00:00Joining us to discuss is Bloomberg IPO reporter Bailey Lipschultz and our chief Wall Street correspondent Sridhar Nadarajan.
00:06Bailey, how do we even gear ourselves up for a historic week like this?
00:12And how does the market even ready itself for an IPO of this size to hit?
00:15We have Matt Miller running around clapping, getting people jacked up.
00:19That's how we get excited for this IPO.
00:20Me and Jamie Dimon.
00:21You and Jamie Dimon, Elon Musk, put him in the room.
00:24No, I mean, I think the big question right now is investment kind of bankers are pulling these orders.
00:30So we already have reported that they already have more demand than there are shares available.
00:33That pretty much happens in every IPO or should happen in every IPO.
00:36The big question now is as they pull in the orders from international banks, as they pull in the orders
00:40from the retail community,
00:42how are they going to distribute, again, a $75 billion IPO?
00:45And what does the plumbing actually look like when we get to Thursday night with these shares being distributed
00:50and people are being told what they got and how does it trade when it opens on Friday?
00:54Do we see investors pulling money in the coming days and weeks?
00:58Again, I've kind of been beating the drum that this has been the worst kept secret.
01:01We've known $75 billion.
01:02We've known $1.75 trillion as a valuation.
01:05So any professional money manager has been well prepared for a number of months for this deal.
01:10And it seems also like everyone's coming to market now, Sri.
01:13Is that the case?
01:13Are IPOs ramping up to a level that's going to make these bankers a lot more money this year
01:19than they earned last year or any year since 2021?
01:23Look, at least in the mega deal space, right?
01:25Because you know that after SpaceX, you're thinking about Anthropic and OpenAI.
01:28And some of these AI companies really do have enormous capital needs.
01:32And therefore, you will see a race towards the end of the year to see who comes out first.
01:36Will it be Anthropic that gets to IPO first?
01:38Will it be OpenAI that gets to IPO before them?
01:40Because the bankers do say whoever is first out the gate definitely has the advantage.
01:45And that's why SpaceX probably coming in makes life a little bit harder for everyone who follows
01:51just because of its share size.
01:53Like you said, a $75 billion capital raise is no easy matter, even if there is enormous enthusiasm
02:00and even if you believe some of the staggering projections from the bankers.
02:03But we have seen Alphabet do an $85 billion capital raise, no problem.
02:08But a good chunk of that was an ATM.
02:09So it's actually not raised yet.
02:11So a good portion of that $80 billion headline number is not actually equity being traded.
02:16That's an at-the-market sale.
02:16That's an at-the-market sale that they can tap as much as they want.
02:19So there is a convertible aspect to it.
02:21Again, it goes back to pulling every lever that they can and want to pull.
02:24So I don't know.
02:25I'll take the other side of Bailey's trade on the lack of enthusiasm.
02:27Still, even with the at-the-market, if you put that aside, a $40 billion raise being able to upsize
02:32it just in the last week,
02:33that itself is incredible, and to have pulled it off in such a stealthy fashion without having a major impact
02:39on the stock
02:40tells you that there is still good absorption capacity in the market.
02:44But what about for everything else?
02:45I mean, I was talking to a private equity executive who was looking at IPO-ing a company,
02:49and their bankers were like, don't do it.
02:51Don't IPO now.
02:52Now is a horrible time to IPO any company that isn't SpaceX, Anthropic, or OpenAI.
02:57Well, I think that anything with an AI flavor is performing well or trading well and can get deals done.
03:02We saw Sienna line up a $2 billion convertible bond that, when I talk to investors, that's going to price
03:06tonight.
03:07They're jacked up on that.
03:08That's a stock of more than 500%.
03:10But if you are a B- or C-list company that has a lot of debt from a PE
03:15perspective, it's a lot tougher.
03:17Yeah, and if you're a private equity executive, it kind of sucks to be hearing this now three or four
03:21years in a row.
03:22Don't do it.
03:22That's what they've been hearing for the last few years.
03:24And now, with these big companies coming into play, life becomes a little bit harder for a lot of these
03:28private equity-backed companies.
03:29And that's not good news for a sector that's already been stuck with so many companies unable to find the
03:35right exit opportunity.
03:37Sri, did your sources worry at all on Friday?
03:39Were you talking to people who were freaking out about the almost 5% drop on the NASDAQ 100 as
03:44we head into SpaceX IPO week?
03:46I mean, you have to imagine that was a big cause of concern going into Friday evening.
03:50But as you wake up Monday morning and you see that there is some level of stability, at least in
03:54U.S. markets, the worry is in the past.
03:57The worry is the worry of the last week.
03:58And that's been the case with this market.
04:00Every day we've had a massive pullback.
04:03It doesn't seem to persist.
04:05It doesn't seem to last.
04:06And that is giving bankers a lot more confidence than in usual circumstances when you see a 4% or
04:105% pullback in the market.
04:12Are we going to look back at this period and say John Gray was right that this was the year
04:16of the IPO?
04:16Or is it the year of the IPO if you're just like a big AI related IPO?
04:20Both.
04:21Both could be accurate.
04:22I mean, 2020 was the year of the IPO.
04:242020 was the year of the IPO.
04:25And, like, I mean, SPACs aside, there still was a lot of cash raised by a lot of companies, whereas
04:29this is very much a handful of huge companies.
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