00:00I'd imagine that the power is with SpaceX here, because everyone wants to be part of this IPO that they
00:04could probably throw their weight around.
00:05Look, everyone in the finance operation at SpaceX is very much like Matt Miller.
00:09They're going to the banks and saying, if you're going to help us raise $75 billion, do not expect your
00:13usual fee.
00:13But the interesting part here is, on a typical IPO, and when we say typical IPO, think less than a
00:18billion dollars,
00:19which is what you'd raise in a normal, regular IPO, banks charge between 4% to 7%.
00:22And that fee does go down pretty sharply for the mega IPOs.
00:26But even in those cases, and if you think about some of the biggest ones in the last decade, the
00:32Facebook, Uber, Alibaba's of the world, it would still be a little over 1%.
00:36So if SpaceX comes in at under 75 basis points or under 0.75%, that will be one of the
00:43lowest IPO fees on record.
00:45And it's also an interesting point, because the last time we even hit that mark, or at least we can
00:49think of a big occasion, was the General Motors IPO back in 2010.
00:54And that was a whole different scenario, because at that time, Wall Street was negotiating with the U.S. government,
01:00which was the majority owner of the automaker back then.
01:03This will still be the most money anyone's ever raised in terms of fees from an IPO, right?
01:08Even if it's only a fraction of a percent.
01:11And that's an important point here, that even if it comes in at 0.6% or 0.7%, you're
01:15talking about a fee payday that comes in at roughly $500 million.
01:18Yes, split among 23 banks, where you expect the lead left, the Goldman Sachs and the Morgan Stanley's to have
01:24the biggest chunk of that fee pool.
01:26This is an extraordinary fee event for the bank.
01:29But the one note of caution is, as we think about the rest of the year and as investors, analysts
01:34try and factor in what will this mean for bank earnings and bank results,
01:38and you think about OpenAI and Anthropic, you may want to consider what you may have previously thought was going
01:44to be a billion, billion and a half dollar payday.
01:47It's not going to turn out that way.
01:48And you should expect some sort of a discount when OpenAI and Anthropic hit the market as well.
01:53So that's just something that investors have to factor in, because when we heard the news that Goldman and Morgan
01:58Stanley were leading the SpaceX IPO,
02:00you should take a look at the stock and the reaction there at that time.
02:03And those stocks both were up, I think, 5% or 6% on the day, because there was a
02:06lot of enthusiasm behind that.
02:08So this maybe tempers that enthusiasm ever so slightly, but there is no taking away from the fact that this
02:14is an extraordinary event for the banks,
02:16and this will be an extraordinary year for them if these IPOs were smoothly.
02:19Free.
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