00:00I study it as a pitch on the economics of a satellite of great scale that is a data center.
00:10So in a satellite, you have the body. And right now, the body in any given satellite is a probe
00:17of some kind. It creates data and sends it back down to Earth. What SpaceX is pitching
00:22is a story where there are thousands and thousands of satellites, and in the body of that satellite
00:28with massive solar arrays and radars is a server. You're in Charlottesville, Virginia. You're a
00:33lecturer in CFA Institute on this. What's your X axis to the hopes and dreams of Mr. Musk? Is it
00:42three years? Is it 30 years? This is why it's worth us discussing this on air right now, Wednesday
00:49morning for an IPO that will price tomorrow and trade Friday. Because actually, something has
00:54been happening since Sunday night. Bankers around the country have been pitching this idea in real
00:59time. And based on our reporting, the institutional investors, long only asset managers, are placing
01:07orders for $10 billion of shares, big blocks, because they believe in the economics of what
01:14Elon Musk is pitching on the data center side. In other words, I'm saying the roadshows worked
01:19based on our reporting. Sunday night, they had a certain number of orders. By Wednesday morning,
01:22they had many more. And thus, we arrived to a place where they're oversubscribed. By the way,
01:27the math on a space-based data centers is the same as a data center on Earth. It's a dollar
01:31per token, how many dollars it takes to generate a token, or a dollar per kilowatt, the dollar to
01:37generate a kilowatt worth of compute, which is measured in the electrical drawer. It's exactly the
01:43same. I know, Paul. I see it in your face. It hasn't been done. When did they expect to
01:49deploy some of this technology? So this is why I say this is a live situation. The roadshow has
01:55meaning. In the prospectus, they very clearly outlined that they expected to put an orbital
02:00data center in place 2028 into 2029. Okay. The bankers and SpaceX's representatives have been telling
02:07very important investors ahead of the IPO that they actually might pull that forward a little bit
02:12and do a demo, a test, a pilot in 2027. But given that three days ago, we saw the design
02:20of the
02:20thing for the first time, and how many times have you rolled your eyes at me or cautioned me on
02:26Elon
02:26Musk stating a date, and then see where we actually land? So all of that gets taken into account.
02:31But it is also in the boilerplate risk factors of the document. So that's how I view it.
02:35Has Elon been on the road pitching this personally? Do we know? You know, I don't have any reporting or
02:41evidence that he has done much beyond the conversation he had with Jamie Dimon. Brett
02:46Johnson is SpaceX's CFO. He's much less known. He's basically SpaceX's only ever CFO. And he is going
02:54to preside over the finance org that does the biggest IPO in history, much more engaged directly
02:59with the bankers, the important shareholders. You will notice that Elon Musk, I don't know,
03:06I see the Elizabeth Warren headlines on the SEC. I don't really have any reporting on that.
03:11No, it's fine.
03:12I would say Elon Musk has continued to post on X quite often in this period.
03:17So there's two questions. Let's start with this.
03:19Please.
03:19Let's look at this, folks, the high ground on technology. Do you just assume SpaceX and Tesla
03:25made at some point? Yes. I mean, well, I don't assume. The market assumes that in the end,
03:31SpaceX and Tesla still merge. So this is what drives in. I think of George Noble,
03:34definitive fidelity overseas and many, many other critics of all those. They think the Ed Love
03:39Love world is just, you know, it's going to hell in the basket. Kara Carlson, Bloomberg News.
03:47Yes. Tesla has 59 robo taxis in three Texas cities. And yet people talking to you say,
03:55this is the second coming of whatever. Yeah. I mean, that's the discontinuous nature
04:00of the Ed Love Love world. Yeah. So discuss that.
04:05So the thesis is that if Tesla gets there on the end where they have fleets of thousands and
04:12thousands of robo taxis, in other words, a Tesla vehicle that has no human driver, it drives itself.
04:19There is an element in that of onboard compute. The cars have computers on them,
04:23which helps them perceive the world around them. But this is still AI where you are asking an
04:31underlying algorithm or a model to do something that still requires some kind of mathematics going
04:37on in a data center. So the link is if SpaceX is going to do thousands of satellites and orbits
04:44that are data centers, and they're focused on what we call inference running the AI model,
04:48Tesla becomes the first big customer of that. Gotcha.
04:52It is Elon having a negotiation with Elon.
04:56How is a robo taxi going to pick somebody up at Terminal 1 at JFK?
05:01Good question. How they've done it at other airports is to have designated pickup areas.
05:05They're not JFK.
05:08Yeah, I know they're not.
05:09Kansas City has a gorgeous new airport. Frankly, Manila has a gorgeous new airport.
05:15Can I give you a case study? SFO, right? So Waymo Off Services, SFO, dear listener,
05:21if you're not watching on YouTube, I'm waving my fingers in the air in asterisks, operates at SFO.
05:26You have to go out the terminal, up the escalator, onto the air train, change stop,
05:31go on another stop, walk 500 feet, and then you can get picked up by Waymo SFO.
05:37So that's the reality of it.
05:38What's going to happen Thursday? I don't want to pin you down.
05:43If you're wrong, we understand that I'm wrong all the time.
05:46Well, look.
05:47What's your best guess is going to happen Thursday into Friday?
05:51Kyle Porter and I reported that SpaceX had valued this and priced this IPO early at $1.77 trillion,
05:58and Musk replied on X saying false.
06:00In the end, when all the documents came out, it was $1.77 trillion and $135 per share price.
06:06So we got that right. However, because this is atypical and unusual,
06:12they priced ahead of the roadshow, people don't know what will happen.
06:15There is every legal, mechanical, and psychological chance that the price goes way up,
06:24you know, that they price it higher, that we're talking about a company in excess of $2 trillion,
06:29how it trades at Friday, whenever that gets going, I have no idea.
06:33It's academic, isn't it? It doesn't matter.
06:35But right now, the state of play is so clear.
06:39This is a massively oversubscribed IPO, and people want to participate in it.
06:45How about retail? I think they allocated initially maybe 30%.
06:48So how's that playing out?
06:49There's an outstanding question, which is indirectly,
06:53Musk has promised Tesla's very loyal, quite broad retail shareholder base
06:59that they would get some kind of access to this IPO.
07:01And that's not been codified.
07:03There's no mechanism for that.
07:05So I'd be interested in that.
07:07You know, he, Musk has talked about rewarding loyalty in that sense.
07:10It'd be interesting to see how those Tesla shareholders react if they weren't able to participate.
07:15Remember, the institutional book closes 4 p.m. today,
07:17but all these different platforms offering the retail trade,
07:20I think that carries on until Thursday night.
07:21I didn't know that.
07:22Yeah.
07:23Institutional book closes today.
07:25Yeah.
07:25Interesting.
07:26Yeah.
07:27All right.
07:27I'll get my order in.
07:28You're looking at me with great skepticism, but that's healthy.
07:31Like, how healthy is that?
07:33That's good.
07:34Yep.
07:35All right.
07:35All right.
07:35All right.
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