00:00You guys have both covered a lot of IPOs. Bailey, I want to start with you. Is it fair to
00:04say
00:05demand for SpaceX is out of this world? Out of this world? But is it better than Cerebros was,
00:11a stock that's near to your heart? Is it? No. No, but not by definition as it relates to the
00:16actual share count available. But it's one of those funny things where you go, okay, it's more
00:20than four times oversubscribe, but then you do the back of the envelope math and say, well,
00:24that's a lot of orders. So in terms of sheer net demand, yes. But in terms of like oversubscribed
00:31books, we've seen a number of deals like 20, 30, 45 times oversubscribed and that's normal.
00:36So what's the signal here that this is sending us? I mean, people buy into the story that,
00:42you know, the thing about the, also Bailey, like let's just be sort of boring and old fashioned
00:47about this for a minute. There's a lot that's unknown. The allocations aren't set, right? We
00:52put a lot of reporting into all of these big institutions, placing orders in the billions
00:57of dollars. It's great to place an order. Doesn't mean you'll get it. That gets decided
01:02in real time right now. And, you know, I think what, without speaking on his behalf, what our
01:06reporting as a newsroom shows is that Elon Musk and the rest of SpaceX management have been very
01:11in control of this process, dictating the terms literally, but also who's going to get access in
01:17the end, the retail portion, again, when it gets settled on a percentage basis or a dollar
01:22basis, there will be loads of people around the world that will be very disappointed. So
01:28that actually it's academic what happens tomorrow when it starts trading, you know, okay. There's
01:32the excitement around the IPO and it's hard not to the largest IPO ever. I'm stalling by the way,
01:37because he's trying to send messages to sources. Okay. Okay. So I guess what, okay. So I'm going to
01:42stall with you. I mean, there's the excitement over the IPO. Yay. We're going to get the first
01:47day of trading. I get it. I get the importance of it, but then there's the actual business. I mean,
01:52this is not a profitable business. It's not, but you know, what's been very interesting in the last
01:57week, let's say, speaking to a lot of existing investors and people that will participate in this
02:05IPO, they're actually probably even more bullish on the nearer term opportunity than SpaceX has set
02:11out in the prospectus. So actually the idea of orbital data centers, these are data centers in
02:17the form of satellite going into deployment and then generating revenues. Actually, you know,
02:23a lot of people I've spoken to very seriously believe that is more imminent than SpaceX has said
02:27it is. They've said as early as 2028. And Brent Winton, you had him on. Yeah. I mean,
02:33program from Ark Invest. Ark Invest is very bullish on anything. A $300 billion. Yeah. So,
02:39let me explain as succinctly as I can his thesis. Yeah. Ark and Cathie Wood, you know,
02:44I know some people find her controversial and there's people who, you know, buy what she says
02:48and there are others who don't. But having said that, she was with Elon from the get-go when
02:53everyone didn't, wasn't really impressed with what he was doing at Tesla. And it did take a full,
02:59you know, several years and he didn't hit all his deadlines, but here you are.
03:03So you always start with Elon Musk often misses the timelines that he himself sets out,
03:07but gets there in the end. This is a question about valuation, right? So this stock will trade
03:12at a hundred times or 90 times current revenues and forward 12 month revenues as best we can
03:17calculate them. What Brett Winton and Ark's argument is, is that, well, actually, we have a lot of data
03:24available to us about Starlink. That is the business of internet and direct to sell based on satellites.
03:30We know the cost of those satellites. We know how many of them there are. We know the dollar basis
03:36it
03:36takes to put them there. And all he's doing is extrapolating out to the data center business and
03:41saying, I actually can model for how quickly they can book revenues on it with the big, if they get
03:47Starship, their big rocket to work. Simples. Okay. Okay. Bailey's been on the Bloomberg terminal app
03:53on the, on the phone. Cause Ed gets the computer. Okay. What do you, we're talking about the
03:59headlines that are coming through. SpaceX reports, the pricing of the IPO formally at 135. So not a
04:04surprise though. No, not a surprise at all. Again, Elon kind of called a shot in terms of this being
04:08a
04:08$75 billion fundraise, this being a deal that comes at $135 each, but it's official according to what
04:15we're reporting on, on the terminal right now. And the reason that matters is now to Ed's point,
04:20everyone on the buy side is going to figure out tonight, early tomorrow morning, what their
04:24allocation was. And they're going to have to think through what they want to do tomorrow. Well,
04:28tomorrow, you know, typically when, when a company goes public and has its first day of trading,
04:34there's this price discovery moment. We don't know exactly what time shares will start trading. Do we
04:40expect that to happen tomorrow? Bailey? Is it sometimes price discovery can take a really long
04:45time? It can take a really long time. I mean, we'll go typical normally in the 10 o'clock hour,
04:49we'll start getting indications from NASDAQ. The biggest thing to keep in mind, indications mean
04:54everything and nothing. No one is trading shares. So you can see an indication though,
04:58that says $700, a thousand dollars. It means absolutely nothing. What matters is when we get
05:04closer to that, call it one o'clock, two o'clock window, when we get closer to the first trade
05:08that
05:08Morgan Stanley is going to execute, what does that look like? Because first trade actually does matter
05:13because someone bought and sold in that moment. Sorry, I'm typing, but I am listening.
05:19No, no, no, no. No, it's just, you know, listen again, the superlative, what, where do you want to
05:24go? Who's buying, who's, who can buy, who, who can actually sell? So, so I think what's going to be
05:29more interesting, right? Is, um, the retail allocation, wherever it ends up, you know, again,
05:35there will be lots of individuals around the world, super disappointed. So the indication
05:40doesn't matter. It's, it's largely, um, a sentiment indicator and it's based on humans talking to one
05:47another. But when the trade happens, you know, what we heard on television, Bloomberg Television
05:52Day, but also on the phone is, okay, we open and it goes higher, right? But even if it starts
05:58trading
05:58at 1pm Eastern and there's three hours left in the session, it will be the first opportunity for a lot
06:04of people to buy at that start of trade. And, and they will want to try and, uh, this, this
06:09life
06:09changing amounts of gains, right? So they'll want to sell it if it went to 200 to, um, this is
06:14hypothetical. So the volume could be crazy tomorrow. Yeah. The, I don't know the answer.
06:19Who's allowed to sell, but yeah, I mean, no, it's everyone's open market, but it's only people in
06:23the IPO. So the $75 billion afloat is what trades tomorrow. There's no insider. There's no long-term
06:29employee. Everything that's sold today. Do we have details on the lockup? Lockup starts after
06:34second quarter earnings. Okay. Quarter ends in June. So, and it's even more severe on
06:37Elon's own shares. Not that he, you know, he, it's academic because he'll just take out
06:42loans against his shares. Correct. But also his economic ownership of the company is not
06:47the story here. It's his voting power in the company. And so, you know, these are hypotheticals.
06:52The main point being that, um, the, the thesis as presented by SpaceX management, um, or at
06:59least in our reporting and the existing shareholders is the reason they'll do a larger
07:03shareholder allocation to retail investors is they believe that those retail investors
07:09believe the story. Well, it's partly that. And it's also, again, going back to the reason
07:13that. This is so fun. We're just here holding our phones. I know. I gotta tell you a story
07:18just crossed. Sorry, sorry, sorry, sorry. At 331 written by Bailey Lipschultz and he's been
07:23sitting right here. So I don't know how that happened, but that's the, that's the story.
07:27SpaceX's IPO raises $75 billion in biggest debut of all time. But the thing is 30 to 40% of
07:33Tesla is owned by individual investors writ large. Exactly. Selling even in the IPO, 25%
07:39to retail is a small fraction when you think about what is going to be unlocked in the next
07:45year. So the big question and a lot of things investors are debating is how does retail ramp
07:51up buying to own 30% of a $1.72 trillion company? Because 30% of 75 billion is a
07:57big number, but
07:58it's still only $22 billion. That's trades like water and NVIDIA from a retail perspective. Yeah.
08:03There's one interesting dynamic, which I think tomorrow is going to be very interesting. So look
08:08at shares of Tesla tomorrow. Okay. And the reason being is that if you're a retail investor
08:12that did not get an allocation. That's how you get into it. What choice do you face if your entire
08:18net wealth is tied up in Tesla shares that you've held because you believe in the story long term?
08:23What do you do? Do you sell to give yourself some money to do that? Or going into this,
08:29did you sell to... Well, the big thing though is for a number of, just to clarify on some points,
08:33each platform, each e-broker is different. So some brokers, when you put in an order hypothetically
08:38for $100,000 of SpaceX shares, you either have to have that liquid or have assets pledged as collateral.
08:44So it's not necessarily like we're going to see in real time tomorrow, people selling to turn
08:48around and buy per se. It's just kind of wild. Right. And if you believe that these two companies
08:53are all going to end up being one at some point, like, yeah, that's all again,
08:56to be continued tomorrow at 1 PM with our special covers. This is just the beginning. These guys
09:01will be here.
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