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When Elon Musk's rocket company goes public, it will likely be the largest IPO in history. Should you buy in? How will this impact markets? Where does the company go from here? Business Insider's Dan DeFrancesco and Joe Ciolli have the answers to these questions and more in a live Q&A.
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00:00Hey, good morning, good afternoon, good evening, wherever you're tuning in from.
00:04Thanks for being here. My name is Dan DeFrancesco, author of the BI Today newsletter.
00:09Happy SpaceX Day. The historic IPO is now in the books and Elon Musk's rocket company is
00:17officially trading after raising 75 billion dollars in a historic IPO at a 1.77 trillion
00:24dollar valuation. It's officially hit the public markets, popped about 20 percent when it first
00:31started trading a little bit less than an hour ago. We have a lot to unpack today, so I wanted
00:36to
00:36bring on my colleague Joe Scioli, author of the First Trade newsletter, who's going to help me talk
00:41through a lot of your questions and comments. Joe, thanks so much for being here on this historic day.
00:52Yeah, thanks for having me. I'm pumped to talk about this with you. Yeah, so like I said,
00:58we have a lot to talk about, but before we get into anything, I just want to remind you,
01:02questions, thoughts, concerns, comments, whatever it may be, drop it in the chat wherever you're
01:07watching us from, and we're happy to answer any questions you may have. We want this to be a fun
01:12discussion, so keep the questions coming. But let's start, Joe, with the initial market debut,
01:19a 20% pop, which, you know, for those that don't know, is about the sweet spot for where you
01:24want
01:24to be for an IPO, but what are just your initial reactions as it's trading within the first hour?
01:32Yeah, I think with the 20% pop, roughly, the bankers on this deal earn their money. They earn their
01:37fee,
01:38because it's perfect because you want the stock to go up something, because you want the existing
01:43shareholders to get a nice, you know, jump off the first day. But you also don't want it to go
01:47up
01:48100% because that means that you priced it too low, and you left money on the table, you left
01:51proceeds
01:52out there that you could have raked in. So it's, you know, not too cold, not too warm. It's a
01:56nice
01:56Goldilocks position right there at about 20% higher today. Yeah, it's also interesting when you consider the
02:03uniqueness of this. First of all, it's the size, right? Largest IPO ever. Second of all, it's the
02:08fact that there was not really price discovery for this as far as with the roadshow. Elon just
02:13comes out and says, this is the number I want. So there's that factor. And then there's, and we'll
02:18get into more of this a little bit later, the retail factor, the factor that 30% of the shares
02:22were
02:22allocated to retail investors, a much larger number than typically. So all that considered to still,
02:28it basically hit its mark. I'm looking now, it's still trading about 22% of a pop. Pretty,
02:34pretty impressive. I'd say right now, early days, so far a success. Yeah, no, I totally agree. It's,
02:41there was a lot of worry about that retail allocation. They offered 30% to day traders.
02:47And there was other stuff like Fidelity lowering its minimum account requirement to $2,000 from $100,000.
02:54Like they really wanted retail to get into this trade. And, and I think a lot of the fear going
03:00in was that at least from retail traders on the internet and from skeptics that, you know,
03:05include those that have written into us is that maybe these retail traders are just kind of being
03:10set up to hold the bag for all of the longer term shareholders that are going to mint their money
03:14and,
03:14and, and hop out as quickly as possible. So that hasn't happened yet, but you know,
03:19it's still early innings. We're still only public for the last 60 to 90 minutes.
03:23So there's no, even no guarantee that today the moves are going to hold,
03:27or maybe we'll go up a hundred percent, but it's still early innings, but you know,
03:31so far looking good. And just a couple numbers to, to recap what, what, how unprecedented this is.
03:37You know, we have a chart that shows that this is the biggest IPO ever.
03:41It's raised the most proceeds, $75 billion. That's roughly triple the next closest,
03:48which was Saudi Aramco, you know, several years ago. So that's pretty monumental.
03:52And then when you look at the actual market cap that it entered the,
03:55the market at, um, 1.77 trillion dollars, that is the most ever. Also, uh, again,
04:03exceeding Saudi Aramco and with this 20% spike, we're actually north of $2 trillion.
04:08So SpaceX is now 90 minutes old and also the seventh most valuable company in the world.
04:14So not bad, not bad, Elon, not bad for 90 minutes, uh, work. Um, yeah, no, it's,
04:20it's really incredible. And that's why we're so excited to talk through all this. So we're going
04:24to start with the big question that everyone had coming into this and, and people maybe still have
04:29is, you know, if they would buy the IPO or if they would buy the stock. So we put up
04:33a LinkedIn poll,
04:33uh, almost 2,600 of you voted and most, uh, 69% said no versus 31% said yes. But
04:42the beauty of
04:44this company of the CEO is that regardless of which side you fall on, your opinions are probably
04:50pretty strong, um, which makes it a fun discussion. So let's start with the valuation,
04:55right? Um, which is the, the big topic that a lot of this has come around. So we have two
05:00schools of
05:01thought. Joseph in Boston writes, um, meta at IPO was, uh, 20x, uh, 28x, uh, SpaceX at 1.75 trillion
05:10is close to 90x. I'm never the smartest man in the room. Appreciate Joseph, your, uh, self-awareness,
05:17but I'm okay sitting this one out. And then on the other end, you have a reader in California says,
05:22yes, it's not profitable, but SpaceX is lifting 83% of satellites into orbit. Reusable rockets making
05:29each lift cost-effective star link energy producer robotics equals great potential for the Musk
05:35conglomerate. So that I think in a nutshell is the two arguments there. Um, Joe, I'm curious if you
05:41have thoughts right off the bat about this remarkable valuation and whether it's fair or foul.
05:46Yeah. The, uh, uh, the first one person to write in really said it all. This company isn't profitable
05:51and it's the only company in the upper echelon of market cap of, uh, in the world that isn't
05:57profitable. But to the other point, uh, this is an Elon Musk property that we're talking about.
06:02Uh, Tesla, which is right now about the 10th most valuable company in the world. Um, it wasn't
06:07profitable until very recently and it achieved massive valuations, uh, without profitability.
06:13And eventually the people that stuck it out, held the stock through those unprofitable years,
06:18they have, they have been paid out pretty nicely. So that's the, that's the age old conundrum.
06:24Like, are you investing in Elon and his vision for 10 or 15 years down the road for
06:29putting people on Mars and, you know, transforming AI? Or are you just, are you just looking at this
06:35expensive stock that doesn't make any money and just saying, maybe I'll wait until they start making
06:39money. So that, and that's, you know, the dichotomy that we see. And, and both points are very fair.
06:44And, you know, if I knew the answer of which way it was going to go, I'd probably, you know,
06:47be trying to run a hedge fund somewhere, not talking to you right now. So we're thankful you're not
06:51doing that and that you're here instead. Um, yeah. And so let's let the pros tell us what,
06:56you know, let's let the market tell us what the, uh, what the price is and how,
06:59and whether this company is fairly valued. The thing I will say on the valuation bit though,
07:03is I definitely appreciate why people's palms get a little bit sweaty seeing that number,
07:07especially for a company that's not profitable. But if you look down the pipeline, right, of what's
07:12coming and the two big ones are open AI and anthropic, those numbers aren't going to be any better
07:18either, you know, so people, and, and at least SpaceX is a little bit more mature as far as
07:22its rocket business and Starlink. So, um, I'm not here trying to carry water for anyone, but I am
07:28saying, you know, we're kind of entering this new era where people are investing incredible high
07:33amounts into CapEx. Um, they're having a tough time turning profitability. I'm not saying it's a
07:38bubble or it isn't a bubble, but this is a little bit of the new reality. So to point at
07:42that number,
07:42fair, but then you also have to realize this is kind of a little bit of the new name of
07:46the game for a lot of
07:47the new players that are coming in. Um, I want to pivot to another point that has come up a
07:52lot,
07:53which is the right quote unquote time to buy. Um, so Hunter from Alabama or Atlanta, I'm sorry, writes,
08:00uh, like most IPOs, unless you're in pre IPO levels, then it's not worth bidding for the day of.
08:05Most of these tech stocks lose at least 10% value in the first week. That's when I will make
08:10the decision
08:10on whether or not to invest maybe even after that point. And then Sam and NYC says not at IPO,
08:16but definitely will be down the road, Mars robots, autonomous cars, the future. So I think it touches
08:23on an interesting point that I've seen a lot. I'm sure you've heard a lot from people you're speaking
08:27with is I don't like it at IPO. I do like it in the long run. I just got to
08:32time it right, which I mean,
08:34story of every investor's life. Good luck. Uh, I don't know what, what's your sense on the quote
08:39unquote right time to buy. Yeah. The main thing that's looming over the people that want to wait
08:45is the lockup period for people that the insiders that own shares, you know, the, the people that
08:50have worked at the company forever and are, are one of those thousands of millionaires that are going
08:54to be minted today on this pricing. So, um, yeah, I think that there's a, that's definitely,
09:00that's definitely a consideration. I also, I also think that, um, you know, once you, once you think
09:06about, you know, Elon Musk can't sell for a year and, uh, he's someone that isn't really going to
09:13decide, you know what, I'm going to take half my money out of this. Like he, he'll, he'll sell at,
09:17at, uh, predetermined intervals, but I think it's, it's just that intermediary period, you know,
09:22these, these, this staggered like 30, 70, a hundred day windows. And people are worried that
09:27if they do buy in now, that as soon as the people that inside the company that have, that have
09:31already kind of seen their, their net worth rise on paper to astronomical levels, like who's to say
09:37those people aren't just going to sell, quit their jobs and, you know, go buy an island or something
09:41because it is a lot of them. And so, um, that's what they're worried about. So then it's like,
09:46do you wait until the full year is up? Do you wait until the first two rounds? And that's,
09:50that's a tough question. And, uh, and I think to the point of like, if you're someone that's going
09:54to buy and hold SpaceX for 10 years, or you really believe in the, in the, the, the people on
09:59Mars,
09:59uh, thesis that's behind a lot of this, uh, you know, you, it might not make a huge difference
10:04whether you buy now or in six months, uh, in the grand scheme of things with the upside that
10:08you're imagining might exist in the stock. So it's really just a matter of personal preference.
10:12We've thrown around the, the, uh, the saying, you know, catch, trying to catch a falling knife.
10:16We've talked about that. And, uh, I think that like the stock has to drop for it to be a
10:20falling
10:20knife, but I mean, that's, that's also risky. It's like, if you're trying to bottom, you know,
10:25bottom hunt and find when this stock is going to be attractively valued, you might either be waiting
10:29a while or you might just get that timing wrong. And I think it's just as penal to like buy
10:34too late
10:35as it is to buy too early. Right. Yeah. I think you, you hit the nail on the head there
10:39on a couple
10:40points, but specifically the concept of if this is a company you believe in, in the long term,
10:45okay, sure. There's going to be some volatility, like, you know, we could talk about Elon Musk and,
10:49and what that comes with investing with him or in his companies. But ultimately,
10:53if you believe in the mission and you believe the direction that SpaceX is heading,
10:57and you think it's a good long-term bet, do you really want to wait a month, two months? Because,
11:02you know, so skipping Georgia talked about, he said, never buy until after the expirations,
11:07which is something you touched on, but it's a little bit unique here as far as there's the staggered
11:12release schedule of when employees can sell shares. So it's, a lot of it comes around the
11:19first earnings report that SpaceX will have, which should be the late summer. And then depends on the
11:25stock performance, more can be released. And then to your point, like this, these, this concept of over
11:30the next couple, you know, whether it's 70, 90, 105 days. And then as far as some of the strategic
11:34investors in Elon, it's an entire year. So it's not like there's this drop off point, this cliff where
11:39it's like, Oh, all bets are off. Now everybody can go. It's going to be staggered throughout.
11:43So you might not necessarily see that massive drop to your point, that knife that you can catch. And
11:48if you sit it out and you believe in this company, you're going to miss on some, some big returns
11:52that
11:53you can get in potentially. Right. Yeah. And, and a lot of times like on these IPOs, we had one
11:58of our
11:59readers say, you know, IPOs have been falling 10% in the first week. And, um, I think that's been
12:05relatively true. We did see a really successful tech IPO, Figma, uh, last year we we've seen
12:10Cerberus, which was, uh, which was a, a cybersecurity stock that had previously the best, uh, IPO of the
12:17year. And so we've seen a couple of data points, very small sample size, but to show that maybe that,
12:22that decline isn't going to happen. Uh, but of course, SpaceX is a unicorn. It's, it's sort of its
12:27own deal. Um, it's done everything kind of unconventionally. So I wouldn't expect it to
12:31follow any traditional pattern. Um, so it's, you know, really anyone's guess how this early going
12:35goes, but there is a very real possibility that this stock doesn't drop down to the level that
12:41it priced at for a while. If they're, if the euphoric retail investor phase continues, uh,
12:45like it is now. Yeah. I mean, we're holding firm right now a little bit over 23%. Uh, in the
12:50YouTube
12:50chat, uh, Dubit Smart asked, you know, to buy now or wait for those planning on holding for 10 plus
12:55years.
12:56Again, I think if this is your long-term play, this is something that's just going to sit in your
13:00portfolio and again, and you believe in SpaceX as a company and Elon, I don't know if trying to
13:06price it out over the next couple of months is really going to be beneficial to you. But I think,
13:11you know, you mentioned it's not traditional. The one comparison we had some of our reporters make,
13:15and I know it was on your team was the, uh, the Facebook IPO, which already to be clear,
13:20this is going way better than the, than the Facebook IPO went way back when, but maybe talk
13:25through about like that volatility and how in the long run, again, for people that were invested in the
13:30up being fine, even though they had to, you know, uh, grin, grin and bear it for a bit.
13:35Yeah. The Facebook IPO was, uh, was really, we thought it was going to be a parallel that could
13:39play out, but, um, it tanked right away. And I think the, the, the overwhelming consensus was that
13:46bankers got too, uh, ambitious with the, with what they were, what they were trying to raise or the
13:49price they were trying to, uh, target. And, and that was really like a turning point for tech
13:54IPOs broadly. Uh, I think it was almost sort of like their financial crisis moment. Not that it
13:59was that bad, but it was something that, that, that re dictated the calculus for every tech IPO
14:04after that and made things more conservative and put more controls in place. So that couldn't happen
14:08again. So that's, and that was in 2012. So, you know, this is over 10 years ago. And then there's
14:13also technical issues with the exchange, uh, that it went public on and, and, you know, it's been
14:18again, 14 years. So we've got much faster internet, much better technology, and it doesn't seem like there's any
14:22snafus with the, with the plumbing of this offering. So that's good. Um, and then yeah,
14:26for Facebook, it went down, it was, you know, in the doldrums for months and it didn't really, uh,
14:32overtake its, uh, where it priced for several months. And, uh, the people that got it at the IPO
14:37and waited it out on the dip and wait back on the way back up. I mean, look at meta
14:40now. Um,
14:41it's just absolutely astronomical over the last 15 years. So it's been a, it's been a good bet.
14:46Yeah. Does it really make a difference whether you bought caught that falling knife at the very
14:49bottom or you, or you just kind of like picked it up somewhere else on the curve?
14:53In the grand scheme of how much meta has gone up? Not really. So that's,
14:56again, like there's, there's good and bad takeaways and parallels to be made to what's happening today.
15:00What's the old saying? Pinch a penny, lose a pound. You know, uh, you know, if you're in it for
15:04the
15:04long haul, I think you just got to kind of buckle up. But, uh, if you were in the UK
15:07asked, which I
15:08think this is a great transition, what if something happens to Elon, right? The key man risk factor of
15:13Elon. So I think we can have a broader discussion now about Elon. First of all, congrats to him.
15:17He's now the world's first trillionaire, which is, it blows your mind to think about. Um, but beyond
15:25just the key man risk, we also have this question from Susan in Overland, Kansas, who says, um,
15:30she made her decision because of Elon Musk. That's all she said, which I kind of love because
15:35it's unclear if she made that because she's going to invest in it or not invest in it because of
15:40Elon Musk. But, uh, it's a valid point and it brings up this wider discussion of, uh, this,
15:45this polarizing figure that is Elon Musk. Plenty of people have gotten very wealthy backing his
15:50companies. Plenty of people don't like him. Uh, I think off the top, how much, especially with the, um,
15:57increased political activity, I'll say that we've seen from Elon over the past couple of years,
16:01how big of a factor does he play into this entire investment decision for our viewers?
16:07I think he's the factor, uh, especially with an innovation company. That's still,
16:11that's not profitable. That's still probably 10, 15 years from really achieving its final
16:16vision or form. Uh, you're really making a bet on the person. And like you said, betting on Elon in
16:22the past has been an extremely lucrative proposition, whether you got in on Tesla in the 2010s at some
16:28point, if you did, you know, I hope your yacht is nice. Good to see you. Um, and then, you
16:33know,
16:33if you, uh, if you just like kind of wait out any dip in Tesla, it almost inevitably retakes it
16:40within
16:40several months and, uh, and, and kind of reaches new heights and it's happened continuously for over
16:46a decade now. Uh, but as for the reader question, you know, what happens if something happens to Elon?
16:52Well, we kind of got a dry run of, and when, when I say something happens, like he went and
16:56worked
16:56for the government for several months and he, uh, seemed to be focusing all his attention on Doge
17:01and optimizing the government's finances and all that, all that stuff that we covered, you know,
17:06breathlessly here at BI. So it was a huge national story. Well, during that time, Tesla stock didn't
17:11do very well. And, uh, a lot of it had to do with, you know, Trump, uh, and Elon butting
17:17heads, uh,
17:18after a harmonious relationship at the beginning, they started butting heads,
17:21all of a sudden Trump's saying, I'm going to do stuff that's going to mess with Tesla
17:25and the stock is getting hit. And people are saying, you know, who's driving the bus
17:28if Elon's in, in Washington, who's making our cars, who's doing robo taxi. Like, does this guy
17:34have time for this company that's worth a trillion dollars? And so there was worried. They saw a big
17:39stock slump. Then wouldn't you know it right when Elon was like, I'm out of the government guys,
17:43I'm going back to Tesla stock went back up, rest is history. So, um, it, you know, Elon needs to
17:48be
17:48at the helm. He needs to be running the show and, uh, he needs to be, people want him to
17:54be sleeping
17:54in the warehouses. They want him to be on the front lines at these facilities, uh, being the
17:59master engineer that he is. So, uh, he's, he is everything I would say.
18:03Yeah. And look, ultimately you have a gun to your head. If, do you want to be investing with the
18:08world's richest man or do you want to not be investing with the world's richest man? I mean,
18:11like, I think most people would say they'd want that guy on or that person on their side. I will
18:16also say not to discount the work of SpaceX COO Gwen Shotwell, who's done a fantastic job. And,
18:22and as Elon has worn the million different hats that he has, uh, Shotwell's done a really good job
18:28of continuing to, to keep the company moving forward. Um, but I think it is, it is a real
18:32consideration that, that everyone needs to, um, discuss. Uh, another question we have from David in
18:38Dallas, uh, mentioned, you know, I selected a few shares via Robinhood and this gets back to that
18:43retail allocation that we've seen. Um, we also mentioned another option is to purchase shares
18:48in partners companies today before the IPO, Echo Star, Firefly, Rocket Lab and others. Um,
18:54Joe, as a market expert, do you think that strategy holds? It's like, I want exposure to SpaceX,
18:59but maybe I don't want to go full in. Um, what are your thoughts about kind of playing with the
19:04players that do play with SpaceX and kind of riding off its coattails?
19:08It's a great idea. It's a great diversifier. If you're going to own SpaceX stock,
19:12I think it's, it's a good, good idea to own these other ones as well. Uh, but here's the thing,
19:17the cat's out of the bag. Everyone knows that these companies are linked to SpaceX
19:20and everyone has known that SpaceX is going to be going public for, you know, several weeks or months.
19:26And, um, the moves affiliated with SpaceX have been priced into these stocks already. They went super
19:31nova when we found out that this thing was going to be hitting the public market.
19:34And really with any new valuation round or any, any new like positive news around SpaceX historically,
19:40these stocks have been proxies for that. They've gone up. So are you going to get like a,
19:44a, is no one looking at this? Are you going to find a steal in the bargain bin on these
19:48stocks? No.
19:48Um, but are you, you know, are they, is it, are they a good option for diversifying and hitching your
19:54wagon to SpaceX exposed investments? Absolutely. Just don't, don't think that you're the first
19:59person that to have that idea. And I'm not, I'm not saying you are, but like, it's, uh,
20:02it's definitely a known trade, but one that could still make you a lot of money. Yeah. As the, the,
20:08the wonks say they're not a ton of alpha there necessarily. Right. It's not this hidden gem.
20:13I'd also say, and look, not financial advice. Don't take this. We should have disclosed this
20:18upfront. We're not a financial advisors. Um, but I would say if you're bullish on SpaceX,
20:24right? Why not just bet on SpaceX? If you're betting on the partners, there's the risk that something
20:29specifically would have in the partners. We talked about Elon. Maybe he has a falling out with the
20:32vendor, you know, for whatever reason, um, there's the downside risk of that stock and the upside is
20:38already going to be built in with just investing in SpaceX versus, I don't, I don't know. I don't see
20:43it as much of a play. Like if, if you're that bullish on SpaceX, why not just back SpaceX? But
20:48again,
20:48not a financial advisor. So do as you see, uh, do as you see fit. Um, we talked about the
20:54retail,
20:54right? 30%, uh, uh, SpaceX president, uh, Shotwell also mentioned on CNBC that the demand from the
21:02regular people pushed the company to go public. You wrote about this in the first trade newsletter,
21:06which is a must subscribe if you haven't already. Um, there was a lot of discussion about the retail
21:12involvement and allocation in this IPO. Was it Elon democratizing finance and letting the little
21:18person get a shot? Or was it institutional doesn't want, we got to fill the void somehow. Let's get the
21:23dumb money involved. Yeah. I mean, I'll, I'll give you the PR answer that, that, and then I'll give
21:28you the, what I, what I think is probably the right, the right answer. And the one that I think
21:32has been the prevailing narrative online, the PR answer is yeah, we're democratizing finance. We,
21:37we see all of our, our legions of, uh, of Musk fans out there that have backed Tesla during lean
21:42times.
21:43And we want to, you know, throw you a bone, give you an opportunity for generational wealth,
21:46hitching your wagon to this great company. Um, that sounds awesome. You know, I, I'm sure people really
21:52appreciate that anyone who wanted to buy the stock and on the IPO, like had a much greater opportunity
21:56to do so. So, um, yeah, that, that's one piece of it. But then, um, if you look at online
22:02chatter,
22:03there's been a little bit of cynicism and maybe not a little bit, a lot of cynicism around why this
22:07is happening. Um, I guess the, the logic is why would institutions get, or why would a company give,
22:15just, just give something away as a favor. Um, is there something more nefarious going on with
22:20institutional demand? Is it not as strong as what we thought? And is that going, is it,
22:25are they basically trying to supplement that demand with retail traders? Excuse me. And so,
22:31yeah, it's, it's been unclear, you know, which one it is, but people are, are cynical about it.
22:37Still, the stock's up. So if you bought it on the IPO, you've made 20% today, you're looking good.
22:41But, um, even more now, now we're up to where we've eclipsed 25%, closing it on 26%. Um, that's the
22:48video doing this live. You get it right here. Uh, I, yeah, it is kind of, I, I see it
22:52both sides.
22:52I see it on the one hand of, you know, famous saying like, I would never be a member of
22:56a club
22:57that would have me, right? Like if you are trying to actively aggressively give me something,
23:01especially on wall street, something's probably up, you know, I'm probably being sold a bad bill of
23:05goods. The counter argument, right? Is that this is a company that's been private for a very long time.
23:10It's got, it's raised a lot of money from institutional investors and they just might feel like,
23:15look, we've, we already extremely overexposed to it. We do like it as a company, right? But we've
23:20already pretty heavy in it. And this is, I don't know. I don't mean to, again, like carry water on
23:25the PR side of it, but that's, that's the flip side of it. But to your point, we're a couple
23:29hours
23:30in now and stocks performing pretty well. So those who did end up jumping in or, you know, ending up
23:35on
23:35on the good side of it so far. Um, I want to talk about the other Elon company, Tesla. So
23:43I think
23:44this is super interesting in the S1 for SpaceX, there was a mention of potential murder mergers
23:50or acquisitions. A lot of people naturally pointed to Tesla. You mentioned Tesla before.
23:54It's another trillion dollar giant. It's huge, has a very strong retail base. Um, you know,
24:01I was watching it earlier today. It dropped a little bit more than 2% at one point when SpaceX
24:07started trading. Now it's back up. It's basically flat. Um, I find it a really interesting, uh,
24:14thought process. You know, one, if, if they stand alone, what happens to those two stocks? If we see
24:19SpaceX continue to perform, do the Elon fan boys just go, well, this is the old toy. And now we
24:24want
24:24to go to the new toy. Um, is there a potential for an acquisition? And then we get into this
24:29idea of
24:29an even more of a Frankenstein, Elon conglomerate company, but what's your takeaway on the, the,
24:35the, uh, SpaceX Tesla, uh, uh, sibling rivalry? That's a really good, that's a really good question.
24:41And I think it's something that is still yet to play out. Tesla's basically flat now. Um,
24:46I mean, notable that it's not like getting any sort of huge boost, uh, any, the Elon trade is,
24:51there's no Elon trade that like one, one thing goes up and they all go up apparently. So,
24:56and I think like the old toy analogies is a good one. Um, you know, if Tesla has historically been
25:03a bet on Elon and there's a fresher bet on Elon and there's honestly more stuff under the hood of,
25:08of SpaceX, then you could say Tesla, um, because it has, you know, obviously the space business, but
25:14it's mostly going to be an AI company eventually. Uh, you know, that has like a $28 trillion expected
25:18addressable market. And eventually it's supposed to be 26 billion of that are going to be, is going to be
25:23AI
25:23and like 600 billion will be space. And so that's a, it's going to be an AI company. So that's,
25:30uh,
25:30and it's more, it'll be more of a pure play AI company than Tesla because it has XAI under the
25:35hood. So let's, let's imagine that happens. Uh, Tesla starts to fall out of favor. Maybe people are
25:40even funding their SpaceX purchases by selling Tesla. Um, we, we definitely saw retail investors
25:47leading up kind of trying to create dry powder for themselves by selling other, uh, AI stocks. So
25:53it's very much within the realm of possibility, but I'm going to drop the hammer here and I'm just
25:57going to say, what if they merge? What if there's one big Elon conglomerate that's Tesla and SpaceX
26:04combined? And I'm not, that's not just me, you know, saying, saying BS, like that's definitely
26:09something that's been out in the ether. It's been something that's been rumored. And, um, I think
26:14it would really address a lot of this, like this risk that you're seeing if there's two separate
26:18entities that kind of are both pegged to Elon. Yeah. I mean, look, there's only so much money
26:22these, these, uh, Elon fans have to invest. So ultimately they're going to have to make a decision.
26:27And I think in a lot of ways, it makes sense that, you know, the, the SpaceX trajectory as an
26:32AI
26:32company is very much in line with Tesla's trajectory, right? Like we've heard on the earnings call,
26:36he's not pitching it as an EV company anymore. He's pitching it as an AI company. He's talking about
26:40robotics and all these different things. So in that sense, there is a lot of synergy. And to your point,
26:45like just making it Elon Inc. Right. And letting everyone buy in on SpaceX, I think that makes a
26:50lot of sense. The flip side is, and you know, I think this is a lot of the criticism heading
26:54into
26:55for the Tesla, potential Tesla merger is that it becomes this kind of Frankenstein company,
27:00right? Where you have all these different things. You're doing social media, you're doing, uh, satellites,
27:05you're doing rockets, you're doing AI, you're doing EV, you're doing robotics. And sometimes investors
27:11don't like that. They want a pure play. They want to understand this is the space summit,
27:14because on the one hand, while it gives you diversity, it also gives you a lot of risk,
27:17because if one of these things, a lot of these things couldn't work out and you're spending a
27:20lot of money. So I do see it, you know, not to be middleman Dan here, I do see both
27:25sides of it.
27:25And I think it's, it's really interesting. It will be, um, fun to watch, um, if nothing else.
27:31Uh, I guess the other question I had for you, Joe, and remember, you know, if you're watching,
27:36please get your questions in. Joe and I happy want to talk through a ton of them. But, uh,
27:41now that again, not to call things early, but we're in, we're now up to 27%, uh, almost 28%.
27:49What do you think the folks at open AI and Anthropic are thinking as they're watching this?
27:52Again, those are more pure AI plays, but they're still, you know, they've filed paperwork, uh, privately,
27:59they're eyeing this where, what's your sense of how they're viewing this and what their thoughts are
28:04on entering the market. I think they're pumped there. There's, they're popping the bubbly over
28:09there. They're, they're like, you know what, we're going to get what we want. We're going to get the
28:13proceeds, those, those huge proceeds. And the market is revved up for this, uh, for, for things
28:18associated with AI and for these innovation companies going public this year. So yeah, I think
28:22that they're, they're clinking their glasses. I think there's probably a race to see who can get out
28:26first. Um, because you know, we talk about retail investors having limited dry powder or, you know,
28:31needing to make, make selective allocations as to which stocks they're going to own. I have to think
28:36there's a first mover advantage there. And, uh, so Anthropic did confidentially file its S1 first,
28:42then open AI did it second. Um, I think that it was kind of viewed that open AI was winning
28:47and then
28:47Anthropic leapfrogged it. So, and that's kind of Anthropic's vibe. Like they, they're like very
28:53confrontational with open AI. Like they run commercials about Claude and that, that are
28:57very confrontational. So it's going to be awesome. And as a markets reporter, I can't wait, um, for,
29:02for them to go public and reshape the market and how tech trades. I'm also really, uh, you know,
29:07my mouth is watering at the prospect of a, of a Elon Musk, Frankenstein entity, but, um, that's neither
29:12here nor there, but yeah, I think, um, it's, it's a really exciting time and, uh, Silicon Valley,
29:18and we've written about this across business insider, across our tech team, but like,
29:21it's going to be reshaped entirely. Like there's a ton of people that are coming into a lot of money
29:26all of a sudden, and they are the people that they're not the people that had it before. So
29:30how is that going to tilt the scales in the Bay area, um, or in Austin or other tech hubs?
29:35Like
29:35it's going to be, it's going to be really cool to watch and we're going to be all over it.
29:38Yeah. Lots of discussion about what this means from a market structure perspective,
29:43from just a real estate perspective, from a corporate culture perspective, you know,
29:47the other thing you see with a lot of these types of events is there's a big IPO, a bunch
29:51of people make
29:51money and then they go out and start their own companies. I mean, that's, that was Elon's origin
29:54story, right? Coming from, from the PayPal mafia. Um, so there's just so many knock on effects that
29:58we're going to continue to be covered. So as always, like continue to get your questions in and continue
30:02to reach out to Joe and I subscribe to the newsletter. You mentioned the market structure
30:05thing. I want to touch on that too, because, um, you know, SpaceX got fast tracked to get in some
30:10major indices. Um, other ones said no, but that is a big piece of this puzzle. The fact that because
30:17it's
30:17coming in at such a large size, there's gonna be forced buyers. And you know, we talked before,
30:22should I buy, should I not? You might not have a choice in your portfolio and your pension and your
30:26401k, you might already very soon within the next couple of months, be a buyer of SpaceX because of
30:32the ETFs or whatever else you're invested in, um, is, is forced to buy SpaceX.
30:38Right. And so the one that's going to be most immediately impacted is the NASDAQ 100. It's, uh,
30:44it fast tracked SpaceX. It's going to be in there in 15 days. That's really, really soon. And, uh,
30:50and so, I mean, Invesco QQQ, the ETF, if you watch basketball, they advertise it on the score,
30:55scores box, you know, it's, it's out there and it's got major assets under management and a lot
31:00of people own it. And it's been doing really well because tech stocks have been doing really well.
31:03A lot of people own the Qs. So the Qs are just going to get completely thrown on their head
31:08because this is going to be, you know, this is a $2 trillion company at the moment. And it's going
31:12to
31:12suddenly come in here and take a commensurate weight in that index. There's only a hundred
31:15stocks in there. It's going to start pushing it around the same way that we see all the other
31:20major AI companies, other tech, major tech companies, like, you know, Alphabet, Microsoft,
31:25Apple, Meta. It's, it's right up there in that, in that elite rung. And I think we're going to need
31:30a new acronym because, you know, we, we call these things mag seven. We've called them fang stocks.
31:34Like what's the new acronym that includes these new companies? I think that's maybe a job for us,
31:38Dan. I like this letter. I like where we're heading. What are we thinking? I'm not going to,
31:42start brainstorming live on the air here, but that's something we need to do.
31:45But then the S and P 500 is not going to have a SpaceX in it for until the normal
31:50waiting time
31:51of a year. So that really creates a situation where you have two major indexes that normally
31:56trade it a certain way. The S and P 500 or the, sorry, the NASDAQ usually trades it probably two
32:01or three times the S and P on the way up, on the way down. It's just kind of got
32:06a higher beta to the
32:07market. So if that thing has this huge company coming in, fast tracked and assuming that the
32:13other two, Anthropic and OpenAI are going to get in there eventually, and those things aren't in the
32:17S and P for, you know, 11 and a half months, those two indexes are going to start trading in
32:23an
32:23uncorrelated way that we've never seen. I can't predict what that's going to look like, but it's
32:28going to be, it's going to be very interesting to see like if there's any arbitrage opportunities
32:31between the S and P and the NASDAQ going forward. I'll be honest. I've just been trying to think
32:36about acronyms now that we can use and shorthand. I just love it. So if you're watching, drop some
32:41in the comments, I'd love to hear them, your best, your best one. But yeah, I totally agree. I think
32:47this is, like we said, this is a historic moment, not just because of the size, because of what it
32:51signals for the future of the stock market. I just wanted to read off some other, some comments
32:55that we're getting from LinkedIn. Again, questions, comments, drop them in. Joe in Australia, yes,
32:59as a long-term investment. So then sides with, you know, this is my long-term bet.
33:04Joe Suf in Grand Rapids says, overvalued, every big IPO drops after people are allowed to sell,
33:09you know, in hashtags after the lockout period. We also have Carl in Sweden, overpriced,
33:14overhyped, and the top management fails on all KPIs. Tom in West Virginia, yes, and I'll flip it
33:21really quick. Good for you, Tom. I'm impressed by your investing acumen. It's just a big bag of Elon hype.
33:27I mean, there is value there, just not at these ridiculous numbers for the long-term.
33:32So get in fast, get out, but under no circumstances, hold the stock. Just like a Vegas blackjack table,
33:38take your winnings and then run for the door. I don't win much when I'm at the blackjack table,
33:43so I don't know what that is like, Tom, in West Virginia, but let's definitely hang out. I do like
33:47this reader from Ghana. I think it had the most salient point, and it's a good one. 1.75,
33:527.7 trillion valuation for a company that isn't profitable yet. That's either visionary or bonkers,
33:58maybe both. The hype is real, but so are the risks. I'm curious to see if retail investors go all
34:03in on
34:03the must magic or take a wait-and-see approach. Personally, I'd probably let the first few days of
34:09volatility settle before jumping in. I mean, that's it in a nutshell. This could be, you know, it could be
34:14the best bet ever. It could, you know, crash and burn. Right now, it's looking pretty good. We're
34:19almost at 29% up for the day. By and large, I think, you know, so far, obviously a pretty
34:24successful
34:25IPO. I guess, is there anything else, Joe, you know, before we let our viewers go that you're
34:30really interested in now in the aftermath? I mean, certainly we'll see next week, you know,
34:34for the rest of the day, how it continues to trade in next week. But anything else that really stands
34:36out to
34:37you? Yeah, well, I guess, first off, I think we should probably just keep going. It seems like the
34:41stock's just been going up since we started talking. Should we just talk this thing up to
34:44100? Like, how far can we push? Wait, before we do that, let me get in my order. Let me
34:48get in my
34:48order to place. Okay, now it's confirmed. Okay, now I'm in. All right, now we got to keep talking
34:52it up. So as you look, it's 29% now. Yeah, I mean, we're almost at 30. So I think
34:58we're a good luck
34:59charm. In terms of my final thought, I think that retail is the story here. And one of the bear
35:05arguments that I've heard is that because of the huge retail allocation early on, because
35:1030% of shares were given to them, and just because everyone that wanted to get in really had the
35:16chance to it, it wasn't like anyone was locked out, a lot of people got in now. So are they
35:22going to buy
35:22more in a week or two weeks? What's next? Like, are they going to do what one of our last
35:28readers
35:28just said and just pop in, pop out, take your profit, walk away from the blackjack table? I don't
35:33know. So it's one of the bear arguments is that because they essentially went so big on retail
35:38right off the bat that retail might not be able to sustain this groundswell of interest over a
35:44longer period of time. Of course, retail is not the only game in town. There was really strong
35:49institutional demand for this. One of the stats that I saw from the Wall Street Journal was that
35:54they actually BlackRock, just BlackRock, put in for $5 billion. And that is almost as much as
36:02Cerberus, the previous biggest IPO of the year, raised in its entire offering. So that just gives
36:06you an idea of the scale of the SpaceX IPO, and also the fact that there was institutional interest,
36:12and maybe the demise of that was greatly over-exaggerated. So yeah, I'd say keep an eye on
36:18retail. There's various research firms that track the retail interest, and it can be a leading
36:24indicator. Like, if retail starts to get cold feet, then that could, you know, permeate through,
36:28and because of the huge chunk of shares allocated to them, could end up being market moving. So
36:33watch out for that. But yeah, it's an exciting time. And I think, you know, congrats on Elon on
36:40his trillion. And yeah, think big, everyone. Yeah, he certainly has. And look at how it's paid off.
36:47It's paid off well. We're just shy of 30% now. Just real quick on the retail point. I do
36:55want to bring
36:55up, you know, look, it's fun to, I feel like a lot of people like to pick on retail traders.
36:59They point to WallStreetBets and things like that, and they say, oh, it's the dumb money. And look,
37:04there is some evidence of that at times. But retail traders, certainly, as things have kind of opened
37:09up, as the market has opened up, they become pretty sophisticated in a lot of ways, and very smart
37:14sometimes in holding. So I think the immediate stereotype or the immediate knock, well, it's a ton of
37:20retail money, and that's dumb money, and they're just going to sell, and they're going to hold it back for
37:24everyone else. I think in cases, that has been correct. But at other times, they have turned out
37:29pretty well, and they've done well. And certainly, a lot of times with Elon, they've invested in the
37:33long run. So I think to immediately cross this off as well, because a ton of retail has been invested,
37:38this is dead, and we need to wait till it drops. As we're seeing now, it's not necessarily
37:43turning out. I mean, we're just shy now of that 30%.
37:48Yeah, I think you're right. And I think retail is just going to continue to be the story. Retail
37:55and its relationship with Elon is kind of at the heart of all of Elon's properties and at the heart
38:00of all of his prowess in the market over time. And I think that you're right. It's not really dumb
38:06money anymore. Hedge funds scrape online forums for sentiment data. They use retail traders as an
38:14input to make their professional investment decisions because they realize there's something
38:18going on there that's worth paying attention to, and that these people are more sophisticated than
38:21they used to be. So that's absolutely true. And Team Retail, they've definitely grown into their
38:28shoes a bit, and this is a big moment for them. And I'm happy for anyone who bought in and
38:33is seeing
38:34this nice 30% spike today. So do you hold it? You sell it tomorrow? I don't know. Not my
38:38problem,
38:38but if you have any thoughts, please let us know. Yeah. As always, let us know, you know,
38:43subscribe to Business Insider today, subscribe to FirstTrade. I saw we touched 30%, so that feels
38:47like a good time to end it. Joe, as always, I appreciate you coming on and riffing on all this
38:52stuff. So thanks so much for taking the time. And to you, the viewer, thanks so much for tuning in.
38:57As always, like I said, subscribe to VI today, subscribe to FirstTrade. Let us know what you think
39:01in the comments. And until next time, thanks so much.
39:31Bye.
39:39Bye.
39:50Bye.
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