WEBVTT - The Cult of the Ultra-Wealthy with Ed Elson 0:00:02.480 --> 0:00:07.400 Also media, Hello and welcome to Better Offline arm of 0:00:07.440 --> 0:00:22.160 course your host ed Zitron. Subscribe to the newsletter and 0:00:22.200 --> 0:00:25.360 take part in our annual anniversary newsletter sale ten bucks 0:00:25.400 --> 0:00:28.840 off the annual subscription rateful Life, with the sale extended 0:00:28.920 --> 0:00:31.840 through Sunday, July twenty six. Now join now support the 0:00:31.880 --> 0:00:35.199 greater Zitron Empire, and also like this is my main squeeze. 0:00:35.280 --> 0:00:37.879 Now it's listen the podcast. I mean here, I am. 0:00:37.920 --> 0:00:39.800 I love doing this show. Sound like I'm doing the 0:00:39.800 --> 0:00:44.680 world shittiest oscar speech. Anyway, onto the episode today, I 0:00:44.760 --> 0:00:48.080 am joined by the incredible ed Elson of Prof g Markets. 0:00:48.200 --> 0:00:48.920 Ed how are you doing. 0:00:49.360 --> 0:00:50.360 I'm doing very well. 0:00:50.400 --> 0:00:53.520 I'm very excited to contribute to the Zitron empire, which 0:00:53.560 --> 0:00:55.680 is growing by the minute. 0:00:56.240 --> 0:01:00.560 Yes, it's it is. It's a dangerous empire. Not terrible ideas. 0:01:00.880 --> 0:01:04.120 But let's talk about a specific terrible idea. You've been 0:01:04.160 --> 0:01:07.840 going outrageous over the SpaceX IPO, and I feel like 0:01:07.920 --> 0:01:10.759 I haven't done the listeners just this talking about how 0:01:10.800 --> 0:01:13.320 insane this company is, so please lead us in. 0:01:15.000 --> 0:01:20.679 Yeah, well we could probably start with their proposed valuation, 0:01:20.840 --> 0:01:22.560 which was supposed to you was supposed to go public 0:01:22.560 --> 0:01:25.000 at around two trillion dollars. It eventually came down to 0:01:25.040 --> 0:01:27.640 around one point seventy five trillion dollars, which was just 0:01:28.280 --> 0:01:31.160 flat out insane from the get go because it values 0:01:31.200 --> 0:01:33.679 the company at more than one hundred times sales. And 0:01:34.480 --> 0:01:36.640 you know, if the if the point of a company 0:01:36.959 --> 0:01:40.440 is to make money or to make you know, more 0:01:40.440 --> 0:01:43.120 money than it spends, then this is just a very 0:01:43.160 --> 0:01:46.760 bad company. It lost five billion dollars last year. It 0:01:46.880 --> 0:01:49.760 lost more than four billion dollars in the first quarter 0:01:49.840 --> 0:01:52.520 of this year. And if the idea is that you know, 0:01:52.520 --> 0:01:54.760 your revenues are going to grow faster than your expenditures, 0:01:54.760 --> 0:01:58.280 well that's currently not the case because their revenue grew 0:01:58.320 --> 0:02:01.160 only fifteen percent in the first quarter and their losses 0:02:01.200 --> 0:02:05.000 grew seven hundred percent. So this is like by all 0:02:05.360 --> 0:02:09.480 forms of standard accounting, this is like genuinely a bad business, 0:02:10.440 --> 0:02:12.320 and you really have to kind of cross your fingers 0:02:12.360 --> 0:02:15.880 and hope that something works out in order to believe 0:02:15.919 --> 0:02:18.840 that this is a viable investment, especially at the valuation 0:02:19.639 --> 0:02:23.360 that they were pushing for. And that's basically what we 0:02:23.480 --> 0:02:26.200 learned in that IPO filing that it was basically just 0:02:26.240 --> 0:02:28.880 a giant message to tell investors heges don't worry about it. 0:02:29.120 --> 0:02:31.160 Elon Musk is a genius. Just kind of cross your 0:02:31.200 --> 0:02:33.720 fingers and hope for the best. And there's a lot 0:02:33.840 --> 0:02:36.880 in that filing that we can get into, kind of 0:02:36.919 --> 0:02:40.200 a lot of ridiculous language that we could unpack. But 0:02:40.960 --> 0:02:44.639 essentially that is the problem. It's something that I pointed 0:02:44.680 --> 0:02:47.520 out as soon as the company went public. My prediction 0:02:47.680 --> 0:02:49.680 was that it was going to the stock was going 0:02:49.760 --> 0:02:52.760 to pop twenty five percent on the first day because 0:02:52.760 --> 0:02:54.520 of the amount of momentum and the amount of hype 0:02:54.720 --> 0:02:56.239 and the fact that IPOs are in a lot of 0:02:56.280 --> 0:02:58.320 ways a rigged game. It's kind of rigged by the 0:02:58.320 --> 0:03:01.720 Wall Street banks to make that these things go well 0:03:01.720 --> 0:03:04.240 and that you have a quote unquote successful ipo. That 0:03:04.400 --> 0:03:06.679 is what happened. But the second bottom, my prediction was 0:03:06.720 --> 0:03:09.040 that the stock would get cut in half. I think 0:03:09.040 --> 0:03:12.760 we're down to forty five percent off it's high, so 0:03:12.919 --> 0:03:16.799 we're not there yet, but we are getting close. 0:03:17.520 --> 0:03:21.320 So it feels like the Musk industrial complex that has 0:03:21.440 --> 0:03:25.400 kept Tesla afloat just didn't happen here. Because as I 0:03:25.440 --> 0:03:27.080 look at this number now, and it'll be different by 0:03:27.160 --> 0:03:29.120 the time this goes like it's what one hundred and 0:03:29.160 --> 0:03:32.560 twenty one point nine normal way of reading the stock 0:03:32.639 --> 0:03:36.200 price moving on uh way down from one hundred and 0:03:36.240 --> 0:03:37.920 thirty five, which is what it listed at. It popped 0:03:37.960 --> 0:03:39.720 like one hundred and fifty, went over two hundred at 0:03:39.760 --> 0:03:43.720 one point. But the Muskian bullshit complex that kept Tesla 0:03:43.760 --> 0:03:47.000 inflat it just hasn't happened here. Why do you think 0:03:47.040 --> 0:03:47.440 that is? 0:03:48.640 --> 0:03:51.520 Well, I think it can only last for so long. 0:03:51.680 --> 0:03:54.400 Like you look at Tesla, for example, which is already 0:03:54.560 --> 0:03:58.320 kind of commanding a pretty ridiculous valuation, and that is 0:03:58.360 --> 0:04:00.960 because of the cult of Elon and of the obsession 0:04:01.440 --> 0:04:04.040 with his brain and the fact that you know, he's 0:04:04.480 --> 0:04:07.600 gonna figure out how to build humanoid robots and all 0:04:07.600 --> 0:04:12.640 of this stuff. So the Tesla evaluation is kind of insane. 0:04:12.920 --> 0:04:17.000 But somehow it has been able to sustain itself for 0:04:17.080 --> 0:04:22.800 long enough. SpaceX was like otherworldly no pun intended here 0:04:22.800 --> 0:04:25.760 in terms of its valuation. At some point that has 0:04:25.839 --> 0:04:29.000 to end, at least that is my belief. When it 0:04:29.000 --> 0:04:32.040 comes to markets, I think that when you look at 0:04:32.080 --> 0:04:35.159 what the story that they were actually selling to investors, 0:04:36.000 --> 0:04:39.160 you look at what they said that in that disclosure 0:04:39.160 --> 0:04:42.320 in that filing. One of the things that kind of 0:04:42.360 --> 0:04:46.279 convinced investors that this might be remotely worth it was 0:04:46.320 --> 0:04:49.880 this idea that SpaceX had claimed and identified what they 0:04:49.920 --> 0:04:55.360 call quote the largest actionable total addressable market in human. 0:04:55.200 --> 0:04:58.520 History, right, And what market was was that exactly? 0:04:59.080 --> 0:05:05.599 So that market was launching rockets one, putting satellites into 0:05:05.600 --> 0:05:10.360 space two, but then the biggest one. And to be clear, 0:05:10.400 --> 0:05:12.680 they said that this total addressable market was twenty eight 0:05:12.680 --> 0:05:14.960 and a half trillion dollars, which would mean that the 0:05:15.000 --> 0:05:17.200 size of this market is larger than the GDP of 0:05:17.240 --> 0:05:20.640 Europe or the GDP of China, which is insane. What 0:05:20.839 --> 0:05:25.600 actually contributes to that market, as I said, rockets, satellites, 0:05:25.640 --> 0:05:30.279 but twenty six trillion dollars of that was AI. 0:05:31.520 --> 0:05:34.800 And of course this is not sorry, go ahead, no, no, no. 0:05:34.839 --> 0:05:38.240 I mean is that AI data centers? Are the AI 0:05:38.320 --> 0:05:39.520 data centers on Earth? 0:05:42.000 --> 0:05:45.640 That's that's the real question. So it is AI data centers. 0:05:45.640 --> 0:05:49.239 But supposedly the next theory, the next stage of AI, 0:05:49.839 --> 0:05:51.880 is that we're going to put these AI data centers 0:05:52.160 --> 0:05:55.279 out into space and they're going to orbit around the Earth. 0:05:55.680 --> 0:06:01.479 And that's why the AI opportunity is so massive, So obviously, 0:06:01.640 --> 0:06:04.640 I mean anyone who isn't sort of brought into the 0:06:04.680 --> 0:06:07.760 cult of Elon, anyone who isn't suffering from what I 0:06:07.880 --> 0:06:10.680 believe is Elon derangement syndrome, where you buy into this 0:06:10.720 --> 0:06:12.880 stuff and you believe that any price is worth it 0:06:12.880 --> 0:06:15.880 because it's Elon. Anyone who has their head screwed on 0:06:15.920 --> 0:06:19.320 correctly can understand that that doesn't really make any sense, 0:06:20.320 --> 0:06:24.120 or at least that you can't expect that you're going 0:06:24.160 --> 0:06:26.080 to get real returns from that if they haven't even 0:06:26.160 --> 0:06:29.360 proven that this makes sense both physically in terms of 0:06:29.400 --> 0:06:32.400 like the laws of physics, but also financially and economically, 0:06:32.400 --> 0:06:35.320 they haven't proven that you can get any real return here, 0:06:35.600 --> 0:06:38.960 And that's where all of the language becomes so misleading. 0:06:39.080 --> 0:06:42.599 Like they use this phrase the light of consciousness in 0:06:42.640 --> 0:06:46.640 their est, does that mean that? So that is what 0:06:46.720 --> 0:06:50.520 they say is their mission statement as a company Consciousness. 0:06:50.560 --> 0:06:53.719 To extend the light of consciousness to the stars is 0:06:53.720 --> 0:06:57.200 what their mission is. So it's not about actually delivering 0:06:57.520 --> 0:07:00.960 payloads into space. It's not about delivering broad broadband through 0:07:01.000 --> 0:07:03.200 their satellite business, which is what they should be saying, 0:07:03.240 --> 0:07:06.120 because that's what they do currently, But to get that 0:07:06.240 --> 0:07:11.080 crazy valuation, they need to hype up the scale of 0:07:11.120 --> 0:07:14.400 the project here, and so they have expanded that scale 0:07:14.760 --> 0:07:17.600 not just to the orbital data centers, which they haven't 0:07:17.640 --> 0:07:23.800 proven yet whatsoever, but also to interplanetary travel, interstellar travel, 0:07:23.840 --> 0:07:25.120 I mean, and. 0:07:25.080 --> 0:07:28.640 They were actually promising or suggesting that they would build 0:07:28.680 --> 0:07:29.640 interstellar travel. 0:07:30.160 --> 0:07:32.080 Well, they say that they want to extend the life 0:07:32.080 --> 0:07:34.080 of consciousness to the stars. And if that is their 0:07:34.080 --> 0:07:36.600 mission statement, then I'm going to take that literally and say, Okay, 0:07:36.760 --> 0:07:39.000 what you're saying then is that you want to accomplish 0:07:39.000 --> 0:07:43.320 interstellar travel. That's only what that could possibly mean. They're 0:07:43.360 --> 0:07:46.240 basically saying, we want to take humanity and bring them 0:07:46.240 --> 0:07:50.920 out to the stars. So that's if that's your missions. Again, 0:07:51.040 --> 0:07:53.480 they're not promising that that's what they're going to do. 0:07:53.840 --> 0:07:56.600 They're just saying, this is what we are trying to do. 0:07:57.040 --> 0:07:59.200 And then as soon as you say that, suddenly all 0:07:59.240 --> 0:08:01.040 of the investors, all the people on Wall Street go, 0:08:01.120 --> 0:08:03.640 oh my god, this is a company that is that 0:08:03.760 --> 0:08:06.679 is trying to do something bigger than any any company 0:08:06.680 --> 0:08:09.040 has ever done in history. You look at what Deutsche 0:08:09.080 --> 0:08:12.000 Bank called SpaceX. They call this company in their note 0:08:12.280 --> 0:08:17.080 quote the apex of civilizational ambition. They said that SpaceX 0:08:17.120 --> 0:08:20.960 is quote bending the arc of history. So when you 0:08:21.080 --> 0:08:25.520 talk like that, suddenly people's greed glands get going and 0:08:25.560 --> 0:08:28.080 you start to think about, oh my gosh, what if 0:08:28.120 --> 0:08:30.360 they do it, what if they pull this off? And 0:08:30.400 --> 0:08:32.360 then you kind of forget about the numbers. You forget 0:08:32.360 --> 0:08:34.800 about the fact that they are losing money. You forget 0:08:35.080 --> 0:08:37.520 you forget about the fact that the AI business that 0:08:37.559 --> 0:08:40.080 they say is going to generate, you know, ninety percent 0:08:40.120 --> 0:08:42.840 of their revenues down the line. You forget that it 0:08:42.880 --> 0:08:45.719 doesn't work at all. You forget that it's right, two 0:08:45.720 --> 0:08:47.120 selve billion dollars in losses. 0:08:47.240 --> 0:08:50.360 So there's two assumptions there. There's one that they'll build 0:08:50.400 --> 0:08:53.559 aye data centers in space, which is somewhere between wang 0:08:53.600 --> 0:08:57.200 and bullshit. And then there's the other one, which is 0:08:57.240 --> 0:09:00.880 that the data center demand exists for that. So just 0:09:00.920 --> 0:09:02.600 two of them, two of them at the same time, 0:09:03.520 --> 0:09:06.280 for this data center thing they haven't proven. All right, 0:09:06.520 --> 0:09:08.400 maybe this is a more direct question. You kind of 0:09:08.440 --> 0:09:12.040 hinted it this earlier. What's in it for the banks? Like, 0:09:12.160 --> 0:09:15.560 just on a very very basic level, why what's in 0:09:15.640 --> 0:09:18.599 it for like a Deutsche Bank or a Goldman or 0:09:18.600 --> 0:09:22.040 what have you. To say this stuff that if a 0:09:22.080 --> 0:09:24.280 homeless person screamed it at you, you'd run away. 0:09:26.120 --> 0:09:28.560 So that's the really interesting question. This is where I 0:09:28.600 --> 0:09:30.480 start to kind of put on my tin foil hat 0:09:30.520 --> 0:09:33.920 and get a little bit con that's what it's about exactly, 0:09:34.000 --> 0:09:36.559 and we do it in a data driven way. And 0:09:36.600 --> 0:09:42.000 to be honest, I'll just say this, I'm right. Here's 0:09:42.040 --> 0:09:49.160 why they're doing it. The reason that Wall Street has 0:09:49.280 --> 0:09:53.600 to be nice to SpaceX is because there is a 0:09:53.720 --> 0:09:58.280 very very significant financial incentive to do so. And that 0:09:58.400 --> 0:10:02.000 is this is one of the large IPOs in history 0:10:02.679 --> 0:10:07.080 and one of the most important ways that banks generate revenue. 0:10:07.080 --> 0:10:09.560 The way that they make their money is they take 0:10:09.679 --> 0:10:15.440 companies public. So if SpaceX decides to choose the ed 0:10:15.520 --> 0:10:19.959 Zitron Bank as their underwriter for the IPO, then that 0:10:20.000 --> 0:10:23.360 means that when SpaceX goes public, ed Zitron Bank will 0:10:23.400 --> 0:10:26.720 get a cut of the fees that were generated from this, 0:10:27.640 --> 0:10:28.240 and so. 0:10:28.440 --> 0:10:30.800 Those the fees on the trades. Right, So when someone 0:10:30.840 --> 0:10:33.640 trades there's like what are the fees that they make? 0:10:34.360 --> 0:10:37.960 They take a percentage of the amount of equities of 0:10:38.000 --> 0:10:42.800 the company that were sold, and it depends the percentages 0:10:42.840 --> 0:10:47.080 can change. For SpaceX, it was slightly smaller as a 0:10:47.120 --> 0:10:50.320 percentage of the average IPO offering, but that's because the 0:10:50.360 --> 0:10:54.160 actual amount that was being raised was so gigantic. So 0:10:54.559 --> 0:10:57.400 you look at the banks that reported their earnings last week, 0:10:57.679 --> 0:11:01.240 they made literally billions of dollars off the SpaceX IPO 0:11:01.760 --> 0:11:05.000 because so many of them took this company public. So 0:11:05.320 --> 0:11:07.640 that's the first thing that you need to know is 0:11:07.679 --> 0:11:10.720 that Wall Street, you know, has an incentive to be 0:11:10.840 --> 0:11:13.920 nice to the banks. We actually had an example of 0:11:13.960 --> 0:11:17.880 this back in our favorite era of market history, which 0:11:17.920 --> 0:11:20.480 was the dot com boom, where there was this guy 0:11:20.600 --> 0:11:25.400 named Henry Blodgett who was an analyst Maryland business insider 0:11:25.520 --> 0:11:29.960 himself exactly so who went on to actually create Business Insider, 0:11:30.000 --> 0:11:32.280 and so he actually had a decent career, but he 0:11:32.400 --> 0:11:35.880 got a lot of trouble back in the dot com 0:11:35.920 --> 0:11:43.120 era because he had spoken publicly, very optimistically about a 0:11:43.160 --> 0:11:46.880 lot of these Internet companies that were going public. He 0:11:47.000 --> 0:11:49.640 said that they were all buys. He said that he 0:11:49.679 --> 0:11:51.840 publicly recommended them, and that was kind of his job, 0:11:51.920 --> 0:11:55.480 is to talk about these companies, give price targets and 0:11:55.480 --> 0:11:58.320 say this is what I expected the company. After the 0:11:58.360 --> 0:12:01.800 dot com crash, it was then learned there was an 0:12:01.840 --> 0:12:05.400 investigation into Henry Blodgett and they found out that actually, 0:12:05.440 --> 0:12:07.800 in private, he had been saying that a lot of 0:12:07.800 --> 0:12:11.640 these companies were trash or as you like to call them, wank. 0:12:11.840 --> 0:12:13.880 That was, he said that they were junk, he said 0:12:13.880 --> 0:12:17.360 that they were dogs. He said they were pos's translation 0:12:17.520 --> 0:12:20.280 pieces of shit. And so the question is why was 0:12:20.320 --> 0:12:24.240 he saying one thing privately and then you know, out 0:12:24.280 --> 0:12:25.640 of the other side of his mouth going out to 0:12:25.679 --> 0:12:28.280 the public and saying this company is a bye. And 0:12:28.320 --> 0:12:30.800 the reason is what I said, which is that he 0:12:30.880 --> 0:12:34.360 needed to. He had a financial incentive to make these 0:12:34.400 --> 0:12:38.000 companies like them so that they would be choosing his bank, 0:12:38.080 --> 0:12:40.960 Merrill Lynch, to underwrite their IPOs. In that way, Merrill 0:12:41.000 --> 0:12:43.040 Lynch makes money. So this turned out to be a 0:12:43.080 --> 0:12:45.800 huge scandal, and there were a lot of other analysts 0:12:45.840 --> 0:12:47.640 and a lot of other Wall Street banks that were 0:12:47.640 --> 0:12:50.800 revealed to be doing the same thing. And so the 0:12:50.880 --> 0:12:53.640 SEC looked at this and they thought, Okay, this is 0:12:53.720 --> 0:12:56.840 kind of a problem. We can't have these guys publishing 0:12:56.840 --> 0:13:00.080 this research where they're basically lying about these companies, and 0:13:00.120 --> 0:13:01.679 at the same time we learned that, you know, they 0:13:01.720 --> 0:13:03.079 actually don't believe in these companies. 0:13:03.080 --> 0:13:04.760 So they came up with this law. 0:13:05.440 --> 0:13:10.000 Called the Global Research Analyst Settlement of two thousand and three, 0:13:10.679 --> 0:13:12.920 and this was basically an agreement that was created by 0:13:12.920 --> 0:13:16.880 the SEC to address the conflict of interest between the 0:13:16.960 --> 0:13:20.960 investment banking arms and the equity research arms. The team 0:13:21.000 --> 0:13:23.560 that Henry Blodgett was on at the Wall Street banks, 0:13:24.000 --> 0:13:25.640 and they basically said that what we're going to do 0:13:25.679 --> 0:13:27.800 is we're going to separate you too, from one another, 0:13:28.320 --> 0:13:30.400 and we're going to say, you guys, actually, if you 0:13:30.440 --> 0:13:33.480 work in investment banking, you're actually not allowed to talk 0:13:33.520 --> 0:13:36.960 to anyone on equity research at your bank unless we 0:13:37.040 --> 0:13:40.040 have a chaperone present. Because what we've learned is that 0:13:40.080 --> 0:13:42.760 if you guys start to collude with one another, then 0:13:42.800 --> 0:13:44.720 we're going to start to run into conflicts of interest. 0:13:44.960 --> 0:13:46.480 Then we're going to have the banks and they're going 0:13:46.520 --> 0:13:48.559 to start pumping these shitty stocks that are going to 0:13:48.640 --> 0:13:51.000 lose people a lot of money, because that is exactly 0:13:51.080 --> 0:13:54.120 what happened in the dotcom crash. So they created this 0:13:54.200 --> 0:13:56.880 thing and you'd think, Okay, problem solved. 0:13:57.640 --> 0:14:01.040 Then I go not really, well, it seems like you'd 0:14:01.040 --> 0:14:04.280 have a bloat from just another person in the room 0:14:04.280 --> 0:14:04.520 with you. 0:14:06.000 --> 0:14:11.400 Yes, so that I mean that that's an important point. 0:14:12.520 --> 0:14:15.120 But at the least you could say that they tried 0:14:15.280 --> 0:14:18.360 to address the problem, and the least you could say, Okay, 0:14:18.400 --> 0:14:23.360 we've created a rule that is attempting to make this 0:14:24.280 --> 0:14:26.840 less of a problem than it has been. And maybe 0:14:27.200 --> 0:14:30.160 maybe at most you put a scare into the research 0:14:30.200 --> 0:14:32.640 analyst and you say, hey, guys, this is a big deal, 0:14:32.640 --> 0:14:34.760 and if you start pumping things up, then that's going 0:14:34.840 --> 0:14:36.560 to be a problem. Another thing they did, by the way, 0:14:36.920 --> 0:14:40.200 is they made a law that the equity research analysts 0:14:40.280 --> 0:14:44.720 compensation had to be completely divorced from the investment banking revenues. 0:14:45.080 --> 0:14:47.680 So that way you could sort of argue that if 0:14:47.720 --> 0:14:50.600 you work on equity research, then you don't actually have 0:14:50.680 --> 0:14:53.840 a financial incentive anymore to talk up stocks. Now you 0:14:53.880 --> 0:14:56.479 can just do your research and give your honest recommendations. 0:14:56.720 --> 0:14:59.200 Whether you believe that that actually solved the problem is 0:14:59.200 --> 0:15:02.760 another question, but let it be known they tried to 0:15:02.880 --> 0:15:04.680 and that was the law that they put into effect. 0:15:05.120 --> 0:15:07.280 That just feels like the least effectual way to do 0:15:07.360 --> 0:15:10.960 this though, because I don't know. I read byside analysts 0:15:11.080 --> 0:15:15.880 all the time, and I've never seen them say anything negative. 0:15:16.680 --> 0:15:19.720 Well, here's where I'm going to kind of burst the 0:15:19.760 --> 0:15:24.680 bubble here, which is seven months ago that law was terminated. 0:15:25.240 --> 0:15:28.880 Oh okay, Oh. 0:15:28.200 --> 0:15:31.640 December TWE twenty twenty five. This was the headline from 0:15:31.680 --> 0:15:34.680 the SEC. Quote, the SEC agrees to terminate Global Research 0:15:34.720 --> 0:15:39.440 Analyst Settlement. So they basically decided that we don't need 0:15:39.480 --> 0:15:44.200 to have this law anymore. And their argument the SEC, 0:15:44.280 --> 0:15:46.520 the same SEC which has lost about a fifth of 0:15:46.560 --> 0:15:50.920 its workforce, which is seeing some of the lowest settlements 0:15:51.000 --> 0:15:53.440 in the history of the agency, because they have basically 0:15:53.480 --> 0:15:56.880 made it their mo at this point not to protect investors, 0:15:56.920 --> 0:15:58.840 but to protect white collar crime, which is why we're 0:15:58.840 --> 0:16:01.680 seeing all of the inside trading which has just exploded 0:16:01.720 --> 0:16:02.520 over the past year. 0:16:03.080 --> 0:16:03.880 They said that. 0:16:03.800 --> 0:16:07.400 We don't need to have this law anymore because there 0:16:07.440 --> 0:16:10.080 are other laws that kind of do the job for you. 0:16:10.360 --> 0:16:14.000 Do they come even remotely close to the laws that 0:16:14.120 --> 0:16:17.800 existed beforehand in that initial Global Research Analyst settlement? Do 0:16:17.840 --> 0:16:20.640 they have the laws, for example, where you have to 0:16:20.680 --> 0:16:23.640 have a chaperone in the room for these units to 0:16:23.680 --> 0:16:24.560 be talking to each other. 0:16:24.920 --> 0:16:25.560 No, they don't. 0:16:25.720 --> 0:16:28.800 The laws are a lot weaker, they're a lot more flexible, 0:16:28.800 --> 0:16:30.120 they're a lot less stringent. 0:16:30.600 --> 0:16:32.360 So that happened. 0:16:32.400 --> 0:16:34.720 We don't even have the half hearted one anymore. 0:16:34.840 --> 0:16:41.080 Exactly, there's basically nothing good stuff that happens. SpaceX then 0:16:41.640 --> 0:16:44.480 files its IPO, and then I go and I look 0:16:44.480 --> 0:16:48.200 at the Wall Street price targets that we saw, and unanimously, 0:16:48.360 --> 0:16:53.680 every single bank that underwrote this IPO has said, even 0:16:53.720 --> 0:16:57.440 at that ridiculous valuation that was initially floated, they've said, 0:16:57.440 --> 0:16:59.880 this is a bye so Yeah, Gobin Sachs. They said 0:17:00.200 --> 0:17:02.160 it's worth two hundred and five dollars a share. That's 0:17:02.160 --> 0:17:04.680 a two point seven trillion dollar market cap. Yeah, JP 0:17:04.800 --> 0:17:07.199 Morgan they said that this company is worth three trillion 0:17:07.240 --> 0:17:11.400 dollars Morgan Stanley, four trillion dollars, my favorite, Raymond James, 0:17:11.480 --> 0:17:14.240 a lesser known investment bank. They say the company is 0:17:14.240 --> 0:17:17.960 worth ten and a half trillion dollars, which would mean 0:17:18.040 --> 0:17:20.679 that this company should be trading at a price to 0:17:20.720 --> 0:17:25.560 sales multiple of five hundred and forty two times sales. 0:17:25.640 --> 0:17:29.920 It would mean that this company is the most valuable 0:17:29.920 --> 0:17:34.560 company on Earth, more valuable than Meta and Microsoft combined, 0:17:34.600 --> 0:17:36.040 more valuable than in Video. 0:17:35.840 --> 0:17:38.600 More val Apple and Apple combined. 0:17:38.320 --> 0:17:41.320 Than Apple and Video combined. And at that point you 0:17:41.400 --> 0:17:46.040 have to ask yourself, Okay, what are these guys smoking 0:17:47.000 --> 0:17:48.800 or two? Who's paying that? 0:17:49.400 --> 0:17:49.800 Yeah? 0:17:49.920 --> 0:18:05.760 And the answer is SpaceX is paying that. And then 0:18:05.800 --> 0:18:08.760 you might say, well, they've already done the IPO, so 0:18:09.000 --> 0:18:12.280 haven't they already gotten their fees. Haven't they already collected 0:18:12.280 --> 0:18:16.160 their revenue? Why would they be incentivized to be pumping 0:18:16.200 --> 0:18:19.199 the stock now after the company has already gone public. 0:18:19.600 --> 0:18:22.800 And this is the part that I'm sure you will enjoy, 0:18:22.840 --> 0:18:26.840 which is this company still needs to raise hundreds of 0:18:26.880 --> 0:18:29.280 billions of dollars to achieve all of the things that. 0:18:29.200 --> 0:18:32.880 They need to achieve, and that through the banks. 0:18:33.240 --> 0:18:35.000 They have to do it through the banks, so they 0:18:35.040 --> 0:18:36.959 have to do that. There was the debt offering that 0:18:37.000 --> 0:18:41.840 they recently did, which was somehow people bought, but now 0:18:41.880 --> 0:18:45.480 are seeing that SpaceX bonds are absolutely tanking. But they're 0:18:45.480 --> 0:18:47.239 going to have to raise more equity and they're going 0:18:47.280 --> 0:18:50.560 to have to raise more debt. That's close to I 0:18:50.600 --> 0:18:53.600 think it was two hundred billion dollars of morphinancing that 0:18:53.600 --> 0:18:57.240 they'll need later down the pipeline, which means that's tens 0:18:57.280 --> 0:19:00.879 of billions of dollars in future revenue for the investment banks. 0:19:01.200 --> 0:19:05.560 That's revenue that they have literally a fi fiduciary obligation 0:19:06.040 --> 0:19:10.280 to pursue. So when you ask me, okay, why is 0:19:10.320 --> 0:19:15.840 everyone smoking crack when it comes to SpaceX, this is why. 0:19:16.640 --> 0:19:20.920 And the only analysts who have said that the company 0:19:21.000 --> 0:19:24.240 is a sell morning Star for example, they're analysts who've 0:19:24.240 --> 0:19:27.880 had on my show, Nicholas Owens. The only anlysts who 0:19:27.880 --> 0:19:30.160 are saying that this isn't worth what it is currently 0:19:31.520 --> 0:19:34.880 are analysts who don't have a financial incentive. I mean 0:19:35.160 --> 0:19:38.439 morning Star is an example. They're not taking this company public. 0:19:38.600 --> 0:19:41.240 They have no incentive to get these underwriting fees on 0:19:41.280 --> 0:19:44.480 all of the debt and the equity offerings. So that's 0:19:44.520 --> 0:19:47.800 the problem here, and I think that investors are beginning 0:19:47.800 --> 0:19:50.480 to come to their senses. You're seeing a lot of 0:19:50.800 --> 0:19:54.440 fear now as that that line goes down and down 0:19:54.480 --> 0:19:59.000 and down and redder and redder and redder. My projection, 0:19:59.200 --> 0:20:03.160 my expectation is that that number will continue to go down, 0:20:03.680 --> 0:20:08.000 especially as investors start to lose faith in these price 0:20:08.080 --> 0:20:12.119 targets and these revenue projections from the Wall Street banks. 0:20:12.119 --> 0:20:15.360 I mean, you look at like the Raymond James estimates 0:20:15.359 --> 0:20:17.399 as an example, they estimate the revenue is going to 0:20:17.480 --> 0:20:20.280 rise from nineteen billion dollars last year. That was the 0:20:20.359 --> 0:20:23.080 number that SpaceX that's how much revenue they generated last 0:20:23.160 --> 0:20:29.120 year to in twenty thirty five five point two trillion dollars. 0:20:29.200 --> 0:20:34.280 Goldman Sex said that SpaceX's revenue will surge one hundred 0:20:34.560 --> 0:20:37.400 x yes by twenty thirty. 0:20:37.359 --> 0:20:41.399 Which, by the way, is conservative compared to some of 0:20:41.440 --> 0:20:44.760 these other estimates from legal. 0:20:45.000 --> 0:20:49.040 The reason I asked that is is this not again, 0:20:49.160 --> 0:20:52.480 like I guess the is it that they have financial 0:20:52.520 --> 0:20:55.359 models that they can point to that say the things 0:20:55.400 --> 0:20:57.440 they want them to say. Is it that there is 0:20:57.480 --> 0:21:00.320 a mathematical basis or be it a rotten one? Or 0:21:00.359 --> 0:21:04.159 are they just nobody bothers to check them. 0:21:04.720 --> 0:21:08.520 I think that what we know about numbers and statistics 0:21:08.560 --> 0:21:10.679 is that there's a lot of bullshitting and massaging that 0:21:10.720 --> 0:21:14.480 you can do. And the trouble with numbers is that 0:21:14.520 --> 0:21:20.600 they kind of they lend a level of objectivity and 0:21:20.680 --> 0:21:24.639 validity on the surface, but the deeper you dig into them, 0:21:24.680 --> 0:21:26.639 the more you start to realize that numbers can be 0:21:26.680 --> 0:21:29.760 completely fabricated and bullshitted out of thin air. 0:21:30.200 --> 0:21:31.399 And you know this very. 0:21:31.280 --> 0:21:34.359 Well because of the work that you've done investigating the 0:21:34.400 --> 0:21:37.800 finances of an open AI, investigating the finances about Throbbing, 0:21:37.800 --> 0:21:40.120 investigating the finances of a lot of these AI companies, 0:21:40.119 --> 0:21:42.640 which a lot of people are starting to get very 0:21:42.640 --> 0:21:44.919 worried about. I think credit to a lot of the 0:21:44.960 --> 0:21:47.919 work that you have been doing. But the same is 0:21:48.000 --> 0:21:51.639 true of SpaceX. And it's especially true when you have 0:21:51.760 --> 0:21:57.879 a company that whose entire value proposition is predicated on 0:21:58.000 --> 0:22:00.840 a distant dream that is an't and close. 0:22:00.600 --> 0:22:01.560 To being realized. 0:22:01.960 --> 0:22:04.960 So as soon as you say, you know, our total 0:22:05.000 --> 0:22:08.119 addressable market is twenty eight and a half trillion dollars, 0:22:08.160 --> 0:22:12.680 because we're not only going to pursue orbital data centers, 0:22:12.720 --> 0:22:15.880 but we're also going to pursue asteroid mining, and we're 0:22:15.920 --> 0:22:20.480