Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and Vla Low in San Francisco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: SpaceX gears up to finalize its IPO pricing today. This
Speaker 3: is it offers attracts more than seventy billion dollars in
Speaker 3: orders from retail investors alone.
Speaker 4: Plus Oracle is under pressure after the company reported higher
Speaker 4: quarterly capex than expected, raising concerns about the returns on.
Speaker 3: AI and seven seven six founder Reddit co founder Alexis
Speaker 3: o'hanian joins us live from super Return in Berlin later
Speaker 3: this hour first ed with.
Speaker 5: Us both here in New York.
Speaker 4: We check in on these markets that we see the
Speaker 4: bounce back continue to an extent now as that one
Speaker 4: hundred and three ten percent, we're coming down from earlier highs,
Speaker 4: but still there seems to be a lot of muscle
Speaker 4: memory back in the memory perspective. We've got semi conductors
Speaker 4: up two point four percent if you're looking at that
Speaker 4: Sock's index. We are buying back into the hardware. But
Speaker 4: it's not all pretty out there. If you're looking at
Speaker 4: certain names amid the geopolitical.
Speaker 5: Acts as well.
Speaker 3: Okay, so the big earning story is Oracle, right, It's
Speaker 3: down twelve percent, basically falls the most in six months,
Speaker 3: and everyone is still worried about how much it costs
Speaker 3: to get data centers built. And it's so funny because
Speaker 3: like out there in the market, in the AI trade,
Speaker 3: the same anxiety exists on the other side of the table,
Speaker 3: like you can't get it built fast enough, you know,
Speaker 3: give us the compute. We're so compute constrained. But we're
Speaker 3: going to dig into that a lot more later in
Speaker 3: the hour. There's still only one story in town.
Speaker 5: That is, and it's why you're in town.
Speaker 2: It's why we all.
Speaker 4: Gather together in town, because we've got the big story
Speaker 4: of the day, of the week of months.
Speaker 5: Spacexits IPO is upon us almost.
Speaker 4: It feels like we've been building to this crescendo moment
Speaker 4: for a very long time. Bilumo's IPO reporter Bailey Lipschutz
Speaker 4: joins us around the desks space which is in town.
Speaker 4: Lauren Grush and look, we've been along this ride with
Speaker 4: us for many a month, Lauren, what does this mean
Speaker 4: when we're just galvanizing the amount of demand when we're
Speaker 4: starting to see that retail investments are so extreme.
Speaker 5: And order books are filling up. But this is a
Speaker 5: space story. What does it mean for your industry?
Speaker 6: Well, it has become something more than a space story.
Speaker 2: You know.
Speaker 6: I had my bets on how SpaceX would IPO. I
Speaker 6: do not think I would have had it IPO in
Speaker 6: this kind of current form.
Speaker 2: Right.
Speaker 6: We were told they would never IPO until they had
Speaker 6: achieved the Elon's dream of going to Mars. Now it's
Speaker 6: this hybrid rocket telecom AI company. But I just think
Speaker 6: it speaks to the value that SpaceX has provided up
Speaker 6: until now as a launch provider, as this telecom satellite operator.
Speaker 5: You know, it's hard to really.
Speaker 6: Understate the value that this company has brought to our
Speaker 6: space program and now also to you know, the telecom
Speaker 6: business as well. So it's hard to quantify, but I
Speaker 6: think you're seeing it with these you know, astronomical numbers.
Speaker 6: If you are sorry, I'm you.
Speaker 2: Know all you know, this is out of this world, right.
Speaker 3: This is also unusual, Like Bailey, you and I have
Speaker 3: been sort of banging our heads on our desks because
Speaker 3: there's a process to it. It's an atypical process that's
Speaker 3: playing out. But catch the audience up on the mechanics.
Speaker 3: I guess what happens likely aftermarket closed today, what happens tomorrow,
Speaker 3: and where we think the numbers stand, and then we
Speaker 3: can get to the kind of more intergalactic theme that
Speaker 3: we want to.
Speaker 7: We just got to look back a week ago. They
Speaker 7: came out with a fixed price. Abnormal thing here in
Speaker 7: the U. It doesn't normally happen. No normally come out
Speaker 7: with a range. You want to walk Wall Street up
Speaker 7: to it. You want to start low, then come upsize,
Speaker 7: raise the number of shares, raise the.
Speaker 2: Price, baking a big pop.
Speaker 7: Elon and Company over at SpaceX said, we're going to
Speaker 7: treat this like a private equ private deal. This is
Speaker 7: the price, this is the size. Are you in or
Speaker 7: are you out? So that's been playing out for the
Speaker 7: last week. The bankers closed the formal order books yesterday
Speaker 7: at around four o'clock.
Speaker 2: They're all meeting today deciding who's going to get what.
Speaker 7: They're eventually going to take that to Brett Johnson and
Speaker 7: Elon Musk and say this is what we're thinking. Allocations
Speaker 7: are expected to go out this evening early tomorrow morning.
Speaker 7: People are going to find out either they got zero
Speaker 7: or maybe they got billions of dollars worth of shares,
Speaker 7: and then tomorrow the fun will start to take place
Speaker 7: when we start seeing where shares are indicated, probably in
Speaker 7: the ten o'clock hour. Expectations are we'll get first trades
Speaker 7: sometime later in the afternoon, and we'll see if the
Speaker 7: plumbing holds up, because we again have never seen a
Speaker 7: deal of this size. We've never seen a deal of
Speaker 7: this size with retail being what it is, with Robinhood.
Speaker 4: And others and Betty, you've been front and center along
Speaker 4: with ed breaking like the detail on how much demand
Speaker 4: there is and what allocations thus far we're anticipating.
Speaker 5: So it's going to be slightly less to an international.
Speaker 4: Perspective, Japan still getting a couple of billion or more.
Speaker 4: But talk to us about how much retail demand there is,
Speaker 4: how much they might be allocated, how much demand there
Speaker 4: is coming from the Middle East and from US investors.
Speaker 7: So we've put out, just starting with retail, we put
Speaker 7: out and broke this morning more than seventy billion dollars
Speaker 7: in demand, probably well more than seventy billion dollars in demand.
Speaker 7: So you think about that, you're talking at least three
Speaker 7: times over subscribe from retail, which means they have that
Speaker 7: cash in the banking or.
Speaker 2: You could have done this IFEO just on retail, which
Speaker 2: is crazy.
Speaker 7: If you told people a year ago that SpaceX was
Speaker 7: going to Lauren Police disagree with me.
Speaker 6: Laura's research less than a year, less than a year
Speaker 6: that this all kind of came.
Speaker 2: Together come together quickly.
Speaker 7: We've seen in Bloomberg Is reported about the demand from
Speaker 7: the Middle East. We've seen and reported on potential anchor demand,
Speaker 7: and when you kind of stitch all that together, the
Speaker 7: four times over subscribe number kind of seems like a
Speaker 7: no brainer, especially because people on the buy side inflate
Speaker 7: their numbers because maybe you put in for half a
Speaker 7: billion dollars, but you really want to get ten million.
Speaker 7: At least you're getting shares. But it's something that we
Speaker 7: haven't seen before.
Speaker 3: We're going to get to this in a moment with
Speaker 3: our guests, but you and are also reported with the
Speaker 3: team that pre float. They also got basically investment grade
Speaker 3: ratings for the credit agencies, which I think is a
Speaker 3: big indication that this company will raise money post thing.
Speaker 3: I want to go to Lauren because can we just
Speaker 3: remember there is a story here that's not about money.
Speaker 3: It's about a launch system in spacecraft called Starship and
Speaker 3: data centers in space. Would you kindly, Laurene, just summarize
Speaker 3: the plan here for SpaceX.
Speaker 6: Right, it's it's almost it almost represents an entirely new
Speaker 6: direction for the company, This idea that they're going to
Speaker 6: put up to one million data center satellites into space
Speaker 6: to do complex computing for AI. I mean, as we mentioned,
Speaker 6: this wasn't even on our radar in terms of what
Speaker 6: SpaceX is going to be doing, you know, more than
Speaker 6: a year ago, and now it seems to be the
Speaker 6: new direction the future of the company. And yes, all
Speaker 6: of this relies on Starship. Starship is that organtuan rocket
Speaker 6: that they're building in South Texas. It was meant to
Speaker 6: or it is meant to fulfill Elon Musk's AI or
Speaker 6: a Mars dream, but now it's also critical for the
Speaker 6: AI dream too, because it's going to be needed to
Speaker 6: launch these AI data center satellites at scale.
Speaker 2: And you know, as.
Speaker 6: We've noted, the development road has been attacked rocky for Starship.
Speaker 6: I'm not saying they can't get there, but it's still
Speaker 6: unclear when they will unlock for reusability.
Speaker 3: Blue Mike's Baley lip Schultz and Lauren Grash. Just incredible
Speaker 3: reporting to date and obviously the next twenty four hours
Speaker 3: are going to be a lot, Thank you very much. Indeed,
Speaker 3: just SpaceX's growth forecast actually hinges on ideas that seems
Speaker 3: straight out of science fiction, but backers of Elon Musk
Speaker 3: says he's pulled off the unbelievable before. Brett Winton is
Speaker 3: the chief futurist at ARC invest probably one of the
Speaker 3: most prominent institutional supporters of must firm. Brett's great to
Speaker 3: have you back on the show, and like, actually is
Speaker 3: a place to start. I wanted you just to kindly
Speaker 3: remind us of how ARC invested in SpaceX, the sort
Speaker 3: of venture mechanism that you have, and then we'll go
Speaker 3: into the thesis.
Speaker 8: Yeah, so SpaceX space XAI is the largest position in
Speaker 8: our venture fund, which is an interval fund that you know, anybody,
Speaker 8: not just the rich, can invest in. And we did
Speaker 8: that because, as you can see from the retail demand
Speaker 8: for the IPO, people understand kind of like the potential
Speaker 8: power of these innovation focused companies and we think that
Speaker 8: you know, everyday people should be able to get access
Speaker 8: to these AI exposures, including open Aianthropics SpaceX, which are
Speaker 8: the top positions in the fun And so we've invested
Speaker 8: in SpaceX, you know, as long as the vehicle has
Speaker 8: been available, and you know, from the inception of ARC
Speaker 8: we had reusable rockets as a break through disruptive technology.
Speaker 8: And so I've done work all along the way demonstrating
Speaker 8: how being able to reduce cost of launch from ten
Speaker 8: thousand dollars to one thousand dollars to we think much
Speaker 8: less than one hundred dollars with Starship actually unlocks huge
Speaker 8: market potential, certainly on the starlink side and kind of
Speaker 8: as a second stage on the AI side.
Speaker 4: Okay, and for AI one needs data centers. We need
Speaker 4: therefore maybe data centers in space. This is the entire
Speaker 4: pitch that we now go through rule workings. You're numbers
Speaker 4: your thesis on orbital data centers breadth.
Speaker 8: Well, what's interesting about this based XIPO is you actually
Speaker 8: don't need the AI business to really work that well
Speaker 8: in order to actually get a great return on kind
Speaker 8: of just the starlink business.
Speaker 9: So you know, the Elon and Co.
Speaker 8: They are saying they're going to be able to launch
Speaker 8: tens of gigawaps per year by the late twenty twenties.
Speaker 8: So an easy way to think of a gigawat, you
Speaker 8: can rent it out at the current market rate over
Speaker 8: the long term, it's something like fifteen billion dollars per gigwat.
Speaker 8: So imagine launching tens of gigawaps times fifteen billion dollars,
Speaker 8: so three hundred billion in incremental revenue in any individual
Speaker 8: year that you're doing that. The reality of their AI
Speaker 8: business today is on a blnded average basis. They have
Speaker 8: just rented capacity to Google and Anthropic for just a
Speaker 8: little under forty billion dollars per gigawatt. So actually serving
Speaker 8: it as as an infrastructure as a service provider could
Speaker 8: be a wildly lucrative business for them because they can
Speaker 8: they can build assets on the ground so efficiently, and
Speaker 8: once they launch into space they can build it efficiently.
Speaker 3: You know, Brett, like you are as a firm regarded
Speaker 3: as some of the most bullish on Elon Musk like
Speaker 3: the individual and the plan that they outlined in the prospectus.
Speaker 3: But there of course are risks, right you know, must
Speaker 3: post it an X last night, This idea that one
Speaker 3: million tons to orbit will be possible in roughly five years.
Speaker 3: Starship on paper can do one hundred and fifty metric
Speaker 3: tons on paper. Right, do the math. That's one three
Speaker 3: hundred and thirty three launches a year every year for
Speaker 3: five years to do that. You know you would concede, right,
Speaker 3: that this a long shot.
Speaker 8: Well, he always lays out super ambitious targets for its
Speaker 8: companies because that's the way he's found to make his
Speaker 8: workforce most effective it acts delivering world changing technologies.
Speaker 9: Think about it this way. Just look at the.
Speaker 8: Starlink business and imagine instead of look at SpaceX, Imagine,
Speaker 8: instead of launching Falcon nine rockets, I'm launching Starship rockets
Speaker 8: at the same cadence filled with Starlink satellites. That alone
Speaker 8: would get me in two years of launching to roughly
Speaker 8: a little under two hundred billion dollars in revenue. So
Speaker 8: we don't have you don't have to make an assumption
Speaker 8: that the company is going to be launching, you know,
Speaker 8: at even one thousand launches a year in order to
Speaker 8: get into the kind of mostly on Starlink three hundred
Speaker 8: to four hundred billion dollars in revenue by twenty thirty.
Speaker 8: So there's there's this discourse out there that, hey, you know,
Speaker 8: this company on a price to sales basis on the
Speaker 8: immediate term looks very expensive, and poor retail is investing
Speaker 8: in this thing because they don't understand the whole point
Speaker 8: of capital markets is you raise capital and then you
Speaker 8: deploy it in high return on invested capital businesses. And
Speaker 8: Starlink alone is it's you know, a six month cash
Speaker 8: on cash return for five year link satellites. They're going
Speaker 8: to spend a half billion dollars building or launching a
Speaker 8: rocket filled with satellites and acquiring the customers, and it
Speaker 8: should generate them a billion dollars plus per year over
Speaker 8: the five year life.
Speaker 9: Of the satellite. So that's a great, great business.
Speaker 4: I mean unarguable if you think about how much you've
Speaker 4: turned twenty five thousand percent it's been returned since Tesla
Speaker 4: went public. But what is also unarguable is as it stands,
Speaker 4: SpaceX net loss four point two eight billion dollars on
Speaker 4: revenue of four point six nine billion dollars in the
Speaker 4: first quarter, when.
Speaker 5: Does it become positive? Does it need to become positive?
Speaker 5: You happy at being loss making.
Speaker 4: For the foreseeable because the revenues are just going to
Speaker 4: go so astronomically high.
Speaker 8: No, no, I think that profitability at least as we
Speaker 8: have a model, it happens very quickly. As they launched
Speaker 8: the Starlink satellites. It really depends upon how much capital
Speaker 8: they are throwing at terrestrial data centers to try to
Speaker 8: catch up with the frontier labs.
Speaker 9: In terms of GRUX capability.
Speaker 8: You can build an amazing business just basically renting compute
Speaker 8: to others and running Starlink, but there's clearly both an
Speaker 8: ambition and then a higher margin in actually kind of
Speaker 8: like competing within thropic and open. AI didn't argue that
Speaker 8: probably doesn't happen until SpaceX's is launching, so you know,
Speaker 8: multiple gigawatts into orbit.
Speaker 2: I'm sorry to interrupt you.
Speaker 3: There is a disconnect and that many people share this thesis.
Speaker 3: Right what the TAM number in the prospectus twenty six
Speaker 3: point five trillion was for enterprise AI and I appreciate
Speaker 3: this sub buckets in the here and now they've basically
Speaker 3: played a blinder with a ready to go neocloud business,
Speaker 3: and lots of people keep telling me like, in the end,
Speaker 3: it doesn't matter if rock works or is competitive against
Speaker 3: Anthropic and open AI, just rent out the capacity and
Speaker 3: that will fund the you know, the out of this
Speaker 3: world ambition.
Speaker 2: What would you respond to that.
Speaker 8: I think that's possible, as in the way in which
Speaker 8: we model.
Speaker 9: The business, that is the more likely outcome.
Speaker 8: It's I think to compete to get to the frontier
Speaker 8: by twenty thirty, you'll need between thirty and fifty gigawat.
Speaker 9: Years of compute in training.
Speaker 8: It's and there because say I started later and they're
Speaker 8: trying to build their own infrastructure, it's very difficult for
Speaker 8: them to catch up on that amount of kind of
Speaker 8: R and D compute thrown at their model. With the
Speaker 8: caveat that if assuming that they merge with Tesla over
Speaker 8: the next couple of years, cash flow from Tesla could
Speaker 8: actually fund.
Speaker 5: Catch up for you have seen that.
Speaker 8: I think it's a reasonable assumption or more likely than not.
Speaker 8: After the company li and it shares, we're all floating
Speaker 8: that there is a merger between the entities.
Speaker 9: It makes us a ton of strategic sense.
Speaker 8: And as we model Tesla like the cash flow flowing
Speaker 8: off Robotaxi, they can't effectively deploy it, so you know,
Speaker 8: I'm not going to want a special dividend out to
Speaker 8: shareholders for Tesla. I want them to continue to reinvest
Speaker 8: in growth after miss the robot business, you know, requires
Speaker 8: it's not capital constrained, it's really like capability constrained. And
Speaker 8: so whereas SpaceX actually can use additional capital to continue
Speaker 8: to accelerate growth.
Speaker 4: Bret Winton, we could talk for hours, chief futurist at
Speaker 4: our covestor. We are very thankful for the time that
Speaker 4: you've given us. Now coming up, Oracle makes a costly
Speaker 4: bet on AI and then massive spending plans are grabbing
Speaker 4: wall streets attention.
Speaker 5: It doesn't look pretty. This is rubg Tech.
Speaker 4: Oracle shares having their worstday in six months. That's sixty
Speaker 4: one billion dollars wiped out in market cap after they
Speaker 4: reported quarterly capital expenditure which is above what the market thought,
Speaker 4: raising investing concerns about the profitability of AI infrastructure buildouts.
Speaker 4: Pimbugs Brodie Ford breaks it down. Look, they sort of
Speaker 4: try to tell us that they weren't going to raise
Speaker 4: more debt equity this fiscal year, but we're looking now
Speaker 4: at next year and there is going to be a
Speaker 4: lot more raising needed to do.
Speaker 10: Right.
Speaker 11: The whole question for Oracle is how quickly can you
Speaker 11: convert this massive AI demand into actual revenue and what
Speaker 11: are the capital requirements associated? And so last night when
Speaker 11: a lot of different spending metrics came up a little high,
Speaker 11: whether it was capex in the corridor or debt plans
Speaker 11: for the next year, all of these things came together
Speaker 11: to make investors a little bit indigested.
Speaker 3: In the top line, right, like, yes, okay, they're going
Speaker 3: to go to equity and debt markets again. They've told
Speaker 3: us that, But are they growing, Like are they able
Speaker 3: to actually operate this business effectively?
Speaker 11: They're growing massively. The question is whether it's empty calories.
Speaker 11: It's all about that margin question, Becau. As we see
Speaker 11: as the AI business ramps up, the gross margins come down,
Speaker 11: and they fired thousands of people this quarter to try
Speaker 11: to control those costs. But it's still crunching them right.
Speaker 11: It's still a question around what is the margin of
Speaker 11: offering AI infrastructure.
Speaker 2: And is this a good business to be in?
Speaker 11: Generally, Oracle has gone up quite a bit in their
Speaker 11: share price and investors are hopeful, but it's all about
Speaker 11: how quickly they can deliver on the big promises.
Speaker 3: Bloomberg's Brady Ford, thank you very much. The world's largest
Speaker 3: private equity firms and deal makers are gathering in Berlin
Speaker 3: for the annual Super Return Conference, Navigating a tough fundraising environment,
Speaker 3: where AI is reshaping, where capital is flowing. Blue Box
Speaker 3: Danny Berger joins us live from the ground for an
Speaker 3: exclusive interview with Reddit co founder and seven seven six
Speaker 3: founder Alexis a Amian.
Speaker 12: Danny and thank you so much. That's right, I am
Speaker 12: here alongside Alexis Lexis. Thank you so much for joining.
Speaker 5: Wonderful to see you, Hey, thanks for having Danny. So.
Speaker 12: Look, the big news that we it's inexcapable, is a
Speaker 12: SpaceX IPO listing tomorrow. You're obviously very intimately familiar with it,
Speaker 12: having owned xai got sold to SpaceX. Well, what does
Speaker 12: it just mean to have this behemoth coming to market tomorrow?
Speaker 13: Look, we are all excited, you know. I think right
Speaker 13: now most of us in venture and in tech have
Speaker 13: been waiting for some watershed moment IPO to hopefully get
Speaker 13: the markets back open.
Speaker 9: Looks like that is upon us.
Speaker 13: And just generally speaking, I've been so excited about space
Speaker 13: tech for about five six, seven years now, and that
Speaker 13: to me is I think this feels like a milestone moment.
Speaker 13: This was an investment thesis that was unthinkable a decade
Speaker 13: ago for most investors, and I think now people are
Speaker 13: coming to grips with the fact that space technology is
Speaker 13: really here. What would have been science fiction US maybe
Speaker 13: ten years ago is now science fact. And I think
Speaker 13: we're only going to see an acceleration of that.
Speaker 5: Okay, what is it all a fact?
Speaker 12: When we start talking about like a twenty nine trillion
Speaker 12: dollar tam and ten million people on Mars. I mean,
Speaker 12: you own space companies yourself is just like this the
Speaker 12: way you need to think or is a little bit
Speaker 12: of a fantasy.
Speaker 13: I it's so these numbers are big, the projections, the
Speaker 13: ambitions are big. I do think though, when we think
Speaker 13: about what we are capable of as a species, space
Speaker 13: has been something that has mystified us, excited us for
Speaker 13: a very long time, especially in modern history and modern technology.
Speaker 13: This was a frontier we really believed for a long time,
Speaker 13: and I did growing up. It was only a place
Speaker 13: for governments to build and innovate. NASA putting a man
Speaker 13: on the moon, all that stuff was never something the
Speaker 13: private sector could do. But what we're seeing now here
Speaker 13: is undeniable. The private sector's being able to accomplish a lot,
Speaker 13: and I think it's only going to accelerate. And I
Speaker 13: do think the overall market is potentially that big. I
Speaker 13: think when we're talking about human ambition, there is no
Speaker 13: limit to that, when we talk about the opportunities in space.
Speaker 9: As Low Earth orbit.
Speaker 13: Alone just becomes more accessible, we're unlocking pharmaceuticals, We're unlocking
Speaker 13: biotech that's going to help us here back at home.
Speaker 13: And that's the stuff that gets me fired up as
Speaker 13: an investor. That's what gets me fired up as an American.
Speaker 13: I want to see that innovation come and help us
Speaker 13: live better lives here on planet Earth.
Speaker 12: So as having SpaceX as a public company, is that
Speaker 12: a good thing for your space investments because it shows
Speaker 12: there's a pathway for public markets Or is it a
Speaker 12: bad thing because so much money is going to get
Speaker 12: funneled into this IPO that maybe leaves less room for
Speaker 12: some of the other space companies.
Speaker 13: Well, the goodness is where I like to invest is
Speaker 13: still so early. Very few of these companies, you know,
Speaker 13: companies like Stoke or Astro Forger are thinking about going
Speaker 13: public quite yet. They're still thinking about building and shipping
Speaker 13: and launching. I do think you're going to have undeniably
Speaker 13: a whole fleet of newly minted millionaires multimillionaires as well
Speaker 13: as investors, So not just the early employees, but also
Speaker 13: the investors who believe in space tech, who are now
Speaker 13: going to have capital to put into the sort of
Speaker 13: next wave. And I think we've seen that play out
Speaker 13: in tech before and this will be no exception. And
Speaker 13: I do think that all continues to accelerate all of
Speaker 13: us in building the space economy.
Speaker 2: That we're open for building.
Speaker 12: A space economy, though it is something that certainly takes time,
Speaker 12: and I just wonder if there is room for disappointment.
Speaker 12: I mean, I don't mean to harp on sort of
Speaker 12: the crazy numbers of it all, but is there a
Speaker 12: fear that it gets too overhyped. A SpaceX IPO is
Speaker 12: just too large, and there's some disappointment and it sets
Speaker 12: the project back to humanity what you're talking about, It
Speaker 12: sets it back in some time.
Speaker 13: I do think it is it is important to have
Speaker 13: this tempered expectation. I think, on the one hand, folks
Speaker 13: have to balance one what I think is a very
Speaker 13: important almost unbridled ambition for human progress, which is I
Speaker 13: think a very important and noble and great quest and
Speaker 13: at the same time the realistic, you know, expectations. You know,
Speaker 13: everyone should obviously do their diligence, do their own underwriting,
Speaker 13: all that important stuff before making any kind of stock decision.
Speaker 2: Thank you for the legal leaders compliance.
Speaker 9: Is happy with me.
Speaker 13: But at the end of the day, I do think
Speaker 13: what we're talking about here is creating very real value.
Speaker 13: I know, even you think about anecdotally the difference of
Speaker 13: person has once they've taken a United flight with Starlink,
Speaker 13: Like there's a very very different feeling about how you
Speaker 13: interact with technology when you've experienced just a little fraction
Speaker 13: of what the space economy can do.
Speaker 9: And I do think as we.
Speaker 13: Start to unlock pharmaceuticals and biotech that could really only
Speaker 13: be done in zero G, we're talking about again saving lives,
Speaker 13: improving quality of life, things that I know provide a
Speaker 13: real economic value, but at the same time help us
Speaker 13: live that Star Trek future. I think a lot of
Speaker 13: us grew up wanting, so I think, be exuberant, be excited,
Speaker 13: but at the same time, obviously, you know, be thoughtful
Speaker 13: and how you're.
Speaker 9: Interacting this stuff.
Speaker 12: I mean it's not just obviously spacexsipon. We also have
Speaker 12: open AI filing. Anthropic does as well. And these are
Speaker 12: companies that have had a lot of VC backing. In fact,
Speaker 12: so much so we were talking about this on stage.
Speaker 12: Sixty five percent of VC money has gone to just
Speaker 12: zero point zero five percent of companies. Is something broken
Speaker 12: that Those are the statistics we're faced with right now.
Speaker 9: It is a unique time.
Speaker 13: I think clearly as an early stage investor, you know,
Speaker 13: I am insulated from this a bit because where the ones,
Speaker 13: these multi stages are often marking up my early investments,
Speaker 13: and so you know, it's I think where you start
Speaker 13: to see the challenge is a lot of these companies
Speaker 13: in a previous decade would have already been public, and
Speaker 13: because companies held off going public longer, the private markets
Speaker 13: became a place that was effectively dealing like a public marketplace.
Speaker 13: So you're seeing these valuations, you're seeing this increase. I
Speaker 13: think it is a positive for America and for the
Speaker 13: world that you know, retail, that that regular folks get
Speaker 13: access to these opportunities. I frankly wish it would happen
Speaker 13: sooner because I think Historically, you know, people draw up,
Speaker 13: you know, the market cap of Amazon or revenues of
Speaker 13: Amazon or Google when they went public. And you know,
Speaker 13: we're in a different world now where privately held companies
Speaker 13: are able to generate tremendous revenues and market caps before
Speaker 13: going public. But I do think I think this has
Speaker 13: been a long time coming, and I do think generally
Speaker 13: venture should be a place to be contring and right
Speaker 13: it should be a non consensus asset, especially on the
Speaker 13: growth side. It's looking more and more consensus. So, look,
Speaker 13: those companies are about to turn public. We'll see what
Speaker 13: the next wave of private looks like. I'm certainly trying
Speaker 13: to do my pest to be on the non consensus
Speaker 13: and right side early. And I do think venture is
Speaker 13: healthier as an ecosystem when it's not looking like a
Speaker 13: couple of very very concentrated bets.
Speaker 12: Well, usually what you say when there's a consensus is
Speaker 12: that that's a dangerous thing, and it means that there
Speaker 12: can be a correction. Do you think that that's possible
Speaker 12: for this industry if everyone is crowding around similar bets.
Speaker 13: Look, your instincts are right, and I know you always
Speaker 13: get in trouble saying why something is different this time. Yeah,
Speaker 13: And with that caveat, I still think something is different
Speaker 13: this time. And I know, look, I live through the
Speaker 13: social media wave. I naively thought the social media revolution
Speaker 13: that we were building with Reddit was like the revolution
Speaker 13: it was not. I naively thought mobile was a revolution.
Speaker 2: It was not.
Speaker 13: I mean it was, but in a much smaller way
Speaker 13: compared to what this is. We have seen in just
Speaker 13: a few years technology go from an interesting novelty that
Speaker 13: could help you write like a press relief, to technology
Speaker 13: that could literally write code as well as or better
Speaker 13: than even some of the most senior experience developers. And
Speaker 13: it really augments the output of folks. So there's a
Speaker 13: real technology here. It's a real shift, and I don't
Speaker 13: think it goes away. And I also think it has,
Speaker 13: as I set on stage, a national security importance because
Speaker 13: so much of our lives are digital being able. You
Speaker 13: saw us with the way Anthropic thoughtfully rolled out mythos,
Speaker 13: like you know, we used it first and foremost to
Speaker 13: shore up vulnerabilities that we had in our businesses here
Speaker 13: in America. And so even if it never got even
Speaker 13: if AI never got any better than where it is today.
Speaker 13: You know that is already incredibly valuable, and there's so
Speaker 13: much wood to chop as we look across so many
Speaker 13: businesses that right now don't have any software in them.
Speaker 13: This hotel, I am sure.
Speaker 5: Don't tell me this hotel.
Speaker 12: Is going to be an aips AS, but I am
Speaker 12: sure that whatever systems they're using right now are.
Speaker 13: Very bad and software as a layer of user experience,
Speaker 13: these root should be able to level that up in
Speaker 13: a meaningful way.
Speaker 12: And by the way, I do want to just ask
Speaker 12: quickly because we have forty five seconds left. There is
Speaker 12: this idea that the thing that survives in AI is
Speaker 12: just like live entertainment, and you have a lot of
Speaker 12: bets around women's sports very much. Has this whole revolution
Speaker 12: this thing we're experiencing just Mede, you double down on that.
Speaker 13: Yeah, I mean look, I was a rare voice five
Speaker 13: six years ago saying this was in a soutional great
Speaker 13: asset not just sports, but also specifically women's sports. I
Speaker 13: love seeing this. I am certain five ten years from
Speaker 13: now we will still watch no matter how good the
Speaker 13: AI generated highlights get. You know, watching the AI version
Speaker 13: of that Knicks final last night would do nothing for
Speaker 13: the human soul yep, because it requires even though even
Speaker 13: if it was pixel perfect, if it didn't actually happen,
Speaker 13: it is irrelevant and worthless. So live sports has to
Speaker 13: be fundamentally human. No one is going to line up
Speaker 13: to see a bunch of robots, you know, play eighteen
Speaker 13: holes of golf against each other where everyone hits a
Speaker 13: hole in one.
Speaker 8: Right.
Speaker 13: The end state of this technology is some version of
Speaker 13: this perfection that no one's.
Speaker 9: Going to want to watch. Sport has to be human.
Speaker 13: So I've been saying this for five six years now
Speaker 13: and I'm only more confident about it. And I think
Speaker 13: what this technology does is it makes these assets more valuable.
Speaker 13: It makes them more engaging for fans. It improves training,
Speaker 13: it improves so many elements, but it does not replace minding.
Speaker 5: Is a out of time. But should we just end
Speaker 5: with nix and five?
Speaker 2: Nix and five, I think that's fun.
Speaker 9: That's a look into the camera and Nixon thie perfect
Speaker 9: place to end it.
Speaker 12: Alection, thank you so much for joining me, Ed Caroline
Speaker 12: Alexis o'hanne and the founder of seven seven six and
Speaker 12: read it.
Speaker 3: Thank you very much, Danny Berger. I really want to
Speaker 3: check back in in markets and I don't mean like
Speaker 3: what's happening in the here and now, we're like up
Speaker 3: eight ten percent on that's that one hundred.
Speaker 2: I call it like a modest rebound.
Speaker 3: Oracle is down on track for his worst day in
Speaker 3: six months because it warned investors is going to have
Speaker 3: to tap equity and debt markets. It needs that capital
Speaker 3: carro like it's like can't build compute fast enough. But
Speaker 3: it's interesting, like if you just take a sec calm
Speaker 3: it down most of the names and then that's like one.
Speaker 2: Hundred a higher. It's the hyperscalers that are lower.
Speaker 3: The software names are a little bit lower, and there
Speaker 3: must be an element of like treading water to SpaceX's
Speaker 3: debut tomorrow.
Speaker 4: Definitely, maybe people still rearranging as to how much allocation
Speaker 4: they can have, how much money they've committed. But also, look,
Speaker 4: there's still hardware on the higher side and particular in
Speaker 4: the chip side of the equation. And let's just talk
Speaker 4: a little bit about that, because questions are clearly around
Speaker 4: the cost of the AI boom for Oracle there, but
Speaker 4: also costs for you and me for the American people
Speaker 4: in freation is spiking with tech chants scrambling to build
Speaker 4: out data centers. Memory chip prices have skyrocketed, driving a
Speaker 4: record spike in tech, hardware and electricity costs. This is
Speaker 4: exactly the story that Bloomberg's end a Current is helping
Speaker 4: tell today. You tell it through an individual who's helping
Speaker 4: small medium sized enterprises gain access to upgrading memory.
Speaker 5: And I mean he's just thinking this is out of
Speaker 5: this world.
Speaker 14: Yeah, indeed, I mean this is the word AI boom
Speaker 14: is spilling over into real living costs. So you mentioned,
Speaker 14: for example, I spoke to a couple of companies, one
Speaker 14: of them in bolted More. He deals with small businesses.
Speaker 14: He does for it services. So they come in the
Speaker 14: door looking for memory storage upgrade or maybe even new computer,
Speaker 14: and he's saying to them, look, because of the AI
Speaker 14: boom demand for chips, that's driving up the cost for
Speaker 14: the components he needs, like RAM storage ssd' sa' driving
Speaker 14: it up significantly, and as a result, obviously that means
Speaker 14: their upgrade job will be much more expensive, to the
Speaker 14: point where he says, it's telling some customers looking motophill
Speaker 14: gone by a new computer or new laptop, and the
Speaker 14: cost of the new computer new laptop is also going
Speaker 14: up as a result. So this these chips go into
Speaker 14: everything that we use in every walk of life and
Speaker 14: flowing through now to the inflation data.
Speaker 3: I'm going to just read this and because I couldn't
Speaker 3: believe it, it's the AI summary of your story. But
Speaker 3: the memory squeeze will add zero point four percentage points
Speaker 3: to headline inflation before it eases. According to Blue Megeconomics,
Speaker 3: it is shocking to me that there is a single
Speaker 3: basis point. We're talking about a category of specific hard
Speaker 3: round chips impacting inflation at a the substantive level. Like
Speaker 3: I've spoken to you for years, you've been all around
Speaker 3: the world looking at different economies, different supply chains.
Speaker 2: Is that shocking to you?
Speaker 3: What have you learned in the real world economy about
Speaker 3: that data point.
Speaker 14: It's certainly an impact. I mean, the official data that
Speaker 14: we had yesterday to your point, showed that the technology
Speaker 14: and computer components part of the inflation indicators was actually
Speaker 14: up by just about fifteen percent from a year ago.
Speaker 14: That's a record increase. So it is having the impact now.
Speaker 14: To be clear, obviously it's not the only issue driving
Speaker 14: inflation right now. They ran more of course because of
Speaker 14: the impact and energy is the bigger driver, but it
Speaker 14: is filtering, is filtering through in a meaningful way, and
Speaker 14: economs are saying it's going to be enough to keep
Speaker 14: inflation simmering at a point where it wouldn't otherwise be
Speaker 14: and that's a critical thing, and of course that's a
Speaker 14: real worry for policy makers. So the AI inflation story
Speaker 14: may not be the only factor of what's keeping in
Speaker 14: terms of what's keeping US inflation elevated, but it is
Speaker 14: certainly one of the factors. In a direct consequence of
Speaker 14: this AI boomlet rolls.
Speaker 3: In and when we were discussing markets a moment ago,
Speaker 3: I should also se like, of course the warring around
Speaker 3: the Middle East is like a driver a catalyst. And
Speaker 3: what's happening in equities at least today Bloomberg's end of
Speaker 3: current in DC awesome, Really appreciate it. Thank you, So
Speaker 3: stock stage, let's say a cautious rebound with tech stocks
Speaker 3: somewhat leading the way, like as we were talking about,
Speaker 3: there's a little bit of bifurcation in the bucket of
Speaker 3: then as like one hundred, but concerns about the potential
Speaker 3: escalation escalation right of the conflict in the Middle East
Speaker 3: are keeping investors a little bit on edge. Oil prices
Speaker 3: are still a factor. Again, I still think SpaceX has
Speaker 3: quite a lot to do with this. Let's bring in
Speaker 3: Christina Hooper for her read chief market strategist in the
Speaker 3: Man Group two undred and twenty eight point seven billion
Speaker 3: dollars in assets under management. You know, I say this
Speaker 3: quite often, particularly for the tech sector, Like one session
Speaker 3: the market does not make But what is the story
Speaker 3: you see in the numbers on the screen in front
Speaker 3: of you right now?
Speaker 15: Well, I think there is a lot of excitement around SpaceX.
Speaker 15: This is a I think creating a very significant level
Speaker 15: of positive sentiments, so much so that markets can really
Speaker 15: look through all the geopolitical risk and say, hey, this
Speaker 15: is something exciting. This is something that has incredibly long
Speaker 15: term potential. Long term it is you know, it is
Speaker 15: to me a story about markets that want to focus
Speaker 15: on the positive and this is giving them a reason
Speaker 15: to be positive.
Speaker 4: As a market strategist, Christina, when you're getting bombarded with cools,
Speaker 4: should I buy in space X? Should I be looking
Speaker 4: at open AI and and throw picking all the IPOs
Speaker 4: and might becoming what is your answer?
Speaker 15: My answer is, I think we need to think of
Speaker 15: it in terms of the context of a diversified portfolio,
Speaker 15: there is certainly potential there. As I talked about, there's
Speaker 15: growth opportunities. We also have to recognize that valuations are high,
Speaker 15: and when valuations are high, stocks are vulnerable to a rerating,
Speaker 15: especially in an environment in which you have an enormous
Speaker 15: amount of geopolitical risk.
Speaker 5: Now that may.
Speaker 15: Impact some stocks more than others, but typically when you
Speaker 15: have rates going up, that exerts downward pressure on equities,
Speaker 15: particularly long duration equities like tech names. So if you're
Speaker 15: looking out far longer term for your earnings, for your payoffs,
Speaker 15: so to speak, then you could very well see some
Speaker 15: kind of a rerating because.
Speaker 3: In a part of the space x IPO equation is
Speaker 3: slightly mechanical, so some of the index fast track inclusion
Speaker 3: right and in very simple terms, the passive funds will
Speaker 3: have to buy their own by laws rebalance. Could you
Speaker 3: explain that a little bit a the basics of it.
Speaker 3: But when you're a strategist looking across assets, what you
Speaker 3: think will happen as a result of.
Speaker 15: That, Well, essentially you have a built in demand that
Speaker 15: is vast because if you think about all the different
Speaker 15: owners of index like.
Speaker 2: Fund products.
Speaker 15: You have this captive audience that will be owning it
Speaker 15: as part of that, and so that certainly changes the dynamics.
Speaker 15: That's very different than the other IPOs we've seen, and
Speaker 15: again it's part of why there's so much excitement and
Speaker 15: there's a view that this stock price could go up
Speaker 15: quite significantly from here.
Speaker 4: Isn't an irony that Elo Musk has always pushed and
Speaker 4: railed against past. Yeah, but passive is going to be
Speaker 4: such a driver of demand more broadly for the IPO,
Speaker 4: But so too is the commitment to the retail investor.
Speaker 4: Have you done much strategic thought around the impact of
Speaker 4: retail investor right now on broader markets because they're a
Speaker 4: loyal bunch quite often, but they can also wide in
Speaker 4: on mean themes and cause more volatility.
Speaker 2: Oh.
Speaker 5: Absolutely.
Speaker 15: I think that's why there are so many firms that
Speaker 15: essentially monitor read it and other sites. I think that
Speaker 15: was learned from game stuff that retail investors are quite
Speaker 15: powerful now. I think think what we're seeing now is
Speaker 15: that retail investors are seeing opportunities in technology, particularly AI
Speaker 15: related names, and they have put their full force behind it.
Speaker 15: That's not to say we haven't seen institutional investors as well,
Speaker 15: and so that has created quite a dynamic, and that
Speaker 15: is really, I think largely behind the kind of incredible
Speaker 15: recovery we've seen over the last couple of months. I mean,
Speaker 15: the returns are really quite astounding.
Speaker 3: I would love to dwell on this, if that's okay, Christina.
Speaker 3: So Bloomberg reported that there was seventy billion dollars of
Speaker 3: retail demand for the SpaceX IPO, though we don't actually
Speaker 3: know the allocation yet, so it's oversubscribed. But one of
Speaker 3: the thesis, that thesis that you know, the existing investor
Speaker 3: base of SpaceX tell me over and over again, retail
Speaker 3: understands the story better, They're more likely to hold onto
Speaker 3: the shares for longer, and that will support evaluation over
Speaker 3: a longer time period.
Speaker 2: You model for that, Do you share that belief?
Speaker 5: So I think it can be a double edged sword.
Speaker 15: Yes, retail does under stand the story. That's part of
Speaker 15: why there's so much excitement around it and there's so
Speaker 15: much retail demand for the IPO. But by the same token,
Speaker 15: because retail understands the story, if we see cracks form
Speaker 15: in critical businesses.
Speaker 5: Then you could see retail react to that.
Speaker 15: Again, we have that sort of built in demand because
Speaker 15: of the placement in the index. But having said that,
Speaker 15: you could still see a lot of volatility. You could
Speaker 15: see some kind of rerating in this environment if you
Speaker 15: see yields continue to go up, and if you see
Speaker 15: retail investors just become risk averse in general, which could
Speaker 15: easily happen.
Speaker 4: Christina Hoover, always so measured, always so thoughtful, Thank you
Speaker 4: for coming on. MAD Group Chief market strategists there. Coming
Speaker 4: up from Zatxa Software, go Poff partners with Spacexai a
Speaker 4: new shopping experience.
Speaker 5: We speak with the gop co CEO.
Speaker 4: And why Spacexai, why they're offering why grow business, greenvectech.
Speaker 3: As SpaceX heads towards its IPO tomorrow, investors are betting
Speaker 3: on more than rockets and chatbots and satellites. The company
Speaker 3: says enterprise AI represents a twenty six point five trillion
Speaker 3: dollar opportunity, but can grop actually when corporate customers. One
Speaker 3: of the few companies putting it to work is gopuff,
Speaker 3: which built its new AI shopping assistant on XAIS models.
Speaker 3: Joining us now is Gopuff CEO Raphael Ilishaiev. It's a
Speaker 3: great case study, right I think a lot of people
Speaker 3: read the prospectus and we're like, Okay, the future of
Speaker 3: SPACEXAI is enterprise AI, but they have struggled a little
Speaker 3: to get people to use the models in a meaningful way.
Speaker 3: You are just explain the basics of the relationship and
Speaker 3: what you've actually done with the technology.
Speaker 10: Yeah, Ed, Caroline, thank you so much for having me
Speaker 10: so Over the last thirteen years, gobov has built infrastructure
Speaker 10: to be the fastest and most affordable player in delivery,
Speaker 10: and our partnership with SpaceX and the product that we
Speaker 10: co developed called Go solves the final friction point that
Speaker 10: we really had, which is the consumer shopping experience.
Speaker 2: So we thought about this differently.
Speaker 10: Than I think a lot of other folks. And it's
Speaker 10: not just an LM wrapper that's built within our app,
Speaker 10: but in fact there's a co developed experience where it's
Speaker 10: a whole new consumer on new consumer product where you
Speaker 10: could shop via voice, you could talk to it, have
Speaker 10: total total conversation like you would have with your best friend.
Speaker 10: Go will build your cart, so if it knows enough
Speaker 10: about you, it'll actually develop and build a whole cart,
Speaker 10: and it has this TikTok style scrolling experience where you
Speaker 10: can scroll and discover new products that are hyper personalized
Speaker 10: and cared for you. So this is a whole new
Speaker 10: experience that we co developed together with SpaceX over the
Speaker 10: last year and fad.
Speaker 4: What's interesting is when you're using data from X, You'll
Speaker 4: know that I'm all in on the next in five
Speaker 4: game on Saturday, and suddenly I'm being offered chicken wings
Speaker 4: or I'm being offered chips or whatever it might be
Speaker 4: because I'm able to and gopof on that moment on
Speaker 4: the Saturday. But from actually embedding within X and within groc,
Speaker 4: did you push away other relationships? Did you decide no,
Speaker 4: thanks open Ai, no thanks anthropic?
Speaker 5: Did you look at doing it with competitors?
Speaker 10: You know, this kind of relationship that we had and
Speaker 10: the kind of product that we wanted to build, this
Speaker 10: wasn't just a plug and play that we could have
Speaker 10: done with anyone. So we looked for folks that had
Speaker 10: the right technology, and SpaceX has amongst the best technology
Speaker 10: both for voice and imagine and a partner that was
Speaker 10: willing to co develop this whole new consumer shopping experience
Speaker 10: for us. So you know, this was a long, you know,
Speaker 10: ten eleven month process that we co developed together with
Speaker 10: a partner that was willing to work with us, you know,
Speaker 10: even as early as this morning, talking with our engineers
Speaker 10: and co developing this thing together to make it even better.
Speaker 10: So we were looking for a partner that had the
Speaker 10: right technology, which SpaceX is you know, in cutting edge
Speaker 10: and the best boat in voice and in image generation,
Speaker 10: and a partner that was willing to co develop this
Speaker 10: new product together.
Speaker 3: Could you talk a little bit about how the economics
Speaker 3: of it work, like how does XAI price things with you?
Speaker 3: It sounds also a bit like you get good access
Speaker 3: to the forward deployed engineers, like daily access. All of
Speaker 3: that is a big facts right now because everyone is
Speaker 3: counting the cost of tokens.
Speaker 5: Yeah.
Speaker 10: Yeah, So it's a strategic relationship that we build together
Speaker 10: with SPACEXI from day one. And the way that we
Speaker 10: thought about the scaling is we wanted a provider that
Speaker 10: can provide you know, a super high quality product bought
Speaker 10: across voice and image and is arguably the lowest cost provider.
Speaker 10: So we built a relationship that scales are.
Speaker 3: The lowest provider you benchmarked against open ai and Anthropic
Speaker 3: on the cost as well.
Speaker 10: Yeah, we looked at we looked at a lot of
Speaker 10: players when we did, and costs was one of the
Speaker 10: factors here. But the quality of the product and the
Speaker 10: willingness to co develop this together, all of that kind
Speaker 10: of gave us a lot of confidence to work together
Speaker 10: with SpaceX, And I think the product kind of speaks
Speaker 10: for itself if you play with it. I think it's
Speaker 10: second to none from a consumer AI experience.
Speaker 4: I mean, Raphael is interesting reporting out over all Wall
Speaker 4: Street Journal, for example, there's a thought that open Ai
Speaker 4: might be doing some drastic price cuts in particular basically
Speaker 4: the cost of its product.
Speaker 5: People are who been wonderfully token.
Speaker 4: Maxing is suddenly realizing how expensive that is and they
Speaker 4: want to do that, perhaps ahead of competitors like Anthropic.
Speaker 4: Are you seeing return on such AI investment? Is it
Speaker 4: really driving growth for the business?
Speaker 10: You know, we're a week in to Go launching, and
Speaker 10: I'll tell you a lot of the consumer metrics really
Speaker 10: early on are great. You know, basket sizes up and frequency.
Speaker 9: Within the first week is up.
Speaker 10: But what's even more special is the kind of conversations
Speaker 10: that are consumers are having with Go. You know, we
Speaker 10: saw a conversation earlier today with the mom saying Hey,
Speaker 10: my kid is sick, can you help me? Or a
Speaker 10: conversation a few days ago with someone asking, Hey, I'm
Speaker 10: hosting a barbecue for six people, go can you help me?
Speaker 10: And that kind of relationship that we're building with the
Speaker 10: customer is kind of very special and I think those
Speaker 10: kind of relationships are the ones that are going to
Speaker 10: win and lead to ultimately better KPIs across the board.
Speaker 4: That's great speaking with you, Afair alias Cherv he's the
Speaker 4: co founder and co CEO of Gopuff. Appreciate the take
Speaker 4: on groc and AI and SpaceX Ai. But there's a
Speaker 4: lot to talk from governments around the world at the
Speaker 4: moment about adopting AI. Many countries still having delivered on
Speaker 4: that adoption. That's according to open AI's head of Countries
Speaker 4: and the former UK Chancellor of the Exchequer, George O's one.
Speaker 4: He sat down with bloombg Tech Europe's Tom McKenzie form
Speaker 4: the Founders Forum in the UK.
Speaker 16: I think you are saying what is true is that
Speaker 16: many governments having yet really good delivered on the adoption.
Speaker 16: They've they've talked about it, they've got ambitions around it,
Speaker 16: but they're still in the process of delivering.
Speaker 3: Now.
Speaker 16: I know I've been in government. Things take a while.
Speaker 16: But the governments, I think the do adopt more quickly
Speaker 16: will be the big winners. They'll be the winners in
Speaker 16: their national economy, winners in the quality of their public services,
Speaker 16: and winners in potentially in like where their country is
Speaker 16: going to be over the.
Speaker 2: Next centric coming up.
Speaker 3: Many things about the SpaceX IPO have been unusual. We're
Speaker 3: going to talk through the mechanisms of this public market
Speaker 3: launch next ready for lift off, et cetera, et cetera.
Speaker 3: This is Bloomberg Tech breaking news crossing the terminals. SpaceX
Speaker 3: preparing to sell seventy five billion dollars worth of shares,
Speaker 3: at least a five billion dollar dollar order coming from Blackrock.
Speaker 3: That's according to the Wall Street Journals siding sources. Bloomberg
Speaker 3: had reported right that there were several institutions that had
Speaker 3: placed orders for ten billion dollars worth of shares. The
Speaker 3: allocation will get worked out in the next twenty.
Speaker 2: Four hours through to tomorrow morning.
Speaker 3: Pre trade for black Rock, according to the journal, at
Speaker 3: least five billion.
Speaker 2: Maybe it goes up. We'll see.
Speaker 4: There are some big orders coming from institutional but also
Speaker 4: from retail ed and that is today's big number, more.
Speaker 5: Than seventy billion dollars.
Speaker 4: Retail orders for SpaceX's IPO have actually topped seventy billion,
Speaker 4: according to sources.
Speaker 5: And while individual investors are expected.
Speaker 4: To be allocated well at least twenty percent of the
Speaker 4: available shares at a seventy five billion dollar IPO size,
Speaker 4: many are going to be left unfilled.
Speaker 5: That's just one of the rather unusual.
Speaker 4: Things about this listing, joining us to discuss the IPO mechanics, the.
Speaker 5: Market impact, the thesis.
Speaker 4: Brian White and In, director and co head of Tech
Speaker 4: Investment Banking ever at PYPERSANDLA. You're not one of the
Speaker 4: banks working on the listening, which frees us up to
Speaker 4: discuss things at length with you. Brian, and I'm so
Speaker 4: fascinated by some of the technicalities because you've put in
Speaker 4: in your notes.
Speaker 5: Look, this is a very small float.
Speaker 4: Seventy five billion dollars is enormous and record ibo but
Speaker 4: compared to the valuation of the company, very limited amount
Speaker 4: of how many stock we get access to Is that
Speaker 4: an issue?
Speaker 10: Well, it is.
Speaker 17: It's about four percent of the float, and there's overriding demand.
Speaker 17: You're seeing demand from retail and institutional as evidenced by
Speaker 17: the black Rock order right there. But over time, hopefully
Speaker 17: they will continue to sell more and more. But right
Speaker 17: now it looks like the demand is quite high and
Speaker 17: they could probably actually increase the amount that they want
Speaker 17: to raise, and I'm sure that that's something that the
Speaker 17: underwriters are thinking about as we speak.
Speaker 3: Ryan, they did the unusual thing and set out a
Speaker 3: price pre road show one thirty five. How do you
Speaker 3: think the bankers, the potential investors and everyone else responded
Speaker 3: to that behind the scenes.
Speaker 17: Well, first, what they wanted to do is to back
Speaker 17: into what they believe is an appropriate valuation, and that's
Speaker 17: evaluation based on all the facets of the SpaceX business.
Speaker 2: Number two.
Speaker 17: SpaceX is unique and led by probably one of the
Speaker 17: best entrepreneurs of all time in Elon Musk, and there
Speaker 17: is tremendous demand for it. And instead of the normal
Speaker 17: mechanism where you're trying to determine how to price based
Speaker 17: on where you think demand is and what the market
Speaker 17: value is at, they've determined the price from the outset.
Speaker 17: What that's doing is putting an artificial floor on where
Speaker 17: it's going to be. But what it also may allow
Speaker 17: for is a very very large pop for retail investors tomorrow,
Speaker 17: and I think that that's going to be what we
Speaker 17: want to watch, just how much it pops at the
Speaker 17: open and where it sustains itself, because much of retail
Speaker 17: may see such a large pop that what they decide
Speaker 17: to do is to sell down throughout the day tomorrow.
Speaker 4: But run aren't the limitations as to how much retail
Speaker 4: is allowed to sell out or at least some of
Speaker 4: the brokers that they buy through will punish them if
Speaker 4: they sell on the first day.
Speaker 17: Well, we've never seen a IPO with this much retail allocation,
Speaker 17: and so twenty percent at least is going to retail,
Speaker 17: and the retail is going to be able to have
Speaker 17: access to sell. Now what you may be referring too,
Speaker 17: some of them may have some issues with future IPOs,
Speaker 17: but most of the retail that's in this IPO is
Speaker 17: probably not necessarily planning for much more IPO investments.
Speaker 4: You really think they're not going to be in an
Speaker 4: anthropic or open AI if they want to buy into Xai, Well.
Speaker 17: They would like to be, but it's unclear if open
Speaker 17: AI and Anthropic will actually follow a similar mechanism. My
Speaker 17: instinct is they may not, but we shall see, because
Speaker 17: this is setting a new precedent tomorrow.
Speaker 3: Brian, we reported yesterday that pre float SpaceX has IG
Speaker 3: rating from the three main agencies. To you, how much
Speaker 3: of a signal of that is that they will very
Speaker 3: quickly go back to the markets and raise more money
Speaker 3: through any mechanism available.
Speaker 17: I mean, I think it's a tremendous signal. I think
Speaker 17: that they are going look at the burn that they
Speaker 17: disclosed in the prospectus, look at the ambitions that they have,
Speaker 17: particularly with the XAI part of the business, and with
Speaker 17: their vision about where they want to see their AI
Speaker 17: business and their space business over time. This is a
Speaker 17: business that will continue to consume massive amounts of capital,
Speaker 17: will continue to need to access the public markets to
Speaker 17: raise that capital.
Speaker 3: You didn't get a brief on this. We're being transparent
Speaker 3: about that. But is there a way that Pipe of
Speaker 3: Sandler can play this IPO event.
Speaker 17: Well, what we're trying to do is just continue to
Speaker 17: advise our clients about where defense technology is heading. You know,
Speaker 17: the exciting things that is happening in space, the future
Speaker 17: of you know, defense, Those are the areas that we're
Speaker 17: spending a lot of our time in terms of the
Speaker 17: future opportunities around SpaceX. It's something that you know, our
Speaker 17: team is very fixated on, but we're not participating in
Speaker 17: this IPO tomorrow.
Speaker 3: Brian White, co head of Technology Investment Banking Pipe cent
Speaker 3: to thank you very much, really appreciate it. Okay, you know,
Speaker 3: this is it the final sprint and this is it
Speaker 3: for this edition of Bloomberg Tech.
Speaker 2: Are you ready?
Speaker 5: I'm feeling ready.
Speaker 2: Yeah, are you ready?
Speaker 4: Because you've got a long day ahead of you, Ed Ludlow,
Speaker 4: there's potentially coverage of these things priced there's coverage throughout
Speaker 4: the trading day here on Bloomberg after the trading day.
Speaker 3: And of course we'll think me to take away from
Speaker 3: the game. It's all premeditated. You kind of know what's
Speaker 3: going to happen. Still lots to review on the pod.
Speaker 4: There is Get That podcast you can find on the
Speaker 4: terminal as well as online on Apple, Spotify, and iHeart.
Speaker 5: I have ed here for another day. In New York City,
Speaker 5: there's a bluembog Tech