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00:00This will be an historic week for the market. SpaceX, ticker SPCX, is going to make its debut on the
00:05NASDAQ on Friday.
00:07That's right. It is happening. It's happening this week. It's going to shatter records and be the largest ever initial
00:12IPO, initial public offering.
00:14So this is an opportunity for the company to make some money, investors to make some money, and for me
00:18to make some groan-worthy puns as we continue onward here.
00:21The estimates for how big SpaceX could be are quite literally astronomical.
00:26But there's a lot that could happen between now and then. Joining us now ahead of the launch, Ed Ludlow,
00:32co-host of Bloomberg Tech,
00:33Bailey Lipschulz, a senior equities reporter covering IPOs, and George Ferguson, senior aerospace defense and airline analyst.
00:38Apologies to all of you for enduring that.
00:40I know that Ed Ludlow has heard none of these puns before and certainly isn't tired of these old tropes.
00:44Ed, I'm going to start with you. I know you're going to be in town for this IPO, when it
00:48happens at the NASDAQ.
00:49What should we expect here in the days leading up to it? What should we be watching for this week?
00:53Yeah, I mean, nothing about this process from SpaceX has been typical. It's been highly unusual.
01:00But technically, right now, they're in a roadshow. They're out there in different guises trying to convince investors that the
01:10story is real and that investors, big and small, should participate.
01:17It's what you call a roadshow, right? And I think, you know, the reason that Bailey and I in particular
01:22are kind of scratching our heads is that SpaceX took this step of almost pre-pricing the IPO very early
01:28before the roadshow had even started,
01:30which gave us all these large numbers that we have. And that's not how that usually works.
01:34So what they're trying to get as the net result, I think, is worthy of debate.
01:40So, Bailey, walk us through that. Do you expect that pricing to be about where estimates are right now?
01:45What happens with the IPO process in the next couple of days? Who's able to buy it?
01:50And then what are the rules for being listed on these different indexes?
01:53I know the S&P 500, especially, there's been some controversy there.
01:57Yeah, so basically what we reported on Friday is that they already have enough orders, quote unquote, to fill the
02:03book.
02:03That doesn't really mean a lot, but that basically says they already have more than $75 billion of demand.
02:09So what we'll be tracking over the next few days is how large does that number grow?
02:13Bankers are going to be courting some of the largest institutional investors and obviously working around the world to see
02:20how much demand they get from individual and retail investors.
02:22So they'll build out that book as it plays out in the coming days.
02:25That number will only get larger.
02:27And with that fixed price at $135 a share that Ed mentioned, the company kind of as of now is
02:33calling its shot.
02:34Yes, they have the flexibility to essentially refile with any number.
02:38They could bring out a range.
02:39They could increase the number of shares.
02:41Structurally, they are allowed to do that in the coming days leading up to Thursday.
02:45Once we see books likely close on Wednesday, that's when the bankers' real work will begin and we'll be chasing
02:51and calling all of our sources to see, OK, are they staying at $135 a share?
02:56And will this stick at an initial fundraise of $75 billion at a $1.77 trillion valuation?
03:03Huge numbers that we're going to keep an eye on.
03:05But really, this is where the bankers are going to have to pull together these orders and try to get
03:11a better sense of where this will ultimately go.
03:13As you mentioned, this is a company that should be joining the NASDAQ 100 15 trading days after they price
03:19and trade on Friday.
03:20So they'll be joining the NASDAQ 100 early in July.
03:23They will not be joining the S&P 500 in six months.
03:27And we put out a story on Friday that, according to analyst estimates that we've gotten our hands on, it
03:33may be closer to 2027, 2028, because they do need to be net income positive on a trailing 12-month
03:40basis.
03:40And in the last quarter, they're still operating at a loss.
03:43And analysts are expecting them to only continue to spend more money in the coming years.
03:47Barron's is calling SpaceX the world's most valuable money-losing company.
03:53Go ahead, David.
03:54Bailey, I want to dig into that.
03:55I read that piece.
03:56You quote Howard Silverblatt, longtime veteran of S&P.
03:59And he talked about how S&P is still holding fast to this, that net income positive thing that's been
04:04there for so long.
04:05Is it likely to change?
04:07Is this a moment when S&P is likely to reevaluate that?
04:10Just describe the kind of contrast here between S&P and NASDAQ in more detail, if you would.
04:14Well, the S&P has this committee.
04:17No one knows who's in it.
04:18They take this proposal.
04:19They went to this committee and said, we want you to look through shortening the timeline from 12 months to
04:25six months.
04:25We want you to reevaluate if we still think gap net income positivity on a 12-month basis is still
04:33a bar that we want to be cleared.
04:35The committee came out and seemingly said, all the rules that we had in place before, still in place.
04:40Yes, they could reevaluate this in six months.
04:43They could reevaluate this in three months.
04:45That is totally up to S&P if they want to do that.
04:49The difference between them and NASDAQ 100, NASDAQ operates a exchange.
04:53They benefit from having SpaceX trading on the NASDAQ.
04:57You have to be on the NASDAQ to be in the NASDAQ 100.
05:00So that's a bargaining check from the exchange perspective.
05:04The big question will be, does S&P reevaluate this again if we do get Anthropoc going public later this
05:10year?
05:10If we get OpenAI going public later this year, a company that people don't think will be profitable until the
05:162030s, that again creates more of a conversation.
05:20But we dealt with this before with Tesla, with Uber, with a number of other companies that whether they were
05:26building out their operations or didn't care to, according to financial statements, be profitable, weren't added to the S&P
05:32500 for quite some time.
05:34And that was good and bad, depending on the investors you spoke to.
05:38All right, George, we've talked about the money.
05:39We've talked about the markets.
05:40Talk to us about the nuts and bolts of this actual company.
05:43What is your take on this new era of the public-private space race and how you think SpaceX, Blue
05:50Origin, but especially SpaceX, how that impacts the air defense industry, especially in light of China and even these alliances
05:58between India and Japan and other countries trying to get in on this?
06:02Yeah, so thanks for having me again.
06:04So, to me, you know, the new space race, I mean, I think some of the technological hurdles they're overcoming
06:14are outstanding.
06:16And as an aerospace defense geek, it's very exciting.
06:21But I don't see the business case here as much as even, I think, before we saw the public filings.
06:28So, excuse me.
06:31So, when we looked at SpaceX got into the filings, 76% of their launch, of the launch business, was
06:38all for Starlink in 2025.
06:41Some 80% were for Starlink in the first quarter.
06:45So, I mean, Elon Musk has built, I think, a very impressive space business, but it solely serves as low
06:51-Earth orbit Starlink.
06:52And as we think about Starlink and we think about demand for space from governments, from low-Earth orbit operators,
07:00first, I think low-Earth orbit operators are the biggest potential operators or, you know, requirers of lift into space.
07:09They're building constellations that are 10,000, some of them expect sort of 12,000, 13,000, 15,000 large
07:16satellite constellations.
07:19Look, I think that maybe there's room for maybe five of those in the world when I think about, you
07:25know, sort of the next decade or so.
07:26I think maybe the Chinese would want to build out a couple of these.
07:30You've seen already Amazon.
07:31They'll build something out with LEO.
07:34They're far behind.
07:35But they'll want to lift that with Blue Origin.
07:37I think the Chinese want to lift that with something out of China.
07:42There's a lot of sort of SpaceX wannabes out of China.
07:47And I think maybe Europe or India might do one of these LEO constellations.
07:51I think government satellite isn't big enough to sort of warrant a business like this.
07:57And so while I'm super excited about the business and the technology, again, I think the majority of the service
08:04launch has is for Elon Musk's dream of data centers in space and connectivity out of space to the air
08:12surface, which is Starlink.
08:14Elon Musk had an opportunity to kind of explain the business to a sophisticated audience.
08:18He started his road show right down Park Avenue at J.P. Morgan's headquarters with Jamie Dimon.
08:23Let's take a listen to what he had to say about the motivations for going public right now.
08:27Why SpaceX public now?
08:29Because you had choices.
08:30You didn't have to.
08:31Why now?
08:32We're embarking on a massive new growth phase and we need capital for that.
08:39OK.
08:44OK.
08:44Number two.
08:46Another thing is the revenue.
08:48I also feel pretty good about the revenue projections.
08:52I mean, like before, like revenue was a little unstable.
08:56Ed Ludlow, the laughter there audible probably to you all the way across the country in California.
09:01But let's drill in on what George was talking about just a moment ago here.
09:04That is, there is concern about this conglomerate going forward.
09:07We've talked about that on the show with you before, Ed.
09:09The fact that this is not just a rocket business or a satellite business.
09:12There's a huge AI component.
09:13There are these wild aspirations for data centers in space and millions on the moon and Mars.
09:19How incumbent on Elon Musk is it to make this case to investors or is there, as we've been talking
09:23about, a pool of investors, prospective investors who are so bought into this vision that Elon Musk has that's really
09:28not necessary at this point?
09:29Yeah, a big part of the story for those investors that have been with SpaceX for a long period of
09:34time as a private company and a lot of people that are considering, like, how do I and will I
09:39participate in this IPO?
09:41It's Elon Musk is kind of the swing factor.
09:44You know, we call it boilerplate, but in the S1 filing, you know, there's a section dedicated to the fact
09:49that everything SpaceX outlines in its future is dependent on Elon Musk still being around to make it happen.
09:56But the reason that SpaceX is going public is that they need to raise capital at a level that only
10:05an IPO can facilitate, really.
10:07Private markets have been very willing and supportive of OpenAI and Anthropic, and SpaceX has done things a little bit
10:14differently where they've tended to allow employees to sell shares.
10:19And in that process, SpaceX bought back shares, but they never raised money through that mechanism.
10:25It's just a really a liquidity practice.
10:27So that's all kind of jargony market stuff.
10:30The main point being they need money.
10:32Why do they need money?
10:33They need money to buy GPUs, chips for running AI models, because the business model going forward is not one
10:42of simply launching stuff into orbit.
10:45You know, the way that they present it is that they will make the vast majority of their money from
10:50selling AI software.
10:51And there's like a series of steps for them to get there.
10:54I mean, there are certain large objects or co-anchors I would like to launch into orbit if they don't
10:59stop making terrible space puns this morning.
11:01You hear what she's saying about you, Lisa?
11:02I'm sorry.
11:03You leave Lisa alone.
11:05Bailey, I do want to ask you about, you know, we had this real slump of these tech stocks towards
11:10the end of the week and after Friday.
11:12So now you've got SpaceX entering the mix.
11:15How do you think this mega cap is going to impact the entire market as we go back to trading
11:19tomorrow?
11:20I've heard every kind of take from this is people selling to create capacity.
11:25This is strictly what happens when large IPOs take place.
11:28The one thing I will point back to, as Ed knows as well as I do, this has been the
11:32worst kept secret of an IPO of all time.
11:35And five months ago, we were reporting that they wanted $1.75 to $2 trillion in valuation.
11:40They wanted to raise $75 billion in capacity.
11:44They were planning on doing that this summer.
11:47Obviously, there are technical inputs.
11:49Obviously, no one working on this deal wants to see the NASDAQ 100 down 4% on Friday.
11:54Everyone will be keeping an eye on how the markets trade in the coming days.
11:58But I do question to some degree the causation versus correlation of a market that has seemingly been doing nothing
12:05but moving up into the right with a bit of a pullback.
12:07Obviously, if we do see more volatility, we do see a spike in the VIX Monday through Wednesday.
12:12That could cause a bit of consternation.
12:14And there could be a bit of questions around where is this capital flowing from and what does it ultimately
12:18mean?
12:19But I do think the big question will be how the market performs.
12:23Was Friday really just a reaction to some economic data and a re-rating or resetting a bit of Fed
12:30expectations?
12:30Speaker 2
12:30Speaker 3
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