WEBVTT - Instant Reaction: SpaceX Jumps in First Trades Following Record $75 Billion IPO

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>This is a breaking news update from Bloomberg instant reaction

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<v Speaker 2>and analysis from our three thousand journalists and analysts around

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<v Speaker 2>the world.

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<v Speaker 3>I'm Kailey Liones in Washington, but clearly all eyes are

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<v Speaker 3>on New York today as SpaceX launches into public markets.

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<v Speaker 3>A record setting IPO of seventy five billion dollars priced

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<v Speaker 3>at one thirty five is shared. The stock opens on

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<v Speaker 3>the Nasdaq eleven percent higher than that at one point

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<v Speaker 3>fifty And as we speak down at the Nasdaq where

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

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<v Speaker 3>who will check in within just a moment as we

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<v Speaker 3>considering it raised seventy five billion dollars in that initial offering,

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<v Speaker 3>valuing the company at just about one point eight trillion dollars.

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<v Speaker 3>That valuation that market cap obviously significantly higher with the

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<v Speaker 3>gain we are seeing today north of two trillion dollars.

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<v Speaker 3>So let's go to a hire now at the NASDAQ

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

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<v Speaker 3>What is the vibe like at the NASDAK right now?

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<v Speaker 3>It seems everything and this process has gone pretty smoothly.

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

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<v Speaker 2>And I will say the excitement, especially in the last

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<v Speaker 2>hour as you were getting closer to trading, was palpable.

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<v Speaker 2>You felt it here at the NASDAC. They are all

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<v Speaker 2>scrambling making sure it all went off without a hit,

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<v Speaker 2>without a hitch, And then outside you have all the

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<v Speaker 2>Musk fans gathering hoping to get a glimpse of him.

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<v Speaker 2>But as you and I know, he was over in Texas.

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<v Speaker 2>But as you said, SpaceX has officially begun trading, and

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<v Speaker 2>with the stock opening at one hundred and fifty dollars

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<v Speaker 2>a share above its one hundred and thirty five dollars

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<v Speaker 2>IPO praise, and that game investors an immediate gain of

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<v Speaker 2>roughly eleven percent. But now you said, it is trading

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<v Speaker 2>above that. But this valley's a company at approximately just

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<v Speaker 2>under two trillion dollars, as you said, Kaylee, But it

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<v Speaker 2>instantly puts SpaceX among the most valuable companies in the world,

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<v Speaker 2>more valuable than Tesla itself of course, another Elon Musk

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<v Speaker 2>owned company, Meta, and even Saudi Aramco.

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<v Speaker 3>All right, Bloombergs, you hire on live at the Nasdaq

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<v Speaker 3>as SpaceX debuts. Thank you so much. So let's get

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<v Speaker 3>more on this as we turn to Craig Trudell, our

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

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<v Speaker 3>while you hold that title now you also led for

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<v Speaker 3>a long time Bloomberg's autos coverage. You are very familiar

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<v Speaker 3>with Elon Musk as the CEO of Tesla, which, obviously,

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<v Speaker 3>while being an auto company first and foremost also in

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<v Speaker 3>financial markets and public markets, was the way to bet

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<v Speaker 3>on Elon Musk. We now have a second channel for

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<v Speaker 3>those bets in SpaceX. Whether or not these two get

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<v Speaker 3>rolled together at some point, I'm not sure, but your

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<v Speaker 3>reaction please to the appetite we are seeing for SpaceX

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<v Speaker 3>as at debuts today.

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<v Speaker 1>Yeah, I think it's fascinating to see, Yes, a strong

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<v Speaker 1>debut for SpaceX, a rotation maybe a little bit out

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<v Speaker 1>of Tesla, which is something that we were really braced for,

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

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<v Speaker 1>on an Intrada basis, the stock you know, fall about

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<v Speaker 1>three percent, but as of this moment it's a little

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<v Speaker 1>less than that, about two point eight. This is a

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<v Speaker 1>company that you know has been quite volatile over the

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<v Speaker 1>years in its own right, and if you know sort

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<v Speaker 1>of that track record applies to SPACEXM, we should be

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<v Speaker 1>sort of in for a bumpy ride here.

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<v Speaker 3>Well certainly so it's still Elon Musk that we're talking

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<v Speaker 3>about a visionary maybe, but a lot of volatility we

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<v Speaker 3>know can come with that. Walk us through the unique

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<v Speaker 3>nature of the way this IPO happened, the idea that

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<v Speaker 3>this price was set, It wasn't your typical price. Discovery

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<v Speaker 3>Musk said, the price is one hundred and thirty five

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<v Speaker 3>dollars of share. He got that, and obviously investors are

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<v Speaker 3>buying this stock for more than that as trading gets

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<v Speaker 3>going here. But how should we consider the way in

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<v Speaker 3>which the value for this company was said? We were

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<v Speaker 3>just listening to Jim Chaino's talking about how skeptical he

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<v Speaker 3>is of valuing a market cap at something one hundred

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<v Speaker 3>and ten times revenue for a company that isn't profitable.

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<v Speaker 1>Yeah, I think it's fascinating in that, you know, this

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<v Speaker 1>is also a company that you know, put out incredible

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<v Speaker 1>numbers in their s one about you know, total addressable

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<v Speaker 1>markets and talking about space based economy, you know, to

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<v Speaker 1>hear Musk talk about the potential for this company, and

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<v Speaker 1>to hear people like Jared Isaacman, you know, the head

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<v Speaker 1>of NASA. You know, he gave an interview very recently

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<v Speaker 1>about this notion that the space economy it's been something

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<v Speaker 1>that's been sort of highly speculated about, hyped up as

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<v Speaker 1>something massive, and yet the follow through has been very minimal.

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<v Speaker 1>I will say in defensive Musk and SpaceX, with the

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<v Speaker 1>exception of Starlink, there's been very little in the way

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<v Speaker 1>of progress toward making any money in space. We have

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

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<v Speaker 1>you really run into trouble looking at this company is

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<v Speaker 1>actually the AI portion. And the fact that that was

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<v Speaker 1>just such a very recent addition to the SpaceX story

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<v Speaker 1>maybe makes things kind of muddy and more complicated than

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<v Speaker 1>they might have otherwise been had this just been a

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<v Speaker 1>space company with a solid satellite business.

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<v Speaker 3>Well, a late addition, yes, but one that already does

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<v Speaker 3>have some commitments tied to it. It seems we all

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<v Speaker 3>saw the news of Google's contract with SpaceX that's going

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<v Speaker 3>to be what nearly a billion dollars per month, assuming

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<v Speaker 3>that SpaceX can actually deliver on the computing power that

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<v Speaker 3>has been promised, how far do we have to go

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<v Speaker 3>to SpaceX actually realizing these capabilities, actually having them to

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<v Speaker 3>offer customers, not just like Google, but Anthropic is a

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<v Speaker 3>big customer too, right.

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<v Speaker 1>Yeah, the two of them in sort of rapid fire fashion,

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<v Speaker 1>you know, reach these deals in the lead up to

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

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<v Speaker 1>But if we think about you know, Musk's ambitions to

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<v Speaker 1>not just be a sort of infrastructure partner to the

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<v Speaker 1>likes of Google and Anthropic and actually getting in the

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<v Speaker 1>game itself and and you know, building a competitive chatbot

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<v Speaker 1>and AI capabilities that can be monetized, that's where we've

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<v Speaker 1>seen you know, real failures on musk part and he's

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<v Speaker 1>been pretty open about that. Actually on x This notion

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<v Speaker 1>that they sort of started XAI all wrong and are

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<v Speaker 1>kind of starting over. It was you know, really unusual

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<v Speaker 1>and very like him that he would be so sort

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<v Speaker 1>of candid about that, and yet maybe raises some questions

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<v Speaker 1>about you know, just how quickly this will will be

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<v Speaker 1>a company that's a major player and actually, you know,

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<v Speaker 1>things beyond partnering with companies that have had success like anthropic.

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<v Speaker 3>Well, and you've just made the point, Craig about XAI

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<v Speaker 3>getting rolled in to SpaceX. So would you be surprised

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<v Speaker 3>if we see Tesla rolled in to this larger company.

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<v Speaker 1>You you know, just just going off the trend that

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

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<v Speaker 1>feel like that's also something that people quite close to

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<v Speaker 1>Musk have not shied a way about, you know, speaking

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<v Speaker 1>to this notion that you know, that would be you know,

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<v Speaker 1>not even just a sort of open secret, but just

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<v Speaker 1>something that people are very comfortable, you know. Theorizing about

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<v Speaker 1>tells me that that it does feel like it's likely.

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

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<v Speaker 1>you know, over and over again that he wishes he

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<v Speaker 1>had more control over Tesla. One of the ways to

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<v Speaker 1>sort of address the fact that he's not particularly comfortable

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<v Speaker 1>with his command of that company would be to combine

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<v Speaker 1>these because that is an aspect of SpaceX's structure that

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<v Speaker 1>is quite different, where he has a special class of

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<v Speaker 1>stock that Tesla didn't have when it went public. If

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<v Speaker 1>they were to combine, they would sort of you know,

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<v Speaker 1>rationalize that and give him the ability of of stock

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<v Speaker 1>that protects him from any activism or challenges to his

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<v Speaker 1>sort of rule of the company.

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

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<v Speaker 3>right now trading at one hundred and sixty four dollars

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<v Speaker 3>a share, we're up nearly twenty two percent from that

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<v Speaker 3>one hundred and thirty five dollars IPO price. Quite the

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<v Speaker 3>debut we are seeing for one of the world's largest

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<v Speaker 3>companies by market gap at this point after a record

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<v Speaker 3>setting seventy five billion dollar IPO. Ed Ludlow owns tech

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<v Speaker 3>and space coverage as the co host of Bloomberg Tech,

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<v Speaker 3>and he's here with us now on this debut day

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<v Speaker 3>for SpaceX, and I feel like this is your super Bowl,

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<v Speaker 3>Probably is most people in financial market super Bowl, as

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<v Speaker 3>we're setting records here, not just in terms of IPO,

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<v Speaker 3>but in the size of this debut. Talk to me

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<v Speaker 3>about about the demand here, as we had questions as

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<v Speaker 3>to whether or not this price was set correctly given

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<v Speaker 3>the unusual lack of price discovery that happened, whether or

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<v Speaker 3>not five hundred and fifty five million shares being issued

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<v Speaker 3>was going to be met with adequate demand. Are we

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<v Speaker 3>seeing evidence that perhaps the appetite was even more robust

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<v Speaker 3>than initially thought.

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<v Speaker 4>Well, it was massively oversubscribed on the institutional side, which

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<v Speaker 4>accounted for eighty percent of the offering, and on the

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<v Speaker 4>retail side as well, which was about twenty percent. And

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<v Speaker 4>we can get into more of the specifics of how

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<v Speaker 4>that sliced and diced. It's trading right now one hundred

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<v Speaker 4>and sixty seven fifty twenty four percent above the IPO

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<v Speaker 4>price of one thirty five. What we reported over the

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<v Speaker 4>last five days is that it has been Elon Musk himself,

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<v Speaker 4>along with Brett Johnson, the CFO, and Gwyn shot Well

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<v Speaker 4>the president, that really controlled and dictated the terms literally

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<v Speaker 4>as opposed to like the bankers. Bankers have a lot

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<v Speaker 4>of influence and IPO processes. But this time, part of

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<v Speaker 4>the rationale, as it was explained to me, is that

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<v Speaker 4>if you said it early ahead of a road show

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<v Speaker 4>without a range, it is atypical and unusual. But you

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<v Speaker 4>basically removed the leverage of the long on the asset managers,

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<v Speaker 4>the big institutions that would account for most of the

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<v Speaker 4>order book anyway. It just made things on their terms.

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<v Speaker 4>There are big questions about valuation long term right, it's

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<v Speaker 4>come to IPO at ninety two times or something like

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<v Speaker 4>that sales. But you know that's was how it was done.

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<v Speaker 4>And so you know, there are lots of retail investors

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<v Speaker 4>that did get an allocation, some evidence that they are

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

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<v Speaker 4>but now there are lots of people that are you know,

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<v Speaker 4>reluctantly and I guess not reluctantly it's not the right word.

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<v Speaker 4>They don't want to be buying in the open market,

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<v Speaker 4>but they are, you know, they kind of have to be.

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<v Speaker 3>Yeah, perhaps some noseholding going on here to your point

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<v Speaker 3>and about valuation, walk us through what the thesis is

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<v Speaker 3>here in terms of the total addressable market that SpaceX

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<v Speaker 3>is saying that it can reach and what tangibly the

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<v Speaker 3>company is now going to need to be able to

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<v Speaker 3>accomplish from a technology standpoint, to be able to deliver

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

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<v Speaker 4>Google so like right now, on a fully diluted basis,

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<v Speaker 4>this is a company that has a value of more

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<v Speaker 4>than two trillion, and they are pitching a story about

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<v Speaker 4>a future where they are many things, a diversified business,

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<v Speaker 4>which most of is selling AI software. Right they say

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<v Speaker 4>there's a twenty eight point five trillion dollar addressable market,

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<v Speaker 4>and twenty six point five of that is what they

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<v Speaker 4>are calling in an umbrella or bucket of enterprise AI.

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<v Speaker 4>But in the near term, all of that is predicated

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<v Speaker 4>on them being able to get Starship, which is on paper,

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<v Speaker 4>the most powerful rocket and launch system humankind's have ever

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<v Speaker 4>developed to work regularly and reusably. They have done twelve

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<v Speaker 4>test flights. They asked closer, you know in the coming

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<v Speaker 4>weeks of doing a thirteenth test flight, but they've never

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<v Speaker 4>landed or both parts of it, the booster and the

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<v Speaker 4>spacecraft on top back on Earth. They have to do

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<v Speaker 4>that if they are able to put into orbit satellites

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<v Speaker 4>that are data centers, and that is kind of the

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<v Speaker 4>middle step that gets them to that distant future where

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<v Speaker 4>humans are living on Mars and they're able to generate

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

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<v Speaker 4>and that has been a part of how much you

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<v Speaker 4>place a value of twenty thirty to twenty fifty not

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<v Speaker 4>right now on the historic IPO Friday.

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<v Speaker 3>Well, and it's also just so interesting to consider the

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<v Speaker 3>circular nature of this, if you will, because we're talking

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<v Speaker 3>about what SpaceX will need to do to deliver for

0:12:37.559 --> 0:12:41.040
<v Speaker 3>customers like Anthropic, which at least in some parts of

0:12:41.040 --> 0:12:43.920
<v Speaker 3>the wider SpaceX business. Here, if you're considering roc which

0:12:43.960 --> 0:12:48.000
<v Speaker 3>obviously is no claude, there is still competition there. Just

0:12:48.080 --> 0:12:49.520
<v Speaker 3>speak to that, ed and how all of this is

0:12:49.520 --> 0:12:52.440
<v Speaker 3>setting the stage for Anthropic and also open Ayes ultimate

0:12:52.440 --> 0:12:53.959
<v Speaker 3>public debuts that we're expecting later.

0:12:54.160 --> 0:12:57.560
<v Speaker 4>So state of play is that Anthropic has filed confidentially

0:12:57.559 --> 0:13:02.200
<v Speaker 4>with the SEC for IPO and so has opened SpaceX

0:13:02.600 --> 0:13:06.520
<v Speaker 4>through its XAI R. SpaceX owns XAI. It's a subsidiary,

0:13:06.600 --> 0:13:09.360
<v Speaker 4>a wholly owned subsidiary of SpaceX. Did a deal with

0:13:09.440 --> 0:13:14.040
<v Speaker 4>Anthropic where Anthropic pays SpaceX more than a billion dollars

0:13:14.080 --> 0:13:17.560
<v Speaker 4>a month to rent compute capacity from a data center,

0:13:17.640 --> 0:13:22.440
<v Speaker 4>a specific data center that it built in Tennessee. On paper,

0:13:22.600 --> 0:13:24.720
<v Speaker 4>if you read the prospectus and the vision that we

0:13:24.840 --> 0:13:27.559
<v Speaker 4>just outline, where SpaceX makes most of its money from

0:13:27.600 --> 0:13:31.280
<v Speaker 4>selling AI software, that would make them on paper a

0:13:31.360 --> 0:13:35.719
<v Speaker 4>complete rival on competitors Athropic. But this is what's so interesting.

0:13:35.880 --> 0:13:37.760
<v Speaker 4>A lot of phone calls in the last five days

0:13:37.800 --> 0:13:41.679
<v Speaker 4>from existing SpaceX investors saying it's so important to talk

0:13:41.720 --> 0:13:45.079
<v Speaker 4>about how they've done this. They have data center capacity

0:13:45.120 --> 0:13:48.800
<v Speaker 4>that was available. They know Xai and SpaceX the parent

0:13:48.880 --> 0:13:52.079
<v Speaker 4>are very good at building data centers quickly and running them,

0:13:52.160 --> 0:13:56.360
<v Speaker 4>operating them efficiently on a very competitive dollar P token basis,

0:13:56.520 --> 0:13:58.640
<v Speaker 4>So why not rent it out and make money? And

0:13:58.679 --> 0:14:02.360
<v Speaker 4>that's the near term store that will dictate right now

0:14:03.400 --> 0:14:06.720
<v Speaker 4>the stock performance and the valuation, because you know, the

0:14:06.720 --> 0:14:09.280
<v Speaker 4>rest of it is so far away in another galaxy,

0:14:09.320 --> 0:14:09.760
<v Speaker 4>et cetera.

0:14:11.840 --> 0:14:14.400
<v Speaker 3>Excellent pun and that's of course as we consider the

0:14:14.400 --> 0:14:16.720
<v Speaker 3>performance as a public company. But ed you were just

0:14:16.720 --> 0:14:20.800
<v Speaker 3>talking about speaking to existing SpaceX investors. This is obviously

0:14:20.840 --> 0:14:23.480
<v Speaker 3>not a new company. It's more than two decades old.

0:14:23.520 --> 0:14:26.240
<v Speaker 3>It's existed in private markets for some time, and there

0:14:26.320 --> 0:14:29.080
<v Speaker 3>was a long time in which Elon Musk was saying,

0:14:29.120 --> 0:14:32.360
<v Speaker 3>we can just stay reliant on private capital. Walk us

0:14:32.360 --> 0:14:34.880
<v Speaker 3>through that evolution and whether or not this is going

0:14:34.920 --> 0:14:37.760
<v Speaker 3>to be a new model going forward as we consider

0:14:37.920 --> 0:14:40.000
<v Speaker 3>more robust private markets.

0:14:40.080 --> 0:14:42.520
<v Speaker 4>Yeah, I think you know. Two thousand and two, SpaceX

0:14:42.600 --> 0:14:48.040
<v Speaker 4>was seeded of about twenty seven million dollars and the

0:14:48.400 --> 0:14:51.920
<v Speaker 4>goal was to make a rocket booster land back on

0:14:51.960 --> 0:14:55.000
<v Speaker 4>Earth and be reusable. And now, clearly, as we've just discussed,

0:14:55.040 --> 0:14:59.680
<v Speaker 4>the stories really change. In twenty ten when Tesla went

0:14:59.720 --> 0:15:02.880
<v Speaker 4>PubL the company, the public company that Elon mus is

0:15:02.880 --> 0:15:06.480
<v Speaker 4>also CEO of SpaceX, had a billion dollar valuation and

0:15:06.960 --> 0:15:09.280
<v Speaker 4>rapidly kind of twenty twenty three to twenty twenty five

0:15:09.320 --> 0:15:12.600
<v Speaker 4>in the private markets, its valuation kept growing because it

0:15:12.720 --> 0:15:17.160
<v Speaker 4>just dominated this business of launching payload to orbit and

0:15:17.200 --> 0:15:21.520
<v Speaker 4>then Starlink, which is a Internet service but it's powered

0:15:21.520 --> 0:15:25.320
<v Speaker 4>by a constellation of satellites around Panet Earth, has very

0:15:25.400 --> 0:15:29.760
<v Speaker 4>quickly become cash flow positive, cash generator. So you'll see

0:15:29.760 --> 0:15:32.160
<v Speaker 4>all the Bloomberg stories and read the prospectus and say

0:15:32.240 --> 0:15:35.880
<v Speaker 4>like how unprofitable SpaceX is and how disson it is,

0:15:36.080 --> 0:15:39.920
<v Speaker 4>But in its connectivity business, actually it's a cash generating

0:15:40.160 --> 0:15:43.280
<v Speaker 4>part of the business. And so you know, it's just

0:15:43.320 --> 0:15:45.760
<v Speaker 4>a crazy story we don't have. You could do an

0:15:45.920 --> 0:15:48.840
<v Speaker 4>entire twenty four hours on Bloomberg Television radio to explain

0:15:48.880 --> 0:15:52.640
<v Speaker 4>the history of it. But again, the point of the

0:15:52.720 --> 0:15:55.480
<v Speaker 4>rocket business is that that next gen rocket it needs

0:15:55.600 --> 0:15:59.320
<v Speaker 4>to work for all that other intergalactic out of this

0:15:59.400 --> 0:16:00.800
<v Speaker 4>world's stuff to come true.

0:16:01.360 --> 0:16:03.440
<v Speaker 3>Well, I feel like Ed probably is going to end

0:16:03.520 --> 0:16:06.600
<v Speaker 3>up spending twenty four hours on Bloomberg television and radio today.

0:16:06.600 --> 0:16:09.520
<v Speaker 3>You're working hard. Thank you so much. Bloomberg Tech co

0:16:09.600 --> 0:16:10.520
<v Speaker 3>host ed Ludlow