. They talked about strength into into 49 00:02:41,120 --> 00:02:43,639 Speaker 4: Europe still so maybe not much out of there. They 50 00:02:43,639 --> 00:02:46,840 Speaker 4: talked about weakness in New Mexico, especially with some of 51 00:02:46,880 --> 00:02:50,239 Speaker 4: the unrest we've seen around Mexico, so we'd probably see 52 00:02:50,639 --> 00:02:52,240 Speaker 4: cuts in there. And my guess is they'll look at 53 00:02:52,240 --> 00:02:55,040 Speaker 4: the domestic market pretty closely and look where they're flying 54 00:02:55,080 --> 00:02:57,720 Speaker 4: against competitors and decide what they want to pull and 55 00:02:57,800 --> 00:02:58,560 Speaker 4: what they want to keep. 56 00:02:59,400 --> 00:03:01,920 Speaker 2: George to the stent that the airlines are trying to 57 00:03:02,000 --> 00:03:05,880 Speaker 2: pass along some of their higher fuel costs to customers. 58 00:03:05,880 --> 00:03:09,800 Speaker 2: What's the price elasticity of a US flyer these days? 59 00:03:11,000 --> 00:03:14,639 Speaker 4: That's that's pretty challenging, right. I think that the price 60 00:03:14,720 --> 00:03:19,840 Speaker 4: elasticity is going to be less for Delta America and 61 00:03:19,960 --> 00:03:22,720 Speaker 4: United with a premium flyer. And if you look at 62 00:03:22,919 --> 00:03:28,960 Speaker 4: Delta's results, they were, you know, the basic cabin was 63 00:03:29,000 --> 00:03:32,640 Speaker 4: getting the least amount of capacity gains and fares were 64 00:03:32,680 --> 00:03:36,400 Speaker 4: starting to turn positive in that basic cabin, but their 65 00:03:36,440 --> 00:03:39,920 Speaker 4: premium cabins are where, or premium seating is where they're 66 00:03:39,920 --> 00:03:42,480 Speaker 4: showing some of the bigger gains. So I think their 67 00:03:42,480 --> 00:03:46,320 Speaker 4: elasticity on those premium seats is a lot lower than 68 00:03:46,320 --> 00:03:49,880 Speaker 4: the elasticity on that basic seat. So what does that mean. 69 00:03:49,920 --> 00:03:52,400 Speaker 4: That means is we get into earning season and we 70 00:03:52,480 --> 00:03:54,800 Speaker 4: get into these carriers that are carrying a lot more 71 00:03:55,520 --> 00:04:00,960 Speaker 4: economy passengers. I'm more concerned about their earning in this 72 00:04:01,240 --> 00:04:06,720 Speaker 4: quarter and going forward, but there's clearly some elasticity on 73 00:04:06,800 --> 00:04:09,320 Speaker 4: the premium seats as well. 74 00:04:09,400 --> 00:04:12,600 Speaker 5: George, we heard from Delta that they've quantified the cost 75 00:04:12,640 --> 00:04:16,320 Speaker 5: of higher fuel through June at more than two billion dollars, 76 00:04:16,360 --> 00:04:18,920 Speaker 5: and last month they saw a four hundred million dollars 77 00:04:18,960 --> 00:04:21,000 Speaker 5: spike in fuel costs in just the first two weeks 78 00:04:21,000 --> 00:04:23,920 Speaker 5: of March. Nevertheless, Delta, sticking with its full yar forecast. 79 00:04:24,560 --> 00:04:27,400 Speaker 5: If oil stays at these levels and does not return 80 00:04:27,440 --> 00:04:30,440 Speaker 5: to its pre war levels of seventy dollars a barrel, 81 00:04:30,839 --> 00:04:35,599 Speaker 5: do you expect an updated outlook from Delta. 82 00:04:36,720 --> 00:04:39,160 Speaker 4: That's a good question, right, They've pulled the full year now, 83 00:04:39,680 --> 00:04:44,400 Speaker 4: I think if the volatility stays where it is right now, 84 00:04:44,800 --> 00:04:47,279 Speaker 4: Delta is going to be reticent to give you, you know, 85 00:04:47,320 --> 00:04:50,040 Speaker 4: sort of full year guidance. Even the guidance for two 86 00:04:50,200 --> 00:04:54,279 Speaker 4: Q it looks, you know, it's it's it's got some 87 00:04:54,320 --> 00:04:58,559 Speaker 4: pretty decent wide variations on it, so you can see that, 88 00:04:58,640 --> 00:05:01,520 Speaker 4: you know, I think they're reticent to give you even 89 00:05:01,560 --> 00:05:04,440 Speaker 4: a lot on the quarter. I mean, you know, fuel 90 00:05:04,480 --> 00:05:08,880 Speaker 4: prices here, we just doubled fuel prices in what a month, 91 00:05:08,920 --> 00:05:11,800 Speaker 4: a month and a half in that environment, and that's 92 00:05:12,160 --> 00:05:16,119 Speaker 4: one of the most important expenses for an airline. Last year, 93 00:05:16,800 --> 00:05:19,400 Speaker 4: it would have been, you know, in the similar quarter 94 00:05:19,440 --> 00:05:22,360 Speaker 4: have been something like fifteen percent of Delta revenue. Now 95 00:05:22,360 --> 00:05:25,760 Speaker 4: it's going to be thirty percent consumed by fuel. When 96 00:05:25,800 --> 00:05:29,400 Speaker 4: fuel is bouncing around at these levels of volatility, I 97 00:05:29,440 --> 00:05:32,440 Speaker 4: think they're going to be really hard pressed to want 98 00:05:32,480 --> 00:05:35,760 Speaker 4: to give you full of your guidance or sort of increase, 99 00:05:36,120 --> 00:05:37,800 Speaker 4: you know, the tightness of their guidance. 100 00:05:38,800 --> 00:05:41,680 Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this. 101 00:05:45,360 --> 00:05:49,040 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live 102 00:05:49,120 --> 00:05:52,200 Speaker 1: weekdays at ten am Eastern on Apple corplay and Android 103 00:05:52,240 --> 00:05:55,520 Speaker 1: auto with the Bloomberg Business App. Listen on demand wherever 104 00:05:55,600 --> 00:05:59,120 Speaker 1: you get your podcasts, or watch us live on YouTube. 105 00:05:59,600 --> 00:06:02,440 Speaker 5: All right, Mary Ross Gilbert is our senior equity analyst 106 00:06:02,520 --> 00:06:04,679 Speaker 5: covering retail, and we want to get to some earnings. 107 00:06:04,680 --> 00:06:07,120 Speaker 5: It's not often that you have a retail company come 108 00:06:07,160 --> 00:06:09,719 Speaker 5: out with earnings at this point in the earning season, 109 00:06:09,760 --> 00:06:11,080 Speaker 5: but every once in a while it does happen. 110 00:06:11,279 --> 00:06:13,400 Speaker 3: So, yeah, the retailers are usually a month late. 111 00:06:13,600 --> 00:06:18,000 Speaker 5: They're usually a monthly, and then they're off schedule with 112 00:06:18,040 --> 00:06:19,920 Speaker 5: what the rest of the companies are doing. Right now, 113 00:06:20,080 --> 00:06:22,679 Speaker 5: let's talk about Levi's right now, because Levi's has boosted 114 00:06:22,720 --> 00:06:25,880 Speaker 5: its outlook, it's direct to consumer strategy appears to be 115 00:06:25,880 --> 00:06:28,320 Speaker 5: paying off. Mary, tell us a little bit more about 116 00:06:28,360 --> 00:06:31,920 Speaker 5: what we've learned about Levi's when it comes to its outlook. 117 00:06:33,480 --> 00:06:35,400 Speaker 6: Yeah, So, when it comes to its outlook, and when 118 00:06:35,400 --> 00:06:37,120 Speaker 6: you think about the beat in the quarter and what 119 00:06:37,160 --> 00:06:39,839 Speaker 6: the company said on their earnings call, is that the 120 00:06:39,880 --> 00:06:44,599 Speaker 6: beat was really driven by the wholesale side of the business, 121 00:06:44,640 --> 00:06:48,360 Speaker 6: clearly direct to consumer led growth, you know, was up 122 00:06:48,400 --> 00:06:52,440 Speaker 6: double digits, up about ten percent. But when you look 123 00:06:52,480 --> 00:06:56,159 Speaker 6: at the wholesale business that was very strong in the quarter, 124 00:06:56,839 --> 00:07:00,520 Speaker 6: and because of that, that's where they got sort of 125 00:07:00,520 --> 00:07:02,760 Speaker 6: the beat there. But I think that the company has 126 00:07:02,880 --> 00:07:06,640 Speaker 6: always done a very good job managing investor expectations. We 127 00:07:06,760 --> 00:07:12,240 Speaker 6: completely expected a beaten raise. And the great news about Levi's, 128 00:07:12,360 --> 00:07:17,600 Speaker 6: I think, is because last year they exited the Denizen business, 129 00:07:17,640 --> 00:07:20,720 Speaker 6: so this was sort of it's kind of like a 130 00:07:20,760 --> 00:07:26,120 Speaker 6: private brand that they had with Target. They also exited Dockers, 131 00:07:26,200 --> 00:07:29,760 Speaker 6: so they really got out of businesses that were really 132 00:07:29,840 --> 00:07:32,840 Speaker 6: dragging down the top line. And so now what you 133 00:07:32,920 --> 00:07:36,960 Speaker 6: have left is really Levi's and beyond Yoga, and it's 134 00:07:37,000 --> 00:07:40,880 Speaker 6: a great global brand. Resonates well. They have forty six 135 00:07:41,120 --> 00:07:45,280 Speaker 6: million loyalty customers. They picked up over two million just 136 00:07:45,320 --> 00:07:49,120 Speaker 6: in the first quarter alone, so you're seeing real strength here. 137 00:07:49,240 --> 00:07:52,920 Speaker 6: Their campaigns are incredible. I'm sure you saw the Behind 138 00:07:52,960 --> 00:07:58,320 Speaker 6: Every Original which debuted at the Super Bowl, so it's fabulous. 139 00:07:58,360 --> 00:08:02,800 Speaker 6: Features doech among other stars in that campaign, and it's 140 00:08:02,800 --> 00:08:04,040 Speaker 6: going to be a multi. 141 00:08:05,320 --> 00:08:06,000 Speaker 3: Year drop. 142 00:08:06,160 --> 00:08:08,720 Speaker 6: That's kind of like what they did with the Beyonce campaign, 143 00:08:08,720 --> 00:08:11,320 Speaker 6: where you have these series of campaigns and they're really 144 00:08:11,800 --> 00:08:12,600 Speaker 6: they're so fun. 145 00:08:12,800 --> 00:08:16,160 Speaker 2: All Right, The TV show Love Story, John F. Kennedy 146 00:08:16,280 --> 00:08:20,880 Speaker 2: Junior and Carolyn Bessett. How did does that relate the Levis? 147 00:08:21,600 --> 00:08:25,960 Speaker 6: Yeah, so because the character in that film was wearing 148 00:08:26,040 --> 00:08:30,760 Speaker 6: five seventeen Levis and also and you know this is 149 00:08:30,800 --> 00:08:33,360 Speaker 6: sort of another brand, but Calvin Klein, and so because 150 00:08:33,360 --> 00:08:37,800 Speaker 6: of that, it's kind of really ignited sales there too. 151 00:08:38,000 --> 00:08:42,199 Speaker 6: So anytime you can get these benefits, you know organically, 152 00:08:42,280 --> 00:08:47,200 Speaker 6: For example, Harry Styles, we wore it, you know, at 153 00:08:47,280 --> 00:08:50,839 Speaker 6: an awards show along with all the dancers to War 154 00:08:50,960 --> 00:08:52,920 Speaker 6: five oh ones. So he wore five O ones and 155 00:08:52,960 --> 00:08:56,600 Speaker 6: they all wore five O ones. So I mean it's 156 00:08:56,640 --> 00:08:58,760 Speaker 6: at the hart of culture if you look around. I 157 00:08:58,800 --> 00:09:02,080 Speaker 6: was at the golf club Friday night and I saw 158 00:09:02,120 --> 00:09:06,080 Speaker 6: this very stylish young lady wearing Levi's jeans with heels 159 00:09:06,120 --> 00:09:09,240 Speaker 6: and you know, a beautiful blouse, and it's like wow. 160 00:09:09,360 --> 00:09:11,880 Speaker 6: So yeah, that's kind of everywhere. 161 00:09:12,040 --> 00:09:14,960 Speaker 5: As Alexis was reminding us, the nineties are back, and 162 00:09:15,000 --> 00:09:17,720 Speaker 5: it's a Levi's five seventeen the men's boot cut jeans 163 00:09:17,760 --> 00:09:21,080 Speaker 5: that Carolyn Bessett Kennedy, or the character portraying Carolyn Bassett 164 00:09:21,160 --> 00:09:24,280 Speaker 5: Kennedy was wearing. We should mention as well that the 165 00:09:24,320 --> 00:09:27,360 Speaker 5: CEO of Levi's will be on Bloomberg Business Week this afternoon. 166 00:09:27,400 --> 00:09:30,319 Speaker 5: Michelle Gass will be speaking with Tim Senovik and Krol Masser, 167 00:09:30,360 --> 00:09:31,400 Speaker 5: so be sure to tune. 168 00:09:31,240 --> 00:09:31,560 Speaker 3: In for that. 169 00:09:32,000 --> 00:09:36,720 Speaker 5: Yeah, Mary, these kinds of pop culture sparked, you know, 170 00:09:36,840 --> 00:09:39,240 Speaker 5: trends for certain genes. How long do they last for? 171 00:09:39,360 --> 00:09:40,720 Speaker 3: Is this something just for this quarter? 172 00:09:40,760 --> 00:09:41,800 Speaker 5: It cann't go on for a while? 173 00:09:43,000 --> 00:09:45,120 Speaker 6: Oh no, this can go on for a while. And actually, 174 00:09:45,200 --> 00:09:49,240 Speaker 6: Levis is known for their campaigns over many decades. You 175 00:09:49,280 --> 00:09:54,360 Speaker 6: can go back several decades and find some absolutely amazing 176 00:09:54,520 --> 00:09:59,320 Speaker 6: campaigns that the brand has done. So they've always been 177 00:09:59,480 --> 00:10:02,320 Speaker 6: focused on being right at the center of culture. That's 178 00:10:02,320 --> 00:10:04,400 Speaker 6: sort of the language or the ethos that they always 179 00:10:04,440 --> 00:10:08,480 Speaker 6: talk about, and they've always been successful doing that. So, yes, 180 00:10:08,520 --> 00:10:12,120 Speaker 6: this is going to continue to go on, you know, forever, really, 181 00:10:12,160 --> 00:10:14,760 Speaker 6: and all the other brands are getting involved. 182 00:10:15,679 --> 00:10:18,760 Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this. 183 00:10:22,679 --> 00:10:26,360 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 184 00:10:26,440 --> 00:10:29,160 Speaker 1: weekdays at ten am. He's done on Apple, Cocklay and 185 00:10:29,160 --> 00:10:32,440 Speaker 1: Android Auto with the Bloomberg Business app. Listen on demand 186 00:10:32,480 --> 00:10:36,480 Speaker 1: wherever you get your podcasts. Or watch us live on YouTube. 187 00:10:37,280 --> 00:10:39,920 Speaker 2: Twenty twenty six is expected to be a year where 188 00:10:39,960 --> 00:10:43,320 Speaker 2: there's going to be some huge IPOs coming out of 189 00:10:43,440 --> 00:10:47,880 Speaker 2: AI in particular, but also arguably the biggest of all 190 00:10:47,880 --> 00:10:52,280 Speaker 2: time is going to be Elon Musk and SpaceX. That's 191 00:10:52,360 --> 00:10:56,120 Speaker 2: come up, folks. Max chaffickin he follows all things Elon. 192 00:10:56,360 --> 00:10:58,839 Speaker 2: He's a Bloomberg Business Week senior reporter. He's in San 193 00:10:58,840 --> 00:11:03,959 Speaker 2: Francisco here today. Max, what's the latest on potential IPO 194 00:11:04,040 --> 00:11:04,840 Speaker 2: of SpaceX? 195 00:11:06,320 --> 00:11:10,920 Speaker 7: Right? So, this was a confidential IPO filing last week 196 00:11:11,040 --> 00:11:14,800 Speaker 7: from SpaceX, Elon Musk's rocket company, which is now also 197 00:11:15,080 --> 00:11:21,199 Speaker 7: Elon Musk's AI company, because in February he merged SpaceX 198 00:11:21,440 --> 00:11:26,400 Speaker 7: with Xai, which is which owns Twitter but also makes 199 00:11:26,480 --> 00:11:29,800 Speaker 7: the chatbot at Chatbot that is competitive with Anthropic and 200 00:11:29,840 --> 00:11:32,800 Speaker 7: Open AI. And what is happening right now is bankers 201 00:11:33,000 --> 00:11:36,640 Speaker 7: from SpaceX are shopping this thing, trying to take the temperature, 202 00:11:36,640 --> 00:11:40,760 Speaker 7: and the idea is to get this out very quickly. 203 00:11:40,840 --> 00:11:44,000 Speaker 7: You know, they're talking about as early as June and 204 00:11:44,640 --> 00:11:48,200 Speaker 7: at valuations that are very high. You know, we've seen 205 00:11:48,600 --> 00:11:51,280 Speaker 7: a bunch of different reports. But earlier this week Bloomberg 206 00:11:51,480 --> 00:11:54,760 Speaker 7: said that in some cases talking about valuations over to trillion, 207 00:11:55,200 --> 00:11:57,479 Speaker 7: you know, putting that in perspective, it would make SpaceX, 208 00:11:57,480 --> 00:11:59,800 Speaker 7: you know, one of the most valuable companies. 209 00:11:59,360 --> 00:11:59,760 Speaker 3: In the world. 210 00:11:59,800 --> 00:12:02,600 Speaker 7: We are going to see some other big IPOs, and 211 00:12:02,679 --> 00:12:05,120 Speaker 7: I don't think we know for sure which one will 212 00:12:05,120 --> 00:12:08,280 Speaker 7: be the biggest anthropic A lot of good news coming 213 00:12:08,320 --> 00:12:10,720 Speaker 7: out of that company lately. They are trying to go 214 00:12:10,840 --> 00:12:13,880 Speaker 7: public and open AI as well. So it's kind of 215 00:12:13,920 --> 00:12:17,960 Speaker 7: a race between these three companies to get out first 216 00:12:18,000 --> 00:12:19,080 Speaker 7: and go biggest. 217 00:12:19,679 --> 00:12:23,800 Speaker 3: What do we know, Max about the financials of Spacexi. 218 00:12:25,520 --> 00:12:28,720 Speaker 7: Well, we know a little bit because all those SpaceX 219 00:12:28,960 --> 00:12:31,640 Speaker 7: is a private company. It's been private for a very 220 00:12:31,679 --> 00:12:35,640 Speaker 7: long time. They've done tender offers, the stock has or 221 00:12:35,679 --> 00:12:40,080 Speaker 7: the equity has traded on secondary markets. This is the 222 00:12:40,200 --> 00:12:45,160 Speaker 7: company that has done pretty well reports suggesting that and 223 00:12:45,320 --> 00:12:50,600 Speaker 7: Bloomberg Intelligence estimates suggesting revenues just under twenty billion dollars, 224 00:12:51,360 --> 00:12:55,360 Speaker 7: mostly coming from Starlink, that is the satellite internet business 225 00:12:55,360 --> 00:12:58,560 Speaker 7: that SpaceX operates. You also have a significant revenue coming 226 00:12:58,600 --> 00:13:02,000 Speaker 7: from government contracts. AX provides launches for the US government 227 00:13:02,400 --> 00:13:06,200 Speaker 7: now at two trillion dollars. Though this is it's a 228 00:13:06,280 --> 00:13:08,600 Speaker 7: very small company to be worth two trillion dollars, So 229 00:13:08,760 --> 00:13:12,400 Speaker 7: most of the valuation is going to come essentially from 230 00:13:12,400 --> 00:13:14,920 Speaker 7: the future, which is how Elon Musk always likes it. 231 00:13:15,240 --> 00:13:20,440 Speaker 7: The latest story from Musk is data centers in space exactly. 232 00:13:21,080 --> 00:13:25,520 Speaker 3: How about control here? Elon Musk is he going to 233 00:13:25,960 --> 00:13:28,760 Speaker 3: probably keep control of this company? Is there maybe a 234 00:13:28,800 --> 00:13:30,320 Speaker 3: super voting stock being discussed. 235 00:13:31,679 --> 00:13:34,560 Speaker 7: I believe they're talking about super voting, although not one 236 00:13:34,640 --> 00:13:37,160 Speaker 7: hundred percent sure on that one. And the truth is 237 00:13:37,200 --> 00:13:40,199 Speaker 7: it doesn't really matter. Elon Musk doesn't have super voting 238 00:13:41,080 --> 00:13:43,960 Speaker 7: with Tesla, but he does control it. Because of the 239 00:13:44,280 --> 00:13:47,960 Speaker 7: kind of unique relationship Elon Musk has with his investors, 240 00:13:48,120 --> 00:13:50,920 Speaker 7: My assumption is he will get control. He's been fighting 241 00:13:51,080 --> 00:13:54,720 Speaker 7: for control with Tesla, whether it's through super voting shares 242 00:13:54,880 --> 00:13:58,000 Speaker 7: or some other mechanism. But yes, the expectation is he 243 00:13:58,080 --> 00:14:00,760 Speaker 7: is going to run the company as the you know, 244 00:14:00,880 --> 00:14:04,319 Speaker 7: sole ceo soul decider, just as it is in Tesla. 245 00:14:04,559 --> 00:14:05,640 Speaker 2: Is there you know? 246 00:14:05,679 --> 00:14:07,479 Speaker 3: I guess among Tesla investors. 247 00:14:07,760 --> 00:14:12,040 Speaker 2: There's also the hope or potential that Spacexi, once it 248 00:14:12,120 --> 00:14:15,079 Speaker 2: is public, will just roll up and buy Tesla and 249 00:14:15,120 --> 00:14:18,320 Speaker 2: put all of Elon's toys in one place. 250 00:14:19,120 --> 00:14:20,080 Speaker 3: What are you hearing about that? 251 00:14:21,600 --> 00:14:25,400 Speaker 7: Yeah, I think that is widely regarded not just among 252 00:14:25,800 --> 00:14:28,880 Speaker 7: kind of Tesla investors, not just among Elon Musk's fans, 253 00:14:28,920 --> 00:14:31,440 Speaker 7: but you know also people who are looking at SpaceX 254 00:14:31,480 --> 00:14:36,800 Speaker 7: ipio as a strong possibility, partly because Musk has kind 255 00:14:36,800 --> 00:14:40,960 Speaker 7: of hinted at that this data center in space plan 256 00:14:41,320 --> 00:14:45,640 Speaker 7: involves a massive chip fab, the so called terrafab, which 257 00:14:45,800 --> 00:14:49,280 Speaker 7: yesterday Elon Musk announced a partnership with Intel, big American 258 00:14:49,360 --> 00:14:54,240 Speaker 7: chip maker, that is a SpaceX Tesla joint venture. You 259 00:14:54,360 --> 00:14:58,480 Speaker 7: also have this situation where the shareholder bases are going 260 00:14:58,560 --> 00:15:02,880 Speaker 7: to be pretty similar, so SpaceX is IPO. They're talking 261 00:15:02,880 --> 00:15:05,520 Speaker 7: about as as much as thirty percent, maybe even more 262 00:15:05,920 --> 00:15:09,320 Speaker 7: retail shareholders. That's a lot of retail shareholders. That's the 263 00:15:10,040 --> 00:15:13,600 Speaker 7: kind of Elon Musk fan community. Those are, of course 264 00:15:13,640 --> 00:15:17,880 Speaker 7: the same people that hold space Tesla shares. So you know, 265 00:15:18,440 --> 00:15:21,200 Speaker 7: I think one risk here is a question of do 266 00:15:21,240 --> 00:15:24,400 Speaker 7: they have enough money? Are there enough of those people 267 00:15:24,720 --> 00:15:27,160 Speaker 7: to bid up both stocks or are you going to 268 00:15:27,240 --> 00:15:30,600 Speaker 7: see people selling Tesla shares maybe to buy SpaceX shares 269 00:15:30,640 --> 00:15:33,920 Speaker 7: something like that, And so you could imagine arguments for hey, 270 00:15:34,000 --> 00:15:37,320 Speaker 7: it'd be simpler. This same CEO, we're kind of pushing 271 00:15:37,320 --> 00:15:39,680 Speaker 7: in the same direction, which is AI. Why not just 272 00:15:39,760 --> 00:15:43,080 Speaker 7: put them together. This will get very messy if Elon 273 00:15:43,160 --> 00:15:46,920 Speaker 7: Musk actually tries to pull this off, because even though 274 00:15:47,160 --> 00:15:50,600 Speaker 7: Tesla is controlled by Elon Musk, there's still a lot 275 00:15:50,600 --> 00:15:52,960 Speaker 7: of shareholders that you know, this would be this would 276 00:15:53,000 --> 00:15:56,080 Speaker 7: be controversial, be a mega inside transaction. There would be 277 00:15:56,160 --> 00:15:58,320 Speaker 7: questions about valuation. So I think a lot of things 278 00:15:58,320 --> 00:16:00,119 Speaker 7: would have to fall into place for that to actually. 279 00:16:00,760 --> 00:16:05,440 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 280 00:16:05,640 --> 00:16:09,120 Speaker 1: and anywhere else you get your podcasts. 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