00:00Elon Musk's SpaceX is on track for an historic initial public offering in the coming weeks,
00:04but investors may already be cooling on that $2 trillion valuation.
00:08That's according to Bloomberg's latest reporting ahead of that highly anticipated IPO.
00:12Benedict Campbell is Bloomberg's managing editor for Space and Aviation, and he joins us now.
00:17Hey, thank you. Nice to see you again.
00:19Although you didn't get to come in this time, we appreciate you zooming in.
00:23Look, Bloomberg, as David mentioned, had this exclusive reporting that the SpaceX is now
00:28targeting a slightly lower $1.8 trillion, and I can't believe that's lower than anything, valuation.
00:34And we need to say Elon Musk denied the drop in valuation on X, of course, calling it false.
00:38But why the change here?
00:42Well, we are sort of in the phase where they're trying to figure out where this will go.
00:45And to be honest, $1.8 trillion versus $2 trillion, or north of $2 trillion, that's almost a rounding error,
00:51you could say.
00:52So these numbers are pretty bonkers if you look at them.
00:57They came out with the listing a week ago, and that's really where they pull the curtain back on sort
01:01of a lot of the numbers.
01:02And they are really out there.
01:04So I think what we are seeing now is the managing banks going to investors, getting a feel from the
01:11market.
01:12What is the demand out there?
01:13And what they'll be seeing is that they're low-balling it.
01:18You know, you're coming in, you're managing expectations, and maybe you're coming in with a slightly lower expectation,
01:24and then you blow that out of the water.
01:26So that might well be what's going on right now.
01:28You don't want to over-promise and then under-deliver.
01:30Probably you want to go the other way.
01:32So that might well be where we are right now.
01:35Who knows where it'll settle?
01:36We'll find out in the next couple of days.
01:38So the sequence of events in the next couple of days is that we will get sort of the range.
01:43That's likely on the 4th of June.
01:46And then the actual price is fixed on the 10th, and then the actual trading starts on the 11th.
01:51So you're going to see a lot of jockeying in the next couple of days on this, where it'll actually
01:56fall.
01:57But as you said, Musk himself came out with that single word, denial, if you want to call it that,
02:03call it false.
02:04But, you know, there's still lots of time left.
02:07It might not seem that much, but a lot can happen in the next week.
02:10Benny, let me ask you about the $75 billion figure.
02:13That is how much this company intends to raise.
02:15And we've talked a lot in recent days just about how this company has become something of a conglomerate.
02:19Yes, it shoots rockets into the air and has aspirations of going to the moon and Mars beyond that.
02:24But it's also involved in satellites and AI and all manner of things that Elon Musk is interested in.
02:30Starlink, yeah.
02:30What do we know of what becomes of that $75 billion, why the company is doing this and needs to
02:34do it right now?
02:37Well, the company has one business that is extremely cash thirsty, and that is their AI operations, XAI.
02:43But also rockets are obviously something that is expensive.
02:46So the company needs the cash.
02:49It feels like now is a good moment.
02:51They've stabilized the operation in terms of the space operation.
02:55Starlink is doing extremely well.
02:57They keep signing up customers, particularly in the aviation space.
03:01So it feels like now is the kind of moment.
03:04And if you look at the flip side, they almost have a monopoly.
03:07If you look at what's going on with other rocket launchers, we only a couple of saw the explosion on
03:13the New Glenn.
03:14That's sort of the rival product.
03:16So that really sort of cemented in a slightly tragic way, even though nobody was hurt or killed even.
03:22But it cemented Starlink's and SpaceX's dominance in this sphere.
03:28They are really the only game in town.
03:30And I think as long as they have that momentum, they want to go ahead and use it.
03:35But as you said, I think the conglomerate factor is important.
03:39A lot of people, maybe even a year ago or six months ago, would have thought they're buying into a
03:43fairly clean asset.
03:44It's a rocket launcher with a satellite asset attached to it.
03:48And now with the XAI merger, as it were, it's become a lot more messy.
03:54And some people might be wondering, what is it that I'm actually buying into here?
03:57What is the story?
03:58What is the investment story behind this?
04:00If you look at, again, at the listing and some of the details there, the CapEx is, again, a huge
04:06number north of 20 billion.
04:08And more than half of that is going to flow into the artificial intelligence operation.
04:14So, you know, it's interesting that what was once a fairly clean and a fairly stable business has now become
04:22a lot messier.
04:23And that might also be part of the reason why people might be cooling on it a little bit and
04:26you see this slightly lower price.
04:28I also want to ask you, you know, it's not just about space, of course.
04:31It's about defense, too.
04:32And Bloomberg has some reporting that hit on Friday late in the day that SpaceX has won a $4.16
04:38billion award to develop a golden dome.
04:41This is something the president has been hot on for a while to help protect the U.S. from attacks
04:45through a layered defense system.
04:47This is going to be, we think, working with NORAD, the system that already exists, to kind of have early
04:52detection from space.
04:53Talk about these ties, not just with NASA, but with the Pentagon as well and how they impact these companies.
05:00Well, the Pentagon is obviously a huge operation in terms of, you know, dealing out contracts to companies, Palantir, for
05:09instance, but also Boeing.
05:11And, you know, SpaceX obviously wants to be part of this.
05:14And Golden Dome, as you mentioned, is sort of, you know, it's the golden version of the Iron Dome, which
05:18exists in Israel.
05:19And but unlike that one, this is sort of a glint in President Trump's eye at this point.
05:25So it's something that they want to get out there and want to establish.
05:28But it's hugely complicated.
05:30Our team has done some pretty good reporting on this, just the complexity of, you know, it's one thing securing
05:35a country like Israel.
05:37It's another thing securing a huge landmass that is the U.S.
05:41So whoever can contribute to that will seek to have a part of that pie.
05:46And SpaceX obviously wants to be part of that.
05:49So you're going to see, again, in the next couple of years, everybody trying to pile into that.
05:54We know that the Pentagon budget is hugely inflated and will probably keep going up.
05:58So there is money to be made here.
06:00And, you know, we know that the relationship between President Trump and Elon Musk has been, shall we say, complicated
06:07in the last year.
06:08But they they've come around.
06:09It's been an adventure.
06:11It's been a sign that it's been an adventure.
06:13Yeah.
06:13And they've gone from like deep bro to, you know, hating each other.
06:17And now they sort of swung back a bit.
06:19So the pendulum keeps swinging back and forth.
06:21Right now they seem to be in good enough shape for an award of a contract here.
06:25So they definitely want to be part of this because it is a huge undertaking.
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