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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is a breaking news update from Bloomberg instant reaction

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Speaker 2: and analysis from our three thousand journalists and analysts around

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Speaker 2: the world.

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Speaker 3: I'm Kailey Liones in Washington, but clearly all eyes are

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Speaker 3: on New York today as SpaceX launches into public markets.

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Speaker 3: A record setting IPO of seventy five billion dollars priced

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Speaker 3: at one thirty five is shared. The stock opens on

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Speaker 3: the Nasdaq eleven percent higher than that at one point

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Speaker 3: fifty And as we speak down at the Nasdaq where

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Speaker 3: this trading got underway, we find Bloomberg's Yea Hira on it,

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Speaker 3: who will check in within just a moment as we

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Speaker 3: considering it raised seventy five billion dollars in that initial offering,

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Speaker 3: valuing the company at just about one point eight trillion dollars.

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Speaker 3: That valuation that market cap obviously significantly higher with the

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Speaker 3: gain we are seeing today north of two trillion dollars.

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Speaker 3: So let's go to a hire now at the NASDAQ

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Speaker 3: four more so, Yeah, Hira, obviously we're setting records here.

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Speaker 3: What is the vibe like at the NASDAK right now?

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Speaker 3: It seems everything and this process has gone pretty smoothly.

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Speaker 2: Yeah, pretty smoothly for the biggest IPO we've ever seen.

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Speaker 2: And I will say the excitement, especially in the last

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Speaker 2: hour as you were getting closer to trading, was palpable.

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Speaker 2: You felt it here at the NASDAC. They are all

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Speaker 2: scrambling making sure it all went off without a hit,

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Speaker 2: without a hitch, And then outside you have all the

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Speaker 2: Musk fans gathering hoping to get a glimpse of him.

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Speaker 2: But as you and I know, he was over in Texas.

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Speaker 2: But as you said, SpaceX has officially begun trading, and

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Speaker 2: with the stock opening at one hundred and fifty dollars

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Speaker 2: a share above its one hundred and thirty five dollars

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Speaker 2: IPO praise, and that game investors an immediate gain of

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Speaker 2: roughly eleven percent. But now you said, it is trading

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Speaker 2: above that. But this valley's a company at approximately just

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Speaker 2: under two trillion dollars, as you said, Kaylee, But it

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Speaker 2: instantly puts SpaceX among the most valuable companies in the world,

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Speaker 2: more valuable than Tesla itself of course, another Elon Musk

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Speaker 2: owned company, Meta, and even Saudi Aramco.

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Speaker 3: All right, Bloombergs, you hire on live at the Nasdaq

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Speaker 3: as SpaceX debuts. Thank you so much. So let's get

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Speaker 3: more on this as we turn to Craig Trudell, our

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Speaker 3: managing editor of Global Business America's here at Bloomberg and Craig, obviously,

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Speaker 3: while you hold that title now you also led for

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Speaker 3: a long time Bloomberg's autos coverage. You are very familiar

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Speaker 3: with Elon Musk as the CEO of Tesla, which, obviously,

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Speaker 3: while being an auto company first and foremost also in

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Speaker 3: financial markets and public markets, was the way to bet

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Speaker 3: on Elon Musk. We now have a second channel for

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Speaker 3: those bets in SpaceX. Whether or not these two get

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Speaker 3: rolled together at some point, I'm not sure, but your

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Speaker 3: reaction please to the appetite we are seeing for SpaceX

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Speaker 3: as at debuts today.

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Speaker 1: Yeah, I think it's fascinating to see, Yes, a strong

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Speaker 1: debut for SpaceX, a rotation maybe a little bit out

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Speaker 1: of Tesla, which is something that we were really braced for,

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Speaker 1: but not anything disastrous. I mean, we've seen, you know,

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Speaker 1: on an Intrada basis, the stock you know, fall about

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Speaker 1: three percent, but as of this moment it's a little

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Speaker 1: less than that, about two point eight. This is a

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Speaker 1: company that you know has been quite volatile over the

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Speaker 1: years in its own right, and if you know sort

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Speaker 1: of that track record applies to SPACEXM, we should be

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Speaker 1: sort of in for a bumpy ride here.

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Speaker 3: Well certainly so it's still Elon Musk that we're talking

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Speaker 3: about a visionary maybe, but a lot of volatility we

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Speaker 3: know can come with that. Walk us through the unique

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Speaker 3: nature of the way this IPO happened, the idea that

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Speaker 3: this price was set, It wasn't your typical price. Discovery

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Speaker 3: Musk said, the price is one hundred and thirty five

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Speaker 3: dollars of share. He got that, and obviously investors are

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Speaker 3: buying this stock for more than that as trading gets

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Speaker 3: going here. But how should we consider the way in

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Speaker 3: which the value for this company was said? We were

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Speaker 3: just listening to Jim Chaino's talking about how skeptical he

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Speaker 3: is of valuing a market cap at something one hundred

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Speaker 3: and ten times revenue for a company that isn't profitable.

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Speaker 1: Yeah, I think it's fascinating in that, you know, this

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Speaker 1: is also a company that you know, put out incredible

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Speaker 1: numbers in their s one about you know, total addressable

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Speaker 1: markets and talking about space based economy, you know, to

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Speaker 1: hear Musk talk about the potential for this company, and

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Speaker 1: to hear people like Jared Isaacman, you know, the head

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Speaker 1: of NASA. You know, he gave an interview very recently

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Speaker 1: about this notion that the space economy it's been something

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Speaker 1: that's been sort of highly speculated about, hyped up as

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Speaker 1: something massive, and yet the follow through has been very minimal.

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Speaker 1: I will say in defensive Musk and SpaceX, with the

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Speaker 1: exception of Starlink, there's been very little in the way

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Speaker 1: of progress toward making any money in space. We have

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Speaker 1: seen SpaceX make progress, wh others haven't. I think where

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Speaker 1: you really run into trouble looking at this company is

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Speaker 1: actually the AI portion. And the fact that that was

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Speaker 1: just such a very recent addition to the SpaceX story

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Speaker 1: maybe makes things kind of muddy and more complicated than

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Speaker 1: they might have otherwise been had this just been a

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Speaker 1: space company with a solid satellite business.

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Speaker 3: Well, a late addition, yes, but one that already does

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Speaker 3: have some commitments tied to it. It seems we all

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Speaker 3: saw the news of Google's contract with SpaceX that's going

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Speaker 3: to be what nearly a billion dollars per month, assuming

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Speaker 3: that SpaceX can actually deliver on the computing power that

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Speaker 3: has been promised, how far do we have to go

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Speaker 3: to SpaceX actually realizing these capabilities, actually having them to

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Speaker 3: offer customers, not just like Google, but Anthropic is a

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Speaker 3: big customer too, right.

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Speaker 1: Yeah, the two of them in sort of rapid fire fashion,

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Speaker 1: you know, reach these deals in the lead up to

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Speaker 1: the IPO, and surely that's helping sort of booie sentiment.

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Speaker 1: But if we think about you know, Musk's ambitions to

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Speaker 1: not just be a sort of infrastructure partner to the

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Speaker 1: likes of Google and Anthropic and actually getting in the

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Speaker 1: game itself and and you know, building a competitive chatbot

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Speaker 1: and AI capabilities that can be monetized, that's where we've

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Speaker 1: seen you know, real failures on musk part and he's

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Speaker 1: been pretty open about that. Actually on x This notion

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Speaker 1: that they sort of started XAI all wrong and are

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Speaker 1: kind of starting over. It was you know, really unusual

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Speaker 1: and very like him that he would be so sort

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Speaker 1: of candid about that, and yet maybe raises some questions

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Speaker 1: about you know, just how quickly this will will be

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Speaker 1: a company that's a major player and actually, you know,

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Speaker 1: things beyond partnering with companies that have had success like anthropic.

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Speaker 3: Well, and you've just made the point, Craig about XAI

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Speaker 3: getting rolled in to SpaceX. So would you be surprised

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Speaker 3: if we see Tesla rolled in to this larger company.

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Speaker 1: You you know, just just going off the trend that

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Speaker 1: we've seen this rolling up of Musk's companies. It does

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Speaker 1: feel like that's also something that people quite close to

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Speaker 1: Musk have not shied a way about, you know, speaking

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Speaker 1: to this notion that you know, that would be you know,

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Speaker 1: not even just a sort of open secret, but just

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Speaker 1: something that people are very comfortable, you know. Theorizing about

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Speaker 1: tells me that that it does feel like it's likely.

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Speaker 1: I also thinks it's interesting and that we've heard Musks say,

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Speaker 1: you know, over and over again that he wishes he

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Speaker 1: had more control over Tesla. One of the ways to

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Speaker 1: sort of address the fact that he's not particularly comfortable

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Speaker 1: with his command of that company would be to combine

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Speaker 1: these because that is an aspect of SpaceX's structure that

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Speaker 1: is quite different, where he has a special class of

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Speaker 1: stock that Tesla didn't have when it went public. If

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Speaker 1: they were to combine, they would sort of you know,

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Speaker 1: rationalize that and give him the ability of of stock

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Speaker 1: that protects him from any activism or challenges to his

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Speaker 1: sort of rule of the company.

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Speaker 3: All right, Bloomberg's Craig Drudell, thank you so much. SpaceX

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Speaker 3: right now trading at one hundred and sixty four dollars

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Speaker 3: a share, we're up nearly twenty two percent from that

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Speaker 3: one hundred and thirty five dollars IPO price. Quite the

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Speaker 3: debut we are seeing for one of the world's largest

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Speaker 3: companies by market gap at this point after a record

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Speaker 3: setting seventy five billion dollar IPO. Ed Ludlow owns tech

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Speaker 3: and space coverage as the co host of Bloomberg Tech,

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Speaker 3: and he's here with us now on this debut day

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Speaker 3: for SpaceX, and I feel like this is your super Bowl,

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Speaker 3: Probably is most people in financial market super Bowl, as

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Speaker 3: we're setting records here, not just in terms of IPO,

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Speaker 3: but in the size of this debut. Talk to me

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Speaker 3: about about the demand here, as we had questions as

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Speaker 3: to whether or not this price was set correctly given

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Speaker 3: the unusual lack of price discovery that happened, whether or

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Speaker 3: not five hundred and fifty five million shares being issued

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Speaker 3: was going to be met with adequate demand. Are we

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Speaker 3: seeing evidence that perhaps the appetite was even more robust

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Speaker 3: than initially thought.

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Speaker 4: Well, it was massively oversubscribed on the institutional side, which

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Speaker 4: accounted for eighty percent of the offering, and on the

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Speaker 4: retail side as well, which was about twenty percent. And

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Speaker 4: we can get into more of the specifics of how

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Speaker 4: that sliced and diced. It's trading right now one hundred

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Speaker 4: and sixty seven fifty twenty four percent above the IPO

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Speaker 4: price of one thirty five. What we reported over the

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Speaker 4: last five days is that it has been Elon Musk himself,

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Speaker 4: along with Brett Johnson, the CFO, and Gwyn shot Well

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Speaker 4: the president, that really controlled and dictated the terms literally

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Speaker 4: as opposed to like the bankers. Bankers have a lot

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Speaker 4: of influence and IPO processes. But this time, part of

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Speaker 4: the rationale, as it was explained to me, is that

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Speaker 4: if you said it early ahead of a road show

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Speaker 4: without a range, it is atypical and unusual. But you

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Speaker 4: basically removed the leverage of the long on the asset managers,

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Speaker 4: the big institutions that would account for most of the

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Speaker 4: order book anyway. It just made things on their terms.

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Speaker 4: There are big questions about valuation long term right, it's

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Speaker 4: come to IPO at ninety two times or something like

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Speaker 4: that sales. But you know that's was how it was done.

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Speaker 4: And so you know, there are lots of retail investors

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Speaker 4: that did get an allocation, some evidence that they are

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Speaker 4: people that are also TESSA retail shareholders anecdotes weavidens, I'd say,

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Speaker 4: but now there are lots of people that are you know,

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Speaker 4: reluctantly and I guess not reluctantly it's not the right word.

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Speaker 4: They don't want to be buying in the open market,

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Speaker 4: but they are, you know, they kind of have to be.

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Speaker 3: Yeah, perhaps some noseholding going on here to your point

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Speaker 3: and about valuation, walk us through what the thesis is

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Speaker 3: here in terms of the total addressable market that SpaceX

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Speaker 3: is saying that it can reach and what tangibly the

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Speaker 3: company is now going to need to be able to

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Speaker 3: accomplish from a technology standpoint, to be able to deliver

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Speaker 3: on that deliver what it's promised to customers like Anthropic and.

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Speaker 4: Google so like right now, on a fully diluted basis,

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Speaker 4: this is a company that has a value of more

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Speaker 4: than two trillion, and they are pitching a story about

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Speaker 4: a future where they are many things, a diversified business,

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Speaker 4: which most of is selling AI software. Right they say

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Speaker 4: there's a twenty eight point five trillion dollar addressable market,

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Speaker 4: and twenty six point five of that is what they

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Speaker 4: are calling in an umbrella or bucket of enterprise AI.

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Speaker 4: But in the near term, all of that is predicated

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Speaker 4: on them being able to get Starship, which is on paper,

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Speaker 4: the most powerful rocket and launch system humankind's have ever

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Speaker 4: developed to work regularly and reusably. They have done twelve

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Speaker 4: test flights. They asked closer, you know in the coming

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Speaker 4: weeks of doing a thirteenth test flight, but they've never

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Speaker 4: landed or both parts of it, the booster and the

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Speaker 4: spacecraft on top back on Earth. They have to do

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Speaker 4: that if they are able to put into orbit satellites

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Speaker 4: that are data centers, and that is kind of the

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Speaker 4: middle step that gets them to that distant future where

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Speaker 4: humans are living on Mars and they're able to generate

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Speaker 4: most of their revenues and income from AI. It's not straightforward,

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Speaker 4: and that has been a part of how much you

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Speaker 4: place a value of twenty thirty to twenty fifty not

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Speaker 4: right now on the historic IPO Friday.

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Speaker 3: Well, and it's also just so interesting to consider the

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Speaker 3: circular nature of this, if you will, because we're talking

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Speaker 3: about what SpaceX will need to do to deliver for

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Speaker 3: customers like Anthropic, which at least in some parts of

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Speaker 3: the wider SpaceX business. Here, if you're considering roc which

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Speaker 3: obviously is no claude, there is still competition there. Just

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Speaker 3: speak to that, ed and how all of this is

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Speaker 3: setting the stage for Anthropic and also open Ayes ultimate

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Speaker 3: public debuts that we're expecting later.

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Speaker 4: So state of play is that Anthropic has filed confidentially

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Speaker 4: with the SEC for IPO and so has opened SpaceX

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Speaker 4: through its XAI R. SpaceX owns XAI. It's a subsidiary,

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Speaker 4: a wholly owned subsidiary of SpaceX. Did a deal with

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Speaker 4: Anthropic where Anthropic pays SpaceX more than a billion dollars

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Speaker 4: a month to rent compute capacity from a data center,

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Speaker 4: a specific data center that it built in Tennessee. On paper,

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Speaker 4: if you read the prospectus and the vision that we

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Speaker 4: just outline, where SpaceX makes most of its money from

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Speaker 4: selling AI software, that would make them on paper a

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Speaker 4: complete rival on competitors Athropic. But this is what's so interesting.

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Speaker 4: A lot of phone calls in the last five days

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Speaker 4: from existing SpaceX investors saying it's so important to talk

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Speaker 4: about how they've done this. They have data center capacity

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Speaker 4: that was available. They know Xai and SpaceX the parent

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Speaker 4: are very good at building data centers quickly and running them,

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Speaker 4: operating them efficiently on a very competitive dollar P token basis,

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Speaker 4: So why not rent it out and make money? And

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Speaker 4: that's the near term store that will dictate right now

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Speaker 4: the stock performance and the valuation, because you know, the

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Speaker 4: rest of it is so far away in another galaxy,

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Speaker 4: et cetera.

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Speaker 3: Excellent pun and that's of course as we consider the

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Speaker 3: performance as a public company. But ed you were just

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Speaker 3: talking about speaking to existing SpaceX investors. This is obviously

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Speaker 3: not a new company. It's more than two decades old.

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Speaker 3: It's existed in private markets for some time, and there

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Speaker 3: was a long time in which Elon Musk was saying,

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Speaker 3: we can just stay reliant on private capital. Walk us

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Speaker 3: through that evolution and whether or not this is going

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Speaker 3: to be a new model going forward as we consider

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Speaker 3: more robust private markets.

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Speaker 4: Yeah, I think you know. Two thousand and two, SpaceX

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Speaker 4: was seeded of about twenty seven million dollars and the

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Speaker 4: goal was to make a rocket booster land back on

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Speaker 4: Earth and be reusable. And now, clearly, as we've just discussed,

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Speaker 4: the stories really change. In twenty ten when Tesla went

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Speaker 4: PubL the company, the public company that Elon mus is

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Speaker 4: also CEO of SpaceX, had a billion dollar valuation and

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Speaker 4: rapidly kind of twenty twenty three to twenty twenty five

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Speaker 4: in the private markets, its valuation kept growing because it

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Speaker 4: just dominated this business of launching payload to orbit and

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Speaker 4: then Starlink, which is a Internet service but it's powered

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Speaker 4: by a constellation of satellites around Panet Earth, has very

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Speaker 4: quickly become cash flow positive, cash generator. So you'll see

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Speaker 4: all the Bloomberg stories and read the prospectus and say

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Speaker 4: like how unprofitable SpaceX is and how disson it is,

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Speaker 4: But in its connectivity business, actually it's a cash generating

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Speaker 4: part of the business. And so you know, it's just

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Speaker 4: a crazy story we don't have. You could do an

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Speaker 4: entire twenty four hours on Bloomberg Television radio to explain

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Speaker 4: the history of it. But again, the point of the

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Speaker 4: rocket business is that that next gen rocket it needs

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Speaker 4: to work for all that other intergalactic out of this

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Speaker 4: world's stuff to come true.

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Speaker 3: Well, I feel like Ed probably is going to end

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Speaker 3: up spending twenty four hours on Bloomberg television and radio today.

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Speaker 3: You're working hard. Thank you so much. Bloomberg Tech co

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Speaker 3: host ed Ludlow