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00:00Just about 24 hours ago, before becoming the world's first trillionaire, Elon Musk said this about this startup he had
00:07called SpaceX.
00:08I gave SpaceX less than a 10% chance of succeeding at all, to be clear.
00:17In fact, I told people this. I said, look, we're probably going to fail, but, you know, we should give
00:21it a try.
00:21Because if we don't, if there's not a new company that enters space, we will never be a truly space
00:29-faring civilization.
00:30Some two decades later, SpaceX had the largest ever IPO.
00:33It's now one of the most valuable companies in the world.
00:36Joining us now, Lauren Grush, Bloomberg Space Reporter.
00:38Bailey Lipschulz with us as well.
00:39Both of them are bylines on this big take story you can find at Bloomberg.com or on the terminal.
00:44Ed Ludlow, another one of the bylines.
00:46We'll get Ryan Gould in the mix here at some point as well.
00:48Lauren, let me turn to you first and just ask you for a vibe check on all of this.
00:51Going into the IPO yesterday, it was kind of a split event.
00:55You had some executives here in New York, at NASDAQ, at Times Square.
00:59There were others who were at SpaceX's headquarters, Elon Musk among them.
01:03I was struck by how Elon Musk was surrounded by a lot of employees, many of whom have woken up
01:07here,
01:08maybe not as fabulously wealthy as Elon Musk, but are certainly rich individuals after what happened here.
01:13Absolutely.
01:14And I think it was, you know, probably for them a well-deserved moment of celebration.
01:17I know there were celebrations across all of SpaceX's sites.
01:21Don't think a lot of work got done, which is actually abnormal for SpaceX,
01:25because, you know, most of these employees have been working, gosh, 12-hour days, weekends.
01:31You know, it's a very work-heavy culture.
01:33In fact, burnout culture is kind of part of the strategy a little bit at SpaceX.
01:37And another thing that, you know, when it comes to their compensation, you know,
01:41they take a bit of a lower salary compared to the rest of the industry, but they get these stock
01:46options.
01:47And so for them, you know, it's been a long-time payoff for all that hard work that they've put
01:52into the company.
01:53Bailey, Lauren got the first question because she came in and is here on set,
01:57and you know I'm always going to give you a hard time when you don't come in and join us.
01:59I feel it's unfair.
02:00It's been a long week for all parties involved.
02:02No, it really has.
02:03We appreciate you.
02:04Listen, the stock closed 19% higher at about $161 per share, but not everybody got to buy it.
02:11We were talking with Ed in the 7 a.m. hour about it.
02:13It was four, possibly five times oversubscribed, and I asked him the same question.
02:17Is this like a if you're in line, stay in line, you will get to invest in, you know, bases
02:22on Mars when it's your turn?
02:24How does this happen now?
02:25How do you, like if I wake up today and want this stock, how do I get it?
02:29And how much of the stock went to big bankers, big investments versus small retail consumers?
02:35Well, once the stock started trading, anyone within a brokerage account could buy it.
02:39So you just can't buy it at the IPO price, which was $135.
02:42Got it.
02:43And as we reported throughout the process, that was a fixed price, something abnormal, something Elon Musk wanted to do
02:49to kind of draw the line in the sand, if you will.
02:52The allocation process did skew heavily towards institutions, but we did see a lot of retail demand.
02:57So we saw the retail portion take about 20%, so $15 billion, which is larger than the vast majority of
03:04every IPO that's ever happened.
03:05So not a small feat there.
03:07But the remaining chunk was sold to institutions, heavily skewed towards so-called long-only funds, people who have known
03:15SpaceX, people who have known the company.
03:17And the big kind of pitch has been long.
03:19If you're getting allocated in this IPO process, we want you to show up when we have this massive unlock
03:26throughout later this year, when you do have north of a trillion dollars potentially in shares for sale to step
03:32up and support the stock.
03:33Not people who wanted to make a quick 20% profit, which we typically see.
03:38Obviously, people have to sell.
03:39That's how stocks open.
03:40Someone has to sell.
03:41Someone has to buy.
03:42But that certainly is how that process played out.
03:45And we did hear that, much like many of these big deals, much like founder-led companies, Elon Musk and
03:50CFO Brett Johnson were very heavily involved in that allocation process and going through who was getting what.
03:56We see the exuberance.
03:57We see that manifest in what happened with the stock yesterday.
04:00There are also critics of what's unfolded here.
04:02Jim Chanos among them, he spoke at a conference in New York this week, spoke on Bloomberg Money on Bloomberg
04:06Television yesterday as well, talking about the prospects for this company and the valuation that he thinks is way higher
04:13than it should be.
04:13Let's take a listen to what Jim Chanos had to say.
04:15Is it Elon premium times two or Elon premium divided by two?
04:21I think that that's really the question here because there are people who believe in Elon and have bid up
04:28Tesla accordingly to well beyond where I think most fundamental analysts think it's worth.
04:33Now you have another Elon hopes and dreams company with an even bigger valuation.
04:37Neither of them, let's face it, are being valued on their operations.
04:42Not valued on their operations.
04:43Lauren, let me turn to you on this because you go through that prospectus and there are all these caveats
04:47about when these next adventures that SpaceX plans from Barkha might happen, if they might happen at all.
04:53Indeed, there's this caveat that, in fact, it might not come to pass.
04:57Why were investors, so many of them, so willing to bet on Elon Musk?
05:00I've been doing this kind of parallel to back to Tesla where I think there was more skepticism about making
05:04effectively a kind of blind bet on the magic of Elon Musk and what it could lead to.
05:08It does seem like if you look at the banks that have worked on this deal, the number of investors,
05:12people are willing to give him not even just a pass, but kind of climb onto that bandwagon more easily
05:17than they were in the past.
05:17Well, I think with SpaceX, I would often categorize it as his most successful company, and I think the reason
05:24that they felt confident that they could put those numbers in the prospectus and present essentially a money-losing business
05:31is because they are banking on people to remember the past success that they've had with their company so far.
05:37I mean, when you look at the resume of SpaceX compared to the rest of the space industry, it is
05:42quite remarkable.
05:43They are, you know, right now they have a de facto monopoly on heavy lift launch with their Falcon 9
05:48rocket.
05:49They pioneered the commercial use of reusable rockets.
05:52They are the backbone of our space program right now, for better or for worse.
05:57They're the only way we can get astronauts to the International Space Station from U.S. soil.
06:02You know, they are an elite launch provider for NASA, for the Defense Department.
06:09So when you put all that together, I think what SpaceX is hoping is that you will take that past
06:15success and you'll believe that they can replicate it with this brand-new adventure that they're embarking on.
06:21Lauren, what happens if a new administration comes in and says, we don't have the money for NASA, we're not
06:27using your company anymore, these are cuts?
06:29It's what happens if a competitor, a Starlink, which people are trying to do, comes up, is able to do
06:34it cheaper.
06:34If China comes up with its own version that starts getting purchased other places, so much of what the value
06:39in this company is and what I think people are trying to invest in is really contingent on some outside
06:43factors.
06:44What happens if those things go away?
06:45No, that's such a great point.
06:46I mean, in the prospectus, they mention that customer A, which is thought to be the aggregate of the U
06:53.S. government, is by and large one of their biggest customers.
06:55So, yes, when it comes to how SpaceX was able to get to this point, taking contracts from the U
07:03.S. government, a huge factor in being able to develop the Falcon 9, develop their Crew Dragon capsule, and get
07:09to this point.
07:10However, what we have also seen is that they've been able to use the hardware that they've developed with that
07:16money and those contracts to go beyond the need for the government as much as they used to need it
07:21for.
07:21So, for instance, their Starlink connectivity service, that has been growing.
07:26Its revenue has easily eclipsed its launch business, as we saw in that filing as well.
07:31That will probably continue to grow.
07:33So they have been able to find ways to make money that don't rely on the U.S. government.
07:39And I think that's also a big part of this whole AI data center vision that Elon has, too, is
07:46they saw the success with Starlink, and they thought,
07:49okay, you know, how can we replicate that, but through, you know, this AI dream that everybody is invested in
07:55right now.
07:56Bailey, as you and Lauren have written in the piece in the big take today, there was a lot of
08:01motivation on Elon Musk and SpaceX's part to get out first, to go ahead of open AI and anthropic.
08:05And I'm curious sort of what the debut yesterday says to those two companies about what happens next.
08:10Do they see SpaceX as having maybe wet investor appetite for those big IPOs that are coming down the pipe?
08:16Or have they cannibalized some of what they hope to get when they go public in, you know, a matter
08:21of weeks or months?
08:22I think it certainly proved that the plumbing can work.
08:26So nothing broke on Nasdaq.
08:27There were no real trading errors, which was a big win, I think, for the entire ecosystem.
08:33And I think it did prove that investors are willing to show up and support a company's valuation that very
08:38much is looking towards the end of the decade, if not the next decade.
08:41So that's a big win for both of those companies.
08:43David, the big question, though, I think going forward is, as every banker and CEO will say, the IPO is
08:50a moment in time.
08:50So what happens next week?
08:52Really, what happens in the lead up potentially to anthropic and open AI going public as soon as the fall,
08:57when more shares of SpaceX are available for trading, when it gets included to the Nasdaq 100,
09:03you're looking at a lot of potential stock supply that can be inundating the market later this year.
09:09That has more risk to impacting the market than $75 billion.
09:13It is a lot of money.
09:14It is a heck of a lot of money.
09:15But when you look at that just in one moment in time, it really is kind of just the start
09:20of what the process will look like.
09:22It could be a very different kind of trading backdrop when all those things are taken into account later on
09:28in the fall,
09:29when you contender that we could be having anthropic making its kind of way towards public markets as well.
09:35Really, given the size of this company, are we all kind of invested in SpaceX,
09:40whether we are actually invested in SpaceX or not at this point?
09:43Not yet, but you will.
09:44I think it's one of those things, again, that, as Lauren mentioned, it's potentially integral to everything,
09:52whether it's AI, obviously the space monopoly.
09:54When you look at just market structure and market dynamics,
09:57this is already one of, I think, the sixth or seventh largest companies in the world.
10:02It's not yet really in those indexes that would be linked to people's 401ks, but it will be shortly.
10:08And really, when you just look at that as a potential backdrop,
10:11you have to keep in mind that even if it gets cut in half from here, it's still a trillion
10:16-dollar company,
10:17it still would be, like, one of the 10 or 12 largest companies in the world.
10:21So it still is going to have some real critical mass.
10:24Lauren, Bailey's talking about sort of what investors are going to be looking for here in the week and the
10:27weeks ahead.
10:28IPO a moment in time.
10:30Walk us through the priority list that SpaceX has going forward.
10:33They have this massive rocket that is so critical to all of their operations,
10:36and they have yet to have a wholly successful launch and return of it.
10:41That priority number one, what for them is most important now post-IPO?
10:44Sure.
10:45That is priority number one.
10:46It's also a priority one for me.
10:48For you as well.
10:48Yeah.
10:49Just in terms of a coverage perspective.
10:52But, yes, you know, you mentioned Starship.
10:53Starship is their massive rocket that they're building down at their South Texas launch site called Starbase.
10:59That's where Elon Musk was to ring in the bell.
11:01And it has to be reusable, right, or the margins don't really work.
11:04That is the goal.
11:06I mean, and you have to understand, you know, unlocking that has been something that the, you know,
11:11spaceflight enthusiasts have wanted to do since we started launching rockets.
11:15It's the idea that we can bring back both pieces of the rocket fully intact and then, you know,
11:21with minimal refurbishment, fly them again.
11:24Yes, as they laid out in that prospectus, if it doesn't reach that full reusability,
11:31the economics probably don't work because there is going to be costs associated with flying it again.
11:36And we're talking about flying Starship, I think, they've said thousands of times, you know,
11:41in a given time span, you know, they want to just fly it back to back.
11:45They want it to come back, refly it again.
11:47You know, that has just never been done before.
11:49I will never say never with SpaceX that they can't achieve it,
11:53but it's still a very long road of development ahead that they have to achieve.
11:56And so, you know, with each of these Starship test flights,
11:59we will be watching them very intently.
12:02Now the public will be watching them even more so as well.
12:05And their portfolios.
12:05Exactly.
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