Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is a breaking news update from Bloomberg instant reaction
Speaker 2: and analysis from our three thousand journalists and analysts around
Speaker 2: the world.
Speaker 3: I'm Kailey Liones in Washington, but clearly all eyes are
Speaker 3: on New York today as SpaceX launches into public markets.
Speaker 3: A record setting IPO of seventy five billion dollars priced
Speaker 3: at one thirty five is shared. The stock opens on
Speaker 3: the Nasdaq eleven percent higher than that at one point
Speaker 3: fifty And as we speak down at the Nasdaq where
Speaker 3: this trading got underway, we find Bloomberg's Yea Hira on it,
Speaker 3: who will check in within just a moment as we
Speaker 3: considering it raised seventy five billion dollars in that initial offering,
Speaker 3: valuing the company at just about one point eight trillion dollars.
Speaker 3: That valuation that market cap obviously significantly higher with the
Speaker 3: gain we are seeing today north of two trillion dollars.
Speaker 3: So let's go to a hire now at the NASDAQ
Speaker 3: four more so, Yeah, Hira, obviously we're setting records here.
Speaker 3: What is the vibe like at the NASDAK right now?
Speaker 3: It seems everything and this process has gone pretty smoothly.
Speaker 2: Yeah, pretty smoothly for the biggest IPO we've ever seen.
Speaker 2: And I will say the excitement, especially in the last
Speaker 2: hour as you were getting closer to trading, was palpable.
Speaker 2: You felt it here at the NASDAC. They are all
Speaker 2: scrambling making sure it all went off without a hit,
Speaker 2: without a hitch, And then outside you have all the
Speaker 2: Musk fans gathering hoping to get a glimpse of him.
Speaker 2: But as you and I know, he was over in Texas.
Speaker 2: But as you said, SpaceX has officially begun trading, and
Speaker 2: with the stock opening at one hundred and fifty dollars
Speaker 2: a share above its one hundred and thirty five dollars
Speaker 2: IPO praise, and that game investors an immediate gain of
Speaker 2: roughly eleven percent. But now you said, it is trading
Speaker 2: above that. But this valley's a company at approximately just
Speaker 2: under two trillion dollars, as you said, Kaylee, But it
Speaker 2: instantly puts SpaceX among the most valuable companies in the world,
Speaker 2: more valuable than Tesla itself of course, another Elon Musk
Speaker 2: owned company, Meta, and even Saudi Aramco.
Speaker 3: All right, Bloombergs, you hire on live at the Nasdaq
Speaker 3: as SpaceX debuts. Thank you so much. So let's get
Speaker 3: more on this as we turn to Craig Trudell, our
Speaker 3: managing editor of Global Business America's here at Bloomberg and Craig, obviously,
Speaker 3: while you hold that title now you also led for
Speaker 3: a long time Bloomberg's autos coverage. You are very familiar
Speaker 3: with Elon Musk as the CEO of Tesla, which, obviously,
Speaker 3: while being an auto company first and foremost also in
Speaker 3: financial markets and public markets, was the way to bet
Speaker 3: on Elon Musk. We now have a second channel for
Speaker 3: those bets in SpaceX. Whether or not these two get
Speaker 3: rolled together at some point, I'm not sure, but your
Speaker 3: reaction please to the appetite we are seeing for SpaceX
Speaker 3: as at debuts today.
Speaker 1: Yeah, I think it's fascinating to see, Yes, a strong
Speaker 1: debut for SpaceX, a rotation maybe a little bit out
Speaker 1: of Tesla, which is something that we were really braced for,
Speaker 1: but not anything disastrous. I mean, we've seen, you know,
Speaker 1: on an Intrada basis, the stock you know, fall about
Speaker 1: three percent, but as of this moment it's a little
Speaker 1: less than that, about two point eight. This is a
Speaker 1: company that you know has been quite volatile over the
Speaker 1: years in its own right, and if you know sort
Speaker 1: of that track record applies to SPACEXM, we should be
Speaker 1: sort of in for a bumpy ride here.
Speaker 3: Well certainly so it's still Elon Musk that we're talking
Speaker 3: about a visionary maybe, but a lot of volatility we
Speaker 3: know can come with that. Walk us through the unique
Speaker 3: nature of the way this IPO happened, the idea that
Speaker 3: this price was set, It wasn't your typical price. Discovery
Speaker 3: Musk said, the price is one hundred and thirty five
Speaker 3: dollars of share. He got that, and obviously investors are
Speaker 3: buying this stock for more than that as trading gets
Speaker 3: going here. But how should we consider the way in
Speaker 3: which the value for this company was said? We were
Speaker 3: just listening to Jim Chaino's talking about how skeptical he
Speaker 3: is of valuing a market cap at something one hundred
Speaker 3: and ten times revenue for a company that isn't profitable.
Speaker 1: Yeah, I think it's fascinating in that, you know, this
Speaker 1: is also a company that you know, put out incredible
Speaker 1: numbers in their s one about you know, total addressable
Speaker 1: markets and talking about space based economy, you know, to
Speaker 1: hear Musk talk about the potential for this company, and
Speaker 1: to hear people like Jared Isaacman, you know, the head
Speaker 1: of NASA. You know, he gave an interview very recently
Speaker 1: about this notion that the space economy it's been something
Speaker 1: that's been sort of highly speculated about, hyped up as
Speaker 1: something massive, and yet the follow through has been very minimal.
Speaker 1: I will say in defensive Musk and SpaceX, with the
Speaker 1: exception of Starlink, there's been very little in the way
Speaker 1: of progress toward making any money in space. We have
Speaker 1: seen SpaceX make progress, wh others haven't. I think where
Speaker 1: you really run into trouble looking at this company is
Speaker 1: actually the AI portion. And the fact that that was
Speaker 1: just such a very recent addition to the SpaceX story
Speaker 1: maybe makes things kind of muddy and more complicated than
Speaker 1: they might have otherwise been had this just been a
Speaker 1: space company with a solid satellite business.
Speaker 3: Well, a late addition, yes, but one that already does
Speaker 3: have some commitments tied to it. It seems we all
Speaker 3: saw the news of Google's contract with SpaceX that's going
Speaker 3: to be what nearly a billion dollars per month, assuming
Speaker 3: that SpaceX can actually deliver on the computing power that
Speaker 3: has been promised, how far do we have to go
Speaker 3: to SpaceX actually realizing these capabilities, actually having them to
Speaker 3: offer customers, not just like Google, but Anthropic is a
Speaker 3: big customer too, right.
Speaker 1: Yeah, the two of them in sort of rapid fire fashion,
Speaker 1: you know, reach these deals in the lead up to
Speaker 1: the IPO, and surely that's helping sort of booie sentiment.
Speaker 1: But if we think about you know, Musk's ambitions to
Speaker 1: not just be a sort of infrastructure partner to the
Speaker 1: likes of Google and Anthropic and actually getting in the
Speaker 1: game itself and and you know, building a competitive chatbot
Speaker 1: and AI capabilities that can be monetized, that's where we've
Speaker 1: seen you know, real failures on musk part and he's
Speaker 1: been pretty open about that. Actually on x This notion
Speaker 1: that they sort of started XAI all wrong and are
Speaker 1: kind of starting over. It was you know, really unusual
Speaker 1: and very like him that he would be so sort
Speaker 1: of candid about that, and yet maybe raises some questions
Speaker 1: about you know, just how quickly this will will be
Speaker 1: a company that's a major player and actually, you know,
Speaker 1: things beyond partnering with companies that have had success like anthropic.
Speaker 3: Well, and you've just made the point, Craig about XAI
Speaker 3: getting rolled in to SpaceX. So would you be surprised
Speaker 3: if we see Tesla rolled in to this larger company.
Speaker 1: You you know, just just going off the trend that
Speaker 1: we've seen this rolling up of Musk's companies. It does
Speaker 1: feel like that's also something that people quite close to
Speaker 1: Musk have not shied a way about, you know, speaking
Speaker 1: to this notion that you know, that would be you know,
Speaker 1: not even just a sort of open secret, but just
Speaker 1: something that people are very comfortable, you know. Theorizing about
Speaker 1: tells me that that it does feel like it's likely.
Speaker 1: I also thinks it's interesting and that we've heard Musks say,
Speaker 1: you know, over and over again that he wishes he
Speaker 1: had more control over Tesla. One of the ways to
Speaker 1: sort of address the fact that he's not particularly comfortable
Speaker 1: with his command of that company would be to combine
Speaker 1: these because that is an aspect of SpaceX's structure that
Speaker 1: is quite different, where he has a special class of
Speaker 1: stock that Tesla didn't have when it went public. If
Speaker 1: they were to combine, they would sort of you know,
Speaker 1: rationalize that and give him the ability of of stock
Speaker 1: that protects him from any activism or challenges to his
Speaker 1: sort of rule of the company.
Speaker 3: All right, Bloomberg's Craig Drudell, thank you so much. SpaceX
Speaker 3: right now trading at one hundred and sixty four dollars
Speaker 3: a share, we're up nearly twenty two percent from that
Speaker 3: one hundred and thirty five dollars IPO price. Quite the
Speaker 3: debut we are seeing for one of the world's largest
Speaker 3: companies by market gap at this point after a record
Speaker 3: setting seventy five billion dollar IPO. Ed Ludlow owns tech
Speaker 3: and space coverage as the co host of Bloomberg Tech,
Speaker 3: and he's here with us now on this debut day
Speaker 3: for SpaceX, and I feel like this is your super Bowl,
Speaker 3: Probably is most people in financial market super Bowl, as
Speaker 3: we're setting records here, not just in terms of IPO,
Speaker 3: but in the size of this debut. Talk to me
Speaker 3: about about the demand here, as we had questions as
Speaker 3: to whether or not this price was set correctly given
Speaker 3: the unusual lack of price discovery that happened, whether or
Speaker 3: not five hundred and fifty five million shares being issued
Speaker 3: was going to be met with adequate demand. Are we
Speaker 3: seeing evidence that perhaps the appetite was even more robust
Speaker 3: than initially thought.
Speaker 4: Well, it was massively oversubscribed on the institutional side, which
Speaker 4: accounted for eighty percent of the offering, and on the
Speaker 4: retail side as well, which was about twenty percent. And
Speaker 4: we can get into more of the specifics of how
Speaker 4: that sliced and diced. It's trading right now one hundred
Speaker 4: and sixty seven fifty twenty four percent above the IPO
Speaker 4: price of one thirty five. What we reported over the
Speaker 4: last five days is that it has been Elon Musk himself,
Speaker 4: along with Brett Johnson, the CFO, and Gwyn shot Well
Speaker 4: the president, that really controlled and dictated the terms literally
Speaker 4: as opposed to like the bankers. Bankers have a lot
Speaker 4: of influence and IPO processes. But this time, part of
Speaker 4: the rationale, as it was explained to me, is that
Speaker 4: if you said it early ahead of a road show
Speaker 4: without a range, it is atypical and unusual. But you
Speaker 4: basically removed the leverage of the long on the asset managers,
Speaker 4: the big institutions that would account for most of the
Speaker 4: order book anyway. It just made things on their terms.
Speaker 4: There are big questions about valuation long term right, it's
Speaker 4: come to IPO at ninety two times or something like
Speaker 4: that sales. But you know that's was how it was done.
Speaker 4: And so you know, there are lots of retail investors
Speaker 4: that did get an allocation, some evidence that they are
Speaker 4: people that are also TESSA retail shareholders anecdotes weavidens, I'd say,
Speaker 4: but now there are lots of people that are you know,
Speaker 4: reluctantly and I guess not reluctantly it's not the right word.
Speaker 4: They don't want to be buying in the open market,
Speaker 4: but they are, you know, they kind of have to be.
Speaker 3: Yeah, perhaps some noseholding going on here to your point
Speaker 3: and about valuation, walk us through what the thesis is
Speaker 3: here in terms of the total addressable market that SpaceX
Speaker 3: is saying that it can reach and what tangibly the
Speaker 3: company is now going to need to be able to
Speaker 3: accomplish from a technology standpoint, to be able to deliver
Speaker 3: on that deliver what it's promised to customers like Anthropic and.
Speaker 4: Google so like right now, on a fully diluted basis,
Speaker 4: this is a company that has a value of more
Speaker 4: than two trillion, and they are pitching a story about
Speaker 4: a future where they are many things, a diversified business,
Speaker 4: which most of is selling AI software. Right they say
Speaker 4: there's a twenty eight point five trillion dollar addressable market,
Speaker 4: and twenty six point five of that is what they
Speaker 4: are calling in an umbrella or bucket of enterprise AI.
Speaker 4: But in the near term, all of that is predicated
Speaker 4: on them being able to get Starship, which is on paper,
Speaker 4: the most powerful rocket and launch system humankind's have ever
Speaker 4: developed to work regularly and reusably. They have done twelve
Speaker 4: test flights. They asked closer, you know in the coming
Speaker 4: weeks of doing a thirteenth test flight, but they've never
Speaker 4: landed or both parts of it, the booster and the
Speaker 4: spacecraft on top back on Earth. They have to do
Speaker 4: that if they are able to put into orbit satellites
Speaker 4: that are data centers, and that is kind of the
Speaker 4: middle step that gets them to that distant future where
Speaker 4: humans are living on Mars and they're able to generate
Speaker 4: most of their revenues and income from AI. It's not straightforward,
Speaker 4: and that has been a part of how much you
Speaker 4: place a value of twenty thirty to twenty fifty not
Speaker 4: right now on the historic IPO Friday.
Speaker 3: Well, and it's also just so interesting to consider the
Speaker 3: circular nature of this, if you will, because we're talking
Speaker 3: about what SpaceX will need to do to deliver for
Speaker 3: customers like Anthropic, which at least in some parts of
Speaker 3: the wider SpaceX business. Here, if you're considering roc which
Speaker 3: obviously is no claude, there is still competition there. Just
Speaker 3: speak to that, ed and how all of this is
Speaker 3: setting the stage for Anthropic and also open Ayes ultimate
Speaker 3: public debuts that we're expecting later.
Speaker 4: So state of play is that Anthropic has filed confidentially
Speaker 4: with the SEC for IPO and so has opened SpaceX
Speaker 4: through its XAI R. SpaceX owns XAI. It's a subsidiary,
Speaker 4: a wholly owned subsidiary of SpaceX. Did a deal with
Speaker 4: Anthropic where Anthropic pays SpaceX more than a billion dollars
Speaker 4: a month to rent compute capacity from a data center,
Speaker 4: a specific data center that it built in Tennessee. On paper,
Speaker 4: if you read the prospectus and the vision that we
Speaker 4: just outline, where SpaceX makes most of its money from
Speaker 4: selling AI software, that would make them on paper a
Speaker 4: complete rival on competitors Athropic. But this is what's so interesting.
Speaker 4: A lot of phone calls in the last five days
Speaker 4: from existing SpaceX investors saying it's so important to talk
Speaker 4: about how they've done this. They have data center capacity
Speaker 4: that was available. They know Xai and SpaceX the parent
Speaker 4: are very good at building data centers quickly and running them,
Speaker 4: operating them efficiently on a very competitive dollar P token basis,
Speaker 4: So why not rent it out and make money? And
Speaker 4: that's the near term store that will dictate right now
Speaker 4: the stock performance and the valuation, because you know, the
Speaker 4: rest of it is so far away in another galaxy,
Speaker 4: et cetera.
Speaker 3: Excellent pun and that's of course as we consider the
Speaker 3: performance as a public company. But ed you were just
Speaker 3: talking about speaking to existing SpaceX investors. This is obviously
Speaker 3: not a new company. It's more than two decades old.
Speaker 3: It's existed in private markets for some time, and there
Speaker 3: was a long time in which Elon Musk was saying,
Speaker 3: we can just stay reliant on private capital. Walk us
Speaker 3: through that evolution and whether or not this is going
Speaker 3: to be a new model going forward as we consider
Speaker 3: more robust private markets.
Speaker 4: Yeah, I think you know. Two thousand and two, SpaceX
Speaker 4: was seeded of about twenty seven million dollars and the
Speaker 4: goal was to make a rocket booster land back on
Speaker 4: Earth and be reusable. And now, clearly, as we've just discussed,
Speaker 4: the stories really change. In twenty ten when Tesla went
Speaker 4: PubL the company, the public company that Elon mus is
Speaker 4: also CEO of SpaceX, had a billion dollar valuation and
Speaker 4: rapidly kind of twenty twenty three to twenty twenty five
Speaker 4: in the private markets, its valuation kept growing because it
Speaker 4: just dominated this business of launching payload to orbit and
Speaker 4: then Starlink, which is a Internet service but it's powered
Speaker 4: by a constellation of satellites around Panet Earth, has very
Speaker 4: quickly become cash flow positive, cash generator. So you'll see
Speaker 4: all the Bloomberg stories and read the prospectus and say
Speaker 4: like how unprofitable SpaceX is and how disson it is,
Speaker 4: But in its connectivity business, actually it's a cash generating
Speaker 4: part of the business. And so you know, it's just
Speaker 4: a crazy story we don't have. You could do an
Speaker 4: entire twenty four hours on Bloomberg Television radio to explain
Speaker 4: the history of it. But again, the point of the
Speaker 4: rocket business is that that next gen rocket it needs
Speaker 4: to work for all that other intergalactic out of this
Speaker 4: world's stuff to come true.
Speaker 3: Well, I feel like Ed probably is going to end
Speaker 3: up spending twenty four hours on Bloomberg television and radio today.
Speaker 3: You're working hard. Thank you so much. Bloomberg Tech co
Speaker 3: host ed Ludlow