1 00:00:02,720 --> 00:00:10,559 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,600 --> 00:00:14,560 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,600 --> 00:00:17,880 Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg 4 00:00:17,920 --> 00:00:21,040 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,360 --> 00:00:23,080 Speaker 1: or watch us live on YouTube. 6 00:00:24,079 --> 00:00:25,880 Speaker 2: And a lot of the outlook of the markets will 7 00:00:25,880 --> 00:00:31,200 Speaker 2: depend on how this SpaceX mammoth IPO proceeds. Pricing could 8 00:00:31,200 --> 00:00:33,760 Speaker 2: take place next week, and then the stock could begin 9 00:00:33,840 --> 00:00:37,600 Speaker 2: trading potentially the day after. Shrinat Rajen is our chief 10 00:00:37,960 --> 00:00:40,480 Speaker 2: Wall Street course wanting here at Bloomberg News, and he's 11 00:00:40,520 --> 00:00:43,600 Speaker 2: looking at Paul's favorite angle of IPOs, which is banks 12 00:00:44,000 --> 00:00:47,240 Speaker 2: and banks getting paid to take this company public and tree. 13 00:00:47,400 --> 00:00:51,400 Speaker 2: Your reporting has found that Elon Musk is negotiating to 14 00:00:52,440 --> 00:00:55,640 Speaker 2: cut down the fees that bankers normally get paid. What 15 00:00:55,720 --> 00:00:57,800 Speaker 2: do bankers normally get paid? And what does Elon Musk 16 00:00:57,840 --> 00:00:58,600 Speaker 2: want to pay them? 17 00:00:58,760 --> 00:01:01,320 Speaker 3: Look, if you think about it in some way, SpaceX 18 00:01:01,360 --> 00:01:03,560 Speaker 3: is the Walmut of IPOs, right. It has all the 19 00:01:03,600 --> 00:01:06,480 Speaker 3: pricing power here. It is raising seventy five billion dollars, 20 00:01:06,520 --> 00:01:10,279 Speaker 3: So you shouldn't expect a typical IPOFEE. And to your question, 21 00:01:10,400 --> 00:01:13,800 Speaker 3: what a typical ipofee is most IPOs generally tend to 22 00:01:13,880 --> 00:01:16,360 Speaker 3: raise less than a billion dollars a few hundred million dollars, 23 00:01:16,400 --> 00:01:18,959 Speaker 3: and the banks would usually charge between four to seven percent. 24 00:01:19,360 --> 00:01:22,559 Speaker 3: But even when we talk about the League of mega IPOs, 25 00:01:22,920 --> 00:01:25,959 Speaker 3: that fee does get reduced drastically. But even in most 26 00:01:26,000 --> 00:01:28,319 Speaker 3: of those cases, almost all of those cases are usually 27 00:01:28,360 --> 00:01:31,160 Speaker 3: about one percent. That was the case with Facebook Uber 28 00:01:31,319 --> 00:01:34,559 Speaker 3: Ali Baba. You have to go back perhaps to twenty 29 00:01:34,600 --> 00:01:38,760 Speaker 3: twenty twenty ten and a very unusual public listing of 30 00:01:38,840 --> 00:01:41,679 Speaker 3: General Motors back in twenty ten, when the banks agreed 31 00:01:41,920 --> 00:01:45,040 Speaker 3: to a zero point seventy five percent fee on that IPO, 32 00:01:45,520 --> 00:01:47,880 Speaker 3: largely because the owner of GM at the time was 33 00:01:47,880 --> 00:01:49,240 Speaker 3: the United States government. 34 00:01:49,600 --> 00:01:50,560 Speaker 4: This is very different. 35 00:01:50,800 --> 00:01:53,960 Speaker 3: But also look at the quantum of money that SpaceX 36 00:01:54,000 --> 00:01:56,840 Speaker 3: is trying to raise. Seventy five billion dollars. So even 37 00:01:56,880 --> 00:02:00,600 Speaker 3: if they charge one of the lowest or offer one 38 00:02:00,640 --> 00:02:04,000 Speaker 3: of the lowest IPO fees on record, less than seventy 39 00:02:04,000 --> 00:02:06,440 Speaker 3: five bibs, less than zero point seventy five percent, I 40 00:02:06,480 --> 00:02:08,680 Speaker 3: would still amount to somewhere in the ballpark of five 41 00:02:08,760 --> 00:02:10,960 Speaker 3: hundred million dollars. And Paul will tell you that is 42 00:02:11,000 --> 00:02:13,480 Speaker 3: a pretty good payday for banks. 43 00:02:13,760 --> 00:02:15,280 Speaker 4: And this is how the road show is going to go. 44 00:02:15,360 --> 00:02:18,120 Speaker 5: It's like, I just want to hear Elon, give me 45 00:02:18,160 --> 00:02:19,760 Speaker 5: the vision, give me the pitch. 46 00:02:19,840 --> 00:02:21,200 Speaker 4: I don't need the CFO. 47 00:02:22,160 --> 00:02:25,240 Speaker 5: Total dress ball market. I don't need to talk about evaluation. 48 00:02:25,880 --> 00:02:30,120 Speaker 5: None of that's relevant. It's buy Elon's vision. And if 49 00:02:30,120 --> 00:02:31,680 Speaker 5: I'm Eli, I'm like, what am I paying you that for? 50 00:02:31,880 --> 00:02:32,920 Speaker 5: Can you have anything for that? 51 00:02:33,160 --> 00:02:36,880 Speaker 4: So any pushback on the banks by the banks. 52 00:02:36,639 --> 00:02:38,040 Speaker 5: On this or are they just looking at the long 53 00:02:38,040 --> 00:02:39,760 Speaker 5: game and saying this is Elon Musk and there's a 54 00:02:39,800 --> 00:02:40,680 Speaker 5: lot of business here. 55 00:02:41,639 --> 00:02:44,320 Speaker 3: The latter, Yes, yes, and yes that is. I cannot 56 00:02:44,400 --> 00:02:46,639 Speaker 3: imagine a scenario where the banks have a lot of 57 00:02:46,680 --> 00:02:49,079 Speaker 3: position to push back. You already have twenty three banks 58 00:02:49,120 --> 00:02:51,919 Speaker 3: signed up for this, and again five hundred million dollars. 59 00:02:51,960 --> 00:02:54,480 Speaker 3: You're talking about the lead banks getting probably rough one 60 00:02:54,520 --> 00:02:56,440 Speaker 3: hundred million dollars a year, that's my guess, and it 61 00:02:56,480 --> 00:02:59,160 Speaker 3: trickles down from there. But as everyone who's anyone is 62 00:02:59,160 --> 00:03:00,880 Speaker 3: signed up for this because you don't want to miss 63 00:03:00,919 --> 00:03:02,680 Speaker 3: out on the biggest IPO that matters. 64 00:03:02,840 --> 00:03:05,600 Speaker 2: Okay, twenty three banks sign up for this, Why does 65 00:03:05,639 --> 00:03:08,480 Speaker 2: SpaceX need twenty three different banks to help it sell this. 66 00:03:08,440 --> 00:03:12,359 Speaker 3: Ipocover every corner of possible investors and make sure you 67 00:03:12,400 --> 00:03:14,400 Speaker 3: can get to your one point eight perhaps even the 68 00:03:14,400 --> 00:03:16,600 Speaker 3: two two point two trillion dollar valuation. Of course, our 69 00:03:16,639 --> 00:03:19,000 Speaker 3: reporting shows that the bankers have been dialing it back 70 00:03:19,240 --> 00:03:22,520 Speaker 3: on what the potential valuation could be for SpaceX. But 71 00:03:23,280 --> 00:03:26,079 Speaker 3: all of these banks will serve a different purpose. You 72 00:03:26,160 --> 00:03:29,320 Speaker 3: can see someone like a City Group perhaps tap to 73 00:03:29,360 --> 00:03:33,079 Speaker 3: go after retail investors overseas because of their strengthen those markets, 74 00:03:33,520 --> 00:03:35,960 Speaker 3: or a Bank of America looking at retail investors in 75 00:03:36,000 --> 00:03:39,000 Speaker 3: the United States Common Sachs Morgan Stanley, JP Morgan. These 76 00:03:39,000 --> 00:03:40,840 Speaker 3: are the banks that will be really strong with the 77 00:03:40,920 --> 00:03:45,240 Speaker 3: big institutional investors investors, like say a Black Croc in 78 00:03:45,280 --> 00:03:49,240 Speaker 3: the United States, or the Saudi Sovereign fun PIFF. These 79 00:03:49,240 --> 00:03:50,880 Speaker 3: are some of the names that are already out there, 80 00:03:50,920 --> 00:03:53,560 Speaker 3: But these are the names that these big banks have 81 00:03:53,640 --> 00:03:55,840 Speaker 3: to arrange and make sure that they're able to line up. 82 00:03:56,160 --> 00:03:59,400 Speaker 3: Because even if it's Elon Musk and even if you 83 00:03:59,520 --> 00:04:04,840 Speaker 3: believe this multiplanetary Grand Vision, seventy five billion dollars is 84 00:04:04,840 --> 00:04:08,200 Speaker 3: seventy five billion dollars on the back of the surprise 85 00:04:08,360 --> 00:04:11,720 Speaker 3: stealth eighty billion dollars raised by Google. There's so much 86 00:04:11,760 --> 00:04:14,400 Speaker 3: money going around, so it's kind of extraordinary what's happening 87 00:04:14,400 --> 00:04:17,080 Speaker 3: in this market. In a span of ten days, if 88 00:04:17,120 --> 00:04:20,359 Speaker 3: everything goes right, Goldman, Morganzini and the others would have 89 00:04:20,440 --> 00:04:24,159 Speaker 3: raised over one hundred billion dollars in new equity. I 90 00:04:24,200 --> 00:04:26,200 Speaker 3: can't think of a quarter where they would have raised 91 00:04:26,200 --> 00:04:28,800 Speaker 3: that much, or even the six months gotten to Anthropic 92 00:04:28,880 --> 00:04:30,520 Speaker 3: or open A having it. 93 00:04:30,680 --> 00:04:33,719 Speaker 5: So you got to get ready. When are we going 94 00:04:33,800 --> 00:04:35,359 Speaker 5: to get the road show schedule? So I'm not that 95 00:04:35,400 --> 00:04:37,600 Speaker 5: in my inbox because I'm the first person you're going 96 00:04:37,640 --> 00:04:39,400 Speaker 5: to afford it to. When are we going to get that? 97 00:04:39,680 --> 00:04:41,520 Speaker 3: You will be the first person I have forwarded to 98 00:04:41,640 --> 00:04:43,000 Speaker 3: when I get it and when I have a better 99 00:04:43,040 --> 00:04:43,520 Speaker 3: sense do we. 100 00:04:43,520 --> 00:04:45,520 Speaker 5: Have any idea when that's going to be made available? 101 00:04:46,080 --> 00:04:47,880 Speaker 5: Like are they going to Boston? Are they going to London? 102 00:04:47,920 --> 00:04:49,279 Speaker 5: And they can do a rubber check in lunch here 103 00:04:49,279 --> 00:04:50,640 Speaker 5: in New York? Do we know any of that stuff? 104 00:04:50,800 --> 00:04:52,960 Speaker 3: I mean, imminent has to be the best on seeing 105 00:04:53,040 --> 00:04:56,120 Speaker 3: considering they want to very cris next week they're playing 106 00:04:56,120 --> 00:04:57,919 Speaker 3: a very trace of the best. Or it could also 107 00:04:57,920 --> 00:04:58,920 Speaker 3: mean that I just don't know. 108 00:04:59,080 --> 00:04:59,600 Speaker 4: It could be. 109 00:04:59,680 --> 00:05:02,520 Speaker 2: I don't with the timeline here that we've been reporting 110 00:05:02,720 --> 00:05:06,560 Speaker 2: according to our understanding, is pricing next Thursday, correct, Okay, 111 00:05:06,640 --> 00:05:09,280 Speaker 2: and always, always, always to stock them begins training the 112 00:05:09,279 --> 00:05:09,840 Speaker 2: following day. 113 00:05:10,440 --> 00:05:12,799 Speaker 3: That's the goal that's so up and usually that's what happens. 114 00:05:12,839 --> 00:05:15,240 Speaker 3: And again, these things can move around a day or two. 115 00:05:15,240 --> 00:05:16,919 Speaker 3: But when you're talking about one point in a trillion, 116 00:05:16,960 --> 00:05:19,400 Speaker 3: when you're talking about colonizing Mars, there's the day here 117 00:05:19,480 --> 00:05:20,359 Speaker 3: or that really matter. 118 00:05:20,880 --> 00:05:23,000 Speaker 4: It touches just thirty seconds on the Google. What's the 119 00:05:23,040 --> 00:05:24,920 Speaker 4: buzz out there in the marketprice about the Google deal? 120 00:05:25,080 --> 00:05:26,159 Speaker 6: And nobody expected that? 121 00:05:26,480 --> 00:05:27,599 Speaker 4: What a surprise move. 122 00:05:27,640 --> 00:05:30,360 Speaker 3: We've all been talking about this seventy five billion dollar raise, 123 00:05:30,480 --> 00:05:33,680 Speaker 3: the largest public listing on record, and out of nowhere 124 00:05:33,680 --> 00:05:36,440 Speaker 3: Google comes across. And it's hard to compare the data 125 00:05:36,480 --> 00:05:38,440 Speaker 3: because of the different chanches that are involved in this 126 00:05:38,480 --> 00:05:41,520 Speaker 3: eighty billion dollar that Google is raising. But if I 127 00:05:41,560 --> 00:05:43,279 Speaker 3: had to stick my neck out, I would think that 128 00:05:43,360 --> 00:05:46,280 Speaker 3: this is the largest equity raise ever you have. Berkshire's 129 00:05:46,320 --> 00:05:49,440 Speaker 3: the anchor investor, a bingchunk that gets priced today, another 130 00:05:49,600 --> 00:05:51,360 Speaker 3: piece that gets priced in a few weeks. 131 00:05:52,520 --> 00:05:55,400 Speaker 4: Eighty billion dollars. Never seen anything like that old. 132 00:05:55,600 --> 00:05:58,520 Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this. 133 00:06:02,320 --> 00:06:06,000 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 134 00:06:06,080 --> 00:06:09,200 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 135 00:06:09,200 --> 00:06:12,520 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 136 00:06:12,560 --> 00:06:15,680 Speaker 1: you get your podcasts, or watch us live on YouTube. 137 00:06:16,360 --> 00:06:20,680 Speaker 5: Anthropic is they filed first? It seems like they beat Chat, GPT, 138 00:06:20,880 --> 00:06:23,240 Speaker 5: whatever that thing is, Open ai, all that kind of 139 00:06:23,240 --> 00:06:24,839 Speaker 5: stuff coming to the public markets. 140 00:06:25,160 --> 00:06:26,680 Speaker 4: I guess it's a little bit of a race. 141 00:06:26,520 --> 00:06:28,800 Speaker 2: To Yeah, and it definitely feels like open ai has 142 00:06:28,960 --> 00:06:31,960 Speaker 2: lost the momentum with the trial, the court case between 143 00:06:31,960 --> 00:06:34,840 Speaker 2: Elon Musk and Sam Altman, and Anthropic is all that 144 00:06:34,839 --> 00:06:37,720 Speaker 2: anyone's talking about, right Claude over Chat, GPT, YEP all 145 00:06:37,800 --> 00:06:38,120 Speaker 2: day long. 146 00:06:38,320 --> 00:06:39,520 Speaker 4: Matthew Bloxham joints us here. 147 00:06:39,520 --> 00:06:42,440 Speaker 5: He's the senior media tech analyst for Bloomberg Intelligence based 148 00:06:42,480 --> 00:06:43,679 Speaker 5: over there in London. 149 00:06:44,120 --> 00:06:45,040 Speaker 4: Matthew, what do you expect? 150 00:06:45,120 --> 00:06:49,040 Speaker 5: I mean, we're gonna get SpaceX kicking off Thursday. 151 00:06:48,560 --> 00:06:52,719 Speaker 4: Presumably of the road show. But let's talk about Anthropic here. 152 00:06:52,760 --> 00:06:56,440 Speaker 5: These two big AI IPOs that are coming down the 153 00:06:56,480 --> 00:06:59,040 Speaker 5: pike here what do you think investors are gonna be 154 00:06:59,040 --> 00:06:59,400 Speaker 5: looking for. 155 00:07:02,440 --> 00:07:05,159 Speaker 7: Well, I think with an anthropic, you know that they're 156 00:07:05,560 --> 00:07:07,920 Speaker 7: just kind of looking for as much detail as they 157 00:07:07,960 --> 00:07:12,120 Speaker 7: can get about the kind of revenue model, the momentum 158 00:07:12,120 --> 00:07:14,560 Speaker 7: behind it. Obviously, we've been hearing data points recently that 159 00:07:14,680 --> 00:07:17,200 Speaker 7: you know, we're kind of back end of last year 160 00:07:17,240 --> 00:07:19,840 Speaker 7: that maybe the annualized revenue run rate was around the 161 00:07:19,920 --> 00:07:22,520 Speaker 7: kind of ten billion dollar market could be closer to 162 00:07:22,560 --> 00:07:24,560 Speaker 7: fifty billion dollars by the end of the year, and 163 00:07:25,080 --> 00:07:29,040 Speaker 7: where they are on that pathway, and what the economics 164 00:07:29,080 --> 00:07:30,120 Speaker 7: of the business looked like. 165 00:07:31,080 --> 00:07:33,640 Speaker 8: Yes, it's similar to space. You know, you just kind 166 00:07:33,680 --> 00:07:34,760 Speaker 8: of live off. 167 00:07:34,680 --> 00:07:37,600 Speaker 7: Breadcrumbs and suddenly you get a big download of data 168 00:07:37,640 --> 00:07:39,520 Speaker 7: that kind of really helps you to understand the business 169 00:07:39,520 --> 00:07:40,000 Speaker 7: model more. 170 00:07:40,880 --> 00:07:45,600 Speaker 2: Matthew, we characterize open ai and Anthropic as being in 171 00:07:45,640 --> 00:07:47,960 Speaker 2: a race, but is it actually like that if you 172 00:07:48,040 --> 00:07:51,120 Speaker 2: have Anthropic going public before open Ai, does that mean 173 00:07:51,160 --> 00:07:53,320 Speaker 2: there's less demand for open AI's IPO. 174 00:07:54,920 --> 00:07:57,560 Speaker 7: Yeah, you know, I think it's definitely right to characterize 175 00:07:57,560 --> 00:08:00,000 Speaker 7: this as the race, regardless of what the companies might say. 176 00:08:00,040 --> 00:08:04,480 Speaker 7: You know that these are huge numbers that companies are raising. 177 00:08:04,480 --> 00:08:06,320 Speaker 7: Me we don't know yet how much either of these 178 00:08:06,320 --> 00:08:08,520 Speaker 7: companies will look to raise, but you know, if SpaceX 179 00:08:08,600 --> 00:08:11,840 Speaker 7: is looking to raise seventy five billion and Google's out 180 00:08:11,840 --> 00:08:14,000 Speaker 7: there looking to raise eighty billion, it's going to be 181 00:08:14,040 --> 00:08:16,280 Speaker 7: in the tens of billions of dollars. And there's only 182 00:08:16,320 --> 00:08:20,240 Speaker 7: so much capital out there, and so, you know, I 183 00:08:20,240 --> 00:08:24,920 Speaker 7: think it's definitely better to go earlier than later, because 184 00:08:24,960 --> 00:08:28,560 Speaker 7: if you go later, you're at risk that either the 185 00:08:28,640 --> 00:08:31,560 Speaker 7: capital flow is dried up, or that those IPOs that 186 00:08:31,600 --> 00:08:34,199 Speaker 7: went before you didn't go so well, or the market's 187 00:08:34,200 --> 00:08:36,000 Speaker 7: taken a bit of a turn, and so you're kind 188 00:08:36,040 --> 00:08:38,599 Speaker 7: of left, you know, maybe either having to accept a 189 00:08:38,640 --> 00:08:42,120 Speaker 7: lower evaluation or a small amount of money. So I 190 00:08:42,160 --> 00:08:46,199 Speaker 7: think going sooner it is always better than going later 191 00:08:46,360 --> 00:08:47,600 Speaker 7: when you're raising money. 192 00:08:48,320 --> 00:08:49,920 Speaker 4: I'm an old ev to ebit that guy. 193 00:08:49,960 --> 00:08:51,920 Speaker 5: Maybe I'll go a little price to free cash flow. 194 00:08:52,040 --> 00:08:54,280 Speaker 4: But I don't know how you're going to value. 195 00:08:54,000 --> 00:08:57,280 Speaker 5: This these AI stories based out the market is going 196 00:08:57,360 --> 00:09:00,640 Speaker 5: to be valuation sensed at all? 197 00:09:00,800 --> 00:09:02,560 Speaker 4: Or is it just you take what you get. 198 00:09:04,920 --> 00:09:07,040 Speaker 8: I think it's a little bit of both. But I mean, yeah, 199 00:09:07,080 --> 00:09:08,920 Speaker 8: you know, I mean, we what have we got to 200 00:09:08,920 --> 00:09:09,680 Speaker 8: play with? Nothing? 201 00:09:09,720 --> 00:09:14,640 Speaker 7: Really more than ev to sales, and they're pretty eyewatering multiple. Yeah, 202 00:09:14,640 --> 00:09:19,200 Speaker 7: even on that kind of forward multiple trillion dollars, anthropics 203 00:09:19,280 --> 00:09:22,640 Speaker 7: going to be on about twenty time sales. So yeah, 204 00:09:22,679 --> 00:09:27,680 Speaker 7: you are having to extrapple extrapolate many years out to 205 00:09:27,840 --> 00:09:31,480 Speaker 7: kind of reconcile that with any bit dar musciple or 206 00:09:31,480 --> 00:09:35,520 Speaker 7: and earnings multiple. And there's clearly a huge number of 207 00:09:35,559 --> 00:09:37,520 Speaker 7: assumptions you're having to put in to get to those 208 00:09:37,600 --> 00:09:42,240 Speaker 7: kind of forward estimations. So yeah, it's it's a kind 209 00:09:42,280 --> 00:09:44,720 Speaker 7: of a moonshot trade, real, isn't it That you know, 210 00:09:44,760 --> 00:09:47,400 Speaker 7: you're kind of buying into the fact that, in some way, 211 00:09:47,440 --> 00:09:49,800 Speaker 7: shape or form, these companies that are coming to market 212 00:09:49,960 --> 00:09:53,079 Speaker 7: are going to be the foundational businesses of the next 213 00:09:53,120 --> 00:09:58,800 Speaker 7: thirty forty to fifty years of technology. And yeah, you 214 00:09:58,840 --> 00:10:01,640 Speaker 7: know it's going to work out eventually. 215 00:10:01,679 --> 00:10:05,160 Speaker 2: For you remember peg ratios and eyeballs and all the 216 00:10:05,200 --> 00:10:07,240 Speaker 2: different metrics that used to come up with during the 217 00:10:07,280 --> 00:10:10,520 Speaker 2: dot com bubble days. It feels like a total addressable 218 00:10:10,520 --> 00:10:14,040 Speaker 2: market is a new one for this era. So, Matthew, 219 00:10:14,040 --> 00:10:18,240 Speaker 2: before we say goodbye to you, as people investors get 220 00:10:18,280 --> 00:10:22,280 Speaker 2: ready to partake in these IPOs, they're likely going to 221 00:10:22,360 --> 00:10:25,240 Speaker 2: lighten up in some of their exposure to existing TACH 222 00:10:25,280 --> 00:10:28,200 Speaker 2: holdings because otherwise they have too much concentration risk. What 223 00:10:28,320 --> 00:10:29,680 Speaker 2: kinds of companies are most at risk? 224 00:10:29,720 --> 00:10:34,120 Speaker 8: Then? Yeah, I mean it's a good question, isn't that. 225 00:10:34,280 --> 00:10:39,000 Speaker 7: I mean, you know, it could be everything from like 226 00:10:39,080 --> 00:10:44,400 Speaker 7: you know, and video TSMC. You know, I think you're 227 00:10:44,440 --> 00:10:46,480 Speaker 7: kind of clearly going to be needing to think about 228 00:10:46,520 --> 00:10:50,840 Speaker 7: companies where you have had great performance and that perhaps 229 00:10:50,920 --> 00:10:53,079 Speaker 7: you're kind of prepared to do a bit of profit taking, 230 00:10:53,760 --> 00:10:55,720 Speaker 7: maybe taking the view that actually, you know, even if 231 00:10:55,760 --> 00:10:59,400 Speaker 7: you sell a bit of Nvidia intrinsically, you're kind of 232 00:10:59,400 --> 00:11:02,280 Speaker 7: going to get some benefit and some indirect exposure by 233 00:11:02,360 --> 00:11:04,240 Speaker 7: kind of playing it through one of these other names. 234 00:11:04,240 --> 00:11:06,319 Speaker 8: So yeah, it's a tricky one. 235 00:11:06,160 --> 00:11:09,800 Speaker 7: But I think probably a lot of portfolios are already 236 00:11:09,800 --> 00:11:13,160 Speaker 7: inherently kind of fairly concentrated. So you know, given the 237 00:11:13,240 --> 00:11:15,440 Speaker 7: numbers we're talking about, you're going to be helping to 238 00:11:15,440 --> 00:11:17,520 Speaker 7: look at these like meg A cappams to kind of 239 00:11:17,520 --> 00:11:18,319 Speaker 7: trip exposure. 240 00:11:20,080 --> 00:11:23,040 Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this. 241 00:11:25,080 --> 00:11:28,760 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live 242 00:11:28,840 --> 00:11:31,920 Speaker 1: weekdays at ten am Eastern on Apple, coarcklay and Android 243 00:11:31,960 --> 00:11:35,240 Speaker 1: Auto with the Bloomberg Business app, Listen on demand wherever 244 00:11:35,320 --> 00:11:38,840 Speaker 1: you get your podcasts, or watch us live on YouTube. 245 00:11:39,520 --> 00:11:42,480 Speaker 5: Well, we've been talking about Victoria's Secret all morning. Some 246 00:11:42,559 --> 00:11:46,000 Speaker 5: really really strong numbers beat the street pretty handily, and 247 00:11:46,040 --> 00:11:49,360 Speaker 5: we're seeing a stock of forty five percent here today. 248 00:11:49,400 --> 00:11:50,600 Speaker 4: So that's a good news there. 249 00:11:50,720 --> 00:11:54,160 Speaker 5: Mary Ross Gilbert, she covers the retailers for Bloomberg Intelligence. 250 00:11:54,840 --> 00:11:56,959 Speaker 4: Mary will talk to us about Victoria's Secret. What seems 251 00:11:57,000 --> 00:11:58,320 Speaker 4: like a huge turnaround. 252 00:11:57,840 --> 00:12:02,520 Speaker 9: There, Paul, you're at absolutely right. Hillary super is really 253 00:12:02,640 --> 00:12:07,319 Speaker 9: executing supremely her team, you know Hillary and her team. 254 00:12:07,760 --> 00:12:10,839 Speaker 9: So when you look at the results today, the comparable 255 00:12:10,960 --> 00:12:14,880 Speaker 9: sales were up thirteen percent. Now, remember they are cycling 256 00:12:15,040 --> 00:12:18,240 Speaker 9: declines of comp sales in the first quarter for like 257 00:12:18,280 --> 00:12:22,160 Speaker 9: the past three to four years, so that is helping. Still, 258 00:12:23,120 --> 00:12:25,760 Speaker 9: this is a big increase, seeing a double digit increase 259 00:12:25,800 --> 00:12:28,800 Speaker 9: in comp sales. But it's not just that. It's also 260 00:12:28,880 --> 00:12:33,280 Speaker 9: they're selling more at full price. They're attracting a younger cohort. 261 00:12:33,760 --> 00:12:36,360 Speaker 9: So the eighteen they saw a lot of strength in 262 00:12:36,480 --> 00:12:40,000 Speaker 9: eighteen to twenty four year olds, but they also saw 263 00:12:40,120 --> 00:12:45,680 Speaker 9: strength in households earning under fifty thousand and households earning 264 00:12:45,800 --> 00:12:50,040 Speaker 9: over two hundred thousand. So that's really saying something about 265 00:12:50,040 --> 00:12:53,280 Speaker 9: what's happening here with the brand. So they have great 266 00:12:53,480 --> 00:12:56,920 Speaker 9: franchises that they've created, So they have like the Dream 267 00:12:56,960 --> 00:12:58,920 Speaker 9: Angels and you know a lot of these are the 268 00:12:58,960 --> 00:13:02,880 Speaker 9: innovative lines that they've come out with in bras. You know, 269 00:13:02,920 --> 00:13:07,120 Speaker 9: their lace collection is hugely popular, you know, within Pink. 270 00:13:07,200 --> 00:13:10,840 Speaker 9: The turnaround at Pink has been phenomenal and it's really 271 00:13:10,920 --> 00:13:13,600 Speaker 9: resonating there. I mean, they have these tots that are 272 00:13:13,640 --> 00:13:20,719 Speaker 9: selling out, so SATs well we're talking about tots specifically 273 00:13:20,960 --> 00:13:25,560 Speaker 9: within the Pink franchise, but yes, Victoria's Secret also has tots, 274 00:13:26,040 --> 00:13:29,400 Speaker 9: but Pink does as well. And there were a number 275 00:13:29,400 --> 00:13:34,320 Speaker 9: of pieces for Spring in summer that sold out, including 276 00:13:34,360 --> 00:13:37,720 Speaker 9: a really cool Duffel bag. So they're really hitting the mark. 277 00:13:37,920 --> 00:13:41,000 Speaker 9: You know, they have this wonderful fragrance and beauty franchise 278 00:13:41,040 --> 00:13:44,200 Speaker 9: that's like a two billion dollar business and they saw 279 00:13:44,360 --> 00:13:48,440 Speaker 9: strength and double digit gains across you know, all categories, 280 00:13:48,760 --> 00:13:52,160 Speaker 9: and the momentum should continue in the second half. So 281 00:13:52,240 --> 00:13:55,320 Speaker 9: it appears that the guidance, which is really going to 282 00:13:55,320 --> 00:13:59,679 Speaker 9: be sort of drawn back to more single digit gains. 283 00:14:00,120 --> 00:14:02,360 Speaker 9: Really looks like they could be beatable. There's going to 284 00:14:02,400 --> 00:14:05,840 Speaker 9: be some product launches in the second half. They're going 285 00:14:05,920 --> 00:14:08,839 Speaker 9: to really heat up the campaigns and all of that 286 00:14:09,080 --> 00:14:13,360 Speaker 9: is really I mean, did you know that Victoria's Secret 287 00:14:13,400 --> 00:14:16,319 Speaker 9: has seventy seven million Instagram followers? 288 00:14:16,720 --> 00:14:17,720 Speaker 4: Okay, that is news. 289 00:14:17,720 --> 00:14:20,120 Speaker 2: But I'm looking at Pousweny and he's going to tell 290 00:14:20,160 --> 00:14:23,080 Speaker 2: me that he's not surprised given that Victoria's Secret used 291 00:14:23,080 --> 00:14:25,880 Speaker 2: to be a big, big brand, you know, with the 292 00:14:26,040 --> 00:14:29,080 Speaker 2: fashion shows and everything. Is that something that the CEO 293 00:14:29,160 --> 00:14:31,640 Speaker 2: Hillary Sooper is going to bring back? I mean, the 294 00:14:31,720 --> 00:14:35,680 Speaker 2: company now has the momentum or has a company effectively 295 00:14:35,720 --> 00:14:37,400 Speaker 2: moved away from that former profile. 296 00:14:38,800 --> 00:14:41,840 Speaker 9: Well, let's make it clear. And the reason why their 297 00:14:41,920 --> 00:14:47,680 Speaker 9: ticker symbol vsx Y very sexy, right, I mean it's important. 298 00:14:47,760 --> 00:14:51,240 Speaker 9: That's a big part of the Victoria's Secret brand franchise 299 00:14:51,400 --> 00:14:55,720 Speaker 9: is sexiness. And so Scarlett speaking to the fashion show, 300 00:14:55,760 --> 00:14:59,520 Speaker 9: the fashion show is already back. They had a great, 301 00:14:59,640 --> 00:15:04,320 Speaker 9: my bad show last year. That's okay, and this year 302 00:15:04,360 --> 00:15:07,160 Speaker 9: I'm sure it's going to be great. It's much more inclusive. 303 00:15:07,200 --> 00:15:10,360 Speaker 9: It's from a woman's point of view on you Know 304 00:15:10,480 --> 00:15:16,840 Speaker 9: What is Sexy and it's really a fantastic show. But 305 00:15:16,880 --> 00:15:19,440 Speaker 9: they also have a number of other campaigns that they do. 306 00:15:19,680 --> 00:15:22,520 Speaker 9: They do a lot in New York City, just on 307 00:15:22,560 --> 00:15:25,440 Speaker 9: the street and they post it on social media. All 308 00:15:25,480 --> 00:15:28,040 Speaker 9: of those things are resonating and you see a lot 309 00:15:28,040 --> 00:15:31,280 Speaker 9: of strong sales within the stores. The culture there, I 310 00:15:31,280 --> 00:15:35,320 Speaker 9: think has always been very positive because employees who work 311 00:15:35,400 --> 00:15:38,520 Speaker 9: there love their jobs, and you would experience it if 312 00:15:38,560 --> 00:15:42,200 Speaker 9: you go in there. They'll they're so engaging, they help 313 00:15:42,240 --> 00:15:45,080 Speaker 9: you out, they know how to size you, and they 314 00:15:45,120 --> 00:15:47,560 Speaker 9: show you so much of their product, and so I 315 00:15:47,560 --> 00:15:50,360 Speaker 9: think they get a lot of conversion with that kind 316 00:15:50,400 --> 00:15:51,800 Speaker 9: of engagement in the stores. 317 00:15:53,480 --> 00:15:56,360 Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this. 318 00:16:00,560 --> 00:16:04,240 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 319 00:16:04,320 --> 00:16:07,440 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 320 00:16:07,440 --> 00:16:10,760 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 321 00:16:10,800 --> 00:16:13,920 Speaker 1: you get your podcasts, or watch us live on YouTube. 322 00:16:14,680 --> 00:16:17,160 Speaker 4: And I saw the blowout Dell earnings last week. 323 00:16:17,680 --> 00:16:20,920 Speaker 5: Did I run out and buy HPE stock Hewlett Packard 324 00:16:21,000 --> 00:16:22,040 Speaker 5: like a direct competitor? 325 00:16:22,640 --> 00:16:22,720 Speaker 8: Know? 326 00:16:23,440 --> 00:16:26,720 Speaker 5: And what an HPE do yesterday blowout numbers. Stocks up 327 00:16:26,760 --> 00:16:31,640 Speaker 5: twenty five percent today fifty two week high, all time high. 328 00:16:31,680 --> 00:16:32,360 Speaker 4: So there you go. 329 00:16:32,440 --> 00:16:35,200 Speaker 5: The AI story is a live and well and that's 330 00:16:35,200 --> 00:16:36,080 Speaker 5: part of the tech stack. 331 00:16:36,120 --> 00:16:38,120 Speaker 4: Who Jinho joins is he knows what's going on there. 332 00:16:38,160 --> 00:16:41,240 Speaker 5: He's a senior technology channels, a Bloomberg intelligence down there 333 00:16:41,240 --> 00:16:44,160 Speaker 5: in our Princeton campus which talk to us about HPE. 334 00:16:44,200 --> 00:16:46,040 Speaker 5: What did you learn from their results last night? 335 00:16:46,840 --> 00:16:52,240 Speaker 6: Yeah, hey, hey, Paul, blowout. As an understatement, there's a 336 00:16:52,240 --> 00:16:55,360 Speaker 6: couple of things going on. I think we're starting to 337 00:16:55,400 --> 00:17:03,120 Speaker 6: shift from a cyclical upswing to maybe a secular multi 338 00:17:03,200 --> 00:17:09,680 Speaker 6: year adoption phase for traditional servers, as corporate enterprises UH 339 00:17:09,800 --> 00:17:13,320 Speaker 6: start to adopt AI into the workplace, which may be 340 00:17:13,480 --> 00:17:17,359 Speaker 6: driving better margins as well as a stronger growth for 341 00:17:17,400 --> 00:17:18,119 Speaker 6: a longer period. 342 00:17:19,000 --> 00:17:21,439 Speaker 2: Let me ask a dumb question, moujen, what is the 343 00:17:21,440 --> 00:17:24,960 Speaker 2: difference between Heleett Packard Enterprise and hele Att Packard UH 344 00:17:25,000 --> 00:17:29,440 Speaker 2: trading their the ticker HPQ. I both are seeing benefits 345 00:17:29,520 --> 00:17:31,679 Speaker 2: tied to AI. But I just want someone to kind 346 00:17:31,680 --> 00:17:32,280 Speaker 2: of break it down. 347 00:17:33,080 --> 00:17:37,240 Speaker 6: Yeah, yeah, from a straightforward basis, Scarlett, if you think 348 00:17:37,240 --> 00:17:42,959 Speaker 6: about Heltt Packard UH inc UH, they only sell laptops 349 00:17:42,960 --> 00:17:47,200 Speaker 6: and PCs as well as a sizable printer business. Uh. 350 00:17:47,240 --> 00:17:49,720 Speaker 6: And that was a function of the split several years 351 00:17:49,720 --> 00:17:52,400 Speaker 6: back HPE Helip Hockard Enterprise. 352 00:17:52,920 --> 00:17:53,080 Speaker 5: Uh. 353 00:17:53,119 --> 00:17:57,240 Speaker 6: They sell servers for corporates as well, and data centers 354 00:17:57,480 --> 00:17:59,960 Speaker 6: that have AI data centers and and and and they said, 355 00:18:00,080 --> 00:18:03,120 Speaker 6: is one networking business for for corporate So think about 356 00:18:03,160 --> 00:18:04,760 Speaker 6: corporate it versus personal it. 357 00:18:06,000 --> 00:18:09,760 Speaker 5: Which how does HPE and Dell stack up in this 358 00:18:10,040 --> 00:18:14,119 Speaker 5: new world where again they're trying to take advantage of 359 00:18:14,119 --> 00:18:14,760 Speaker 5: this AI spin. 360 00:18:15,840 --> 00:18:18,160 Speaker 6: Yeah, so that there's a you know, there's a couple 361 00:18:18,200 --> 00:18:23,200 Speaker 6: of things where they're similar and where they differentiate. Look, 362 00:18:23,520 --> 00:18:27,240 Speaker 6: Dell is a market leader in AI servers. They're on 363 00:18:27,320 --> 00:18:29,600 Speaker 6: pace for about sixty billion dollars in AI servers and 364 00:18:29,600 --> 00:18:31,520 Speaker 6: stuff that they sell to the neo clouds such as 365 00:18:31,520 --> 00:18:36,160 Speaker 6: an IBS and core Weave and Vulture for instance. Right, 366 00:18:37,080 --> 00:18:42,000 Speaker 6: Dell HP's presence in that business isn't as sizable. They're 367 00:18:42,040 --> 00:18:44,480 Speaker 6: probably on pace for about six billions a one tenth 368 00:18:44,560 --> 00:18:48,720 Speaker 6: the size of Dell for this year. Where they where 369 00:18:48,760 --> 00:18:51,919 Speaker 6: they're both seeing the momentum is enterprise it. 370 00:18:51,920 --> 00:18:53,480 Speaker 4: Look, I think where. 371 00:18:53,400 --> 00:18:55,840 Speaker 6: The street, including myself have gotten it wrong was that 372 00:18:56,080 --> 00:18:59,880 Speaker 6: this memory inflation was going to impact demand right, there 373 00:18:59,920 --> 00:19:02,280 Speaker 6: was a big pull forward in demand, so we thought 374 00:19:02,520 --> 00:19:04,600 Speaker 6: for this quarter. We drove the upside in the quarter 375 00:19:04,640 --> 00:19:06,840 Speaker 6: as well as the next quarter, but we thought that 376 00:19:06,960 --> 00:19:09,960 Speaker 6: units were going to start dwindling. And what both Dell 377 00:19:10,160 --> 00:19:13,200 Speaker 6: as well as HPE confirmed was that this is going 378 00:19:13,240 --> 00:19:16,120 Speaker 6: to be durable and sustaining going over to the next 379 00:19:16,119 --> 00:19:18,800 Speaker 6: several quarters, which is driving not only sales growth but 380 00:19:18,840 --> 00:19:20,120 Speaker 6: also earnings growth. 381 00:19:20,920 --> 00:19:22,120 Speaker 4: When it comes to HPE. 382 00:19:22,760 --> 00:19:26,119 Speaker 2: They also announced that a partner at Elliott Investment Management, 383 00:19:26,200 --> 00:19:29,479 Speaker 2: Chris hu, would join the board of directors. I know, 384 00:19:29,640 --> 00:19:31,720 Speaker 2: last July is like a million years ago, especially when 385 00:19:31,720 --> 00:19:34,040 Speaker 2: you look at the stock price for HPE, but this 386 00:19:34,240 --> 00:19:38,480 Speaker 2: was a company that was engaging with activist investors. Is 387 00:19:38,520 --> 00:19:41,080 Speaker 2: it safe to say that Elliott's kind of happy with 388 00:19:41,119 --> 00:19:42,080 Speaker 2: what we've seen here? 389 00:19:43,520 --> 00:19:46,560 Speaker 6: I don't know, scarling twenty five percent stop going up 390 00:19:46,680 --> 00:19:50,440 Speaker 6: after turning the board, Elliots should be pretty happy and look, 391 00:19:50,480 --> 00:19:54,359 Speaker 6: to be fair, Elliott was highly involved with the Juniper 392 00:19:54,960 --> 00:19:57,760 Speaker 6: prior to the to the acquisition as well that I 393 00:19:57,800 --> 00:20:00,320 Speaker 6: believe they were a board member, so I'm not surprised. 394 00:20:01,480 --> 00:20:02,680 Speaker 4: Called with HPE. 395 00:20:03,160 --> 00:20:07,520 Speaker 5: What's the visibility on forward bookings for these companies like 396 00:20:07,520 --> 00:20:09,680 Speaker 5: the HP and Dell, do they How does that look 397 00:20:09,800 --> 00:20:10,120 Speaker 5: right now? 398 00:20:10,840 --> 00:20:14,359 Speaker 6: Yeah? So from a from a from a del Ai 399 00:20:14,480 --> 00:20:18,480 Speaker 6: service standpoint, it's it's fairly strong. Right. The backlog on 400 00:20:18,520 --> 00:20:21,240 Speaker 6: the AI service, I think it's closer to about twenty 401 00:20:21,240 --> 00:20:24,119 Speaker 6: seven to thirty billion dollars going forward, So they have 402 00:20:24,160 --> 00:20:27,680 Speaker 6: a fair amount of visibility. You know, they don't give 403 00:20:27,840 --> 00:20:31,560 Speaker 6: water bookings for the traditional server business. But one thing 404 00:20:31,600 --> 00:20:34,440 Speaker 6: that I can say about HPE is that these guys 405 00:20:34,480 --> 00:20:37,879 Speaker 6: gave at fiscal twenty twenty seven guidance. We're still in 406 00:20:37,920 --> 00:20:41,120 Speaker 6: the middle of their fiscal twenty twenty six, so six 407 00:20:41,200 --> 00:20:45,320 Speaker 6: quarters of forward guidance. That takes a lot of number 408 00:20:45,359 --> 00:20:50,000 Speaker 6: one guts, but also a strong confidence in their bookings 409 00:20:50,000 --> 00:20:52,440 Speaker 6: and their backlog to give that kind of guidance, and 410 00:20:52,600 --> 00:20:55,640 Speaker 6: on top of that with strong learnings growth. Their guidance 411 00:20:55,680 --> 00:20:58,919 Speaker 6: implies about four dollars plus in earnings when consensus was 412 00:20:59,200 --> 00:21:03,080 Speaker 6: at the high two news, so you know, to give 413 00:21:03,119 --> 00:21:05,760 Speaker 6: that the sales growth as well as earnings guidance, I 414 00:21:05,760 --> 00:21:07,359 Speaker 6: mean that's a lot of visibility. 415 00:21:07,920 --> 00:21:10,199 Speaker 2: Yeah, that is, and it's pretty incredible. I wonder to 416 00:21:10,240 --> 00:21:12,440 Speaker 2: what extent Paul, We're going to see other companies start 417 00:21:12,440 --> 00:21:15,639 Speaker 2: to do that because so far it isn't necessarily rewarded 418 00:21:16,400 --> 00:21:18,480 Speaker 2: companies that is for for looking that far out. 419 00:21:18,640 --> 00:21:18,840 Speaker 8: Yep. 420 00:21:19,600 --> 00:21:22,679 Speaker 5: What's the next thing we're looking for, which just in 421 00:21:22,760 --> 00:21:25,359 Speaker 5: terms of your world and to see kind of where 422 00:21:25,400 --> 00:21:26,960 Speaker 5: the demand is coming from. 423 00:21:27,560 --> 00:21:30,320 Speaker 6: Yeah, from from my world. Look, earnings is died down. 424 00:21:30,440 --> 00:21:33,199 Speaker 6: A couple of things that we're looking for. We have 425 00:21:33,200 --> 00:21:36,440 Speaker 6: the computext conference that's going on right now, so we've 426 00:21:36,440 --> 00:21:39,000 Speaker 6: seen some of the chip maker names benefit as well. 427 00:21:39,040 --> 00:21:41,680 Speaker 6: But there's going to be some AI server news as well, 428 00:21:41,680 --> 00:21:45,399 Speaker 6: about optics news. And then on top of that we 429 00:21:45,480 --> 00:21:47,399 Speaker 6: have some conferences, so we'll probably get a follow up 430 00:21:47,400 --> 00:21:50,640 Speaker 6: from HPE from their Discovery conference coming soon. 431 00:21:51,560 --> 00:21:56,240 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 432 00:21:56,440 --> 00:21:59,840 Speaker 1: and anywhere else you get your podcasts. Listen live each 433 00:22:00,600 --> 00:22:03,879 Speaker 1: ten am to noon Eastern on Bloomberg dot com, the 434 00:22:03,960 --> 00:22:07,840 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 435 00:22:07,880 --> 00:22:11,159 Speaker 1: can also watch us live every weekday on YouTube and 436 00:22:11,359 --> 00:22:13,320 Speaker 1: always on the Bloomberg terminal