SpaceX Makes History With Biggest Wall Street Debut Ever

Carol Massar

Introduces the segment on SpaceX's IPO, noting the stock is up nearly 30% on its first day of trading.

Tim Stenovec

Plays Elon Musk's live stream quote about the future and SpaceX's mission, then notes it feels familiar from the S1 filing.

Carol Massar

Asks if the valuation is all about future expectations, which is typical when buying into Elon Musk's story.

Ed Ludlow

Explains that SpaceX has a diverse business with different arms over a distant timeline, and Musk's compensation is tied to establishing a human colony on Mars.

Bailey Lipschultz

States that SpaceX pitched a $26.5 trillion AI story, including terrestrial and orbital data centers, and making Grok a rival to Claude and ChatGPT.

Carol Massar

Breaks down 2025 revenue: Space 22%, Connectivity (Starlink) 61%, AI 17%. Asks which segment investors are most bullish on.

Ed Ludlow

In the immediate term, investors are most bullish on SpaceX AI (XAI), which is pivoting to be a NeoCloud, renting compute capacity to Anthropic and Google for billions per month.

Bailey Lipschultz

Notes that Starlink is cash flow positive, a cash generating business, and investors extrapolate that to data centers. The prospectus set a TAM of $28.5 trillion, with Starlink and launch only $2 trillion of that.

Ed Ludlow

Raises a bearish signal: if XAI is selling AI software, why rent out compute capacity to Anthropic and Google instead of using it to train their own models? This could indicate lack of demand for their models.

Carol Massar

Asks about analyst consensus on SpaceX, noting the challenge of banks involved in the deal also having analysts covering it.

Bailey Lipschultz

Says initiations from underwriting banks will come in 25 days. Notes Oppenheimer had a $190 price target. Points out Tesla is the most hotly debated stock on the sell-side, with 30 buys, 24 holds, and 9 sells.

Ed Ludlow

Discusses the potential Tesla-SpaceX merger, noting it has been bandied about for months. SpaceX merged with XAI instead, but the idea persists. Gwen Shotwell acknowledged synergies between Tesla and SpaceX.

Bailey Lipschultz

Connects Optimus robots to Mars infrastructure, and notes that orbital data center satellites have GPUs on board for edge inference, which could serve Tesla's robotaxi and Optimus businesses.

Carol Massar

Introduces Max Chafkin, Bloomberg Businessweek columnist, to discuss the SpaceX IPO.

Max Chafkin

Compares this IPO to Tesla's 2010 IPO, noting that then Elon Musk was incredibly popular without the political baggage. Now, the AI story has swamped everything else, and the White House's 'let them cook' AI policy is baked into the SpaceX pitch.

Ed Ludlow

Points out that the S1 spells out that the entire success of the plan is dependent on Elon Musk leading it. Also notes that Starship is a massive part of America's ambition to get back to the moon, and they are required to demo it this year.

Max Chafkin

Explains that Starship has just done its 12th test flight with a new architecture, but they have never successfully landed both parts back on Earth. They haven't taken anything to orbit yet. All of SpaceX is in a bind if Starship doesn't come through.

Carol Massar

Asks how investors should look at Elon Musk's leadership of Tesla as a model for how he'll run SpaceX, especially dividing his time.

Max Chafkin

SpaceX looks very similar to Tesla of the last couple of years: a very good core business (launch for SpaceX, autos for Tesla) being pushed to the side for futuristic stuff (data centers for SpaceX, robots/self-driving for Tesla). The legacy part of SpaceX is a better business than the EV business, as it has a near-monopoly on launch.

Ed Ludlow

Adds that SpaceX investors would make the case that SpaceX should get credit for being a much more diversified business than talked about, with a good interim before orbital data centers.

Carol Massar

Introduces Anthony Hughes, Bloomberg ECM reporter, to discuss the trading dynamics.

Anthony Hughes

A 20-30% gain on the first day is a pretty balanced outcome from the banks' perspective. You want to see a decent return for a high-growth company, but not go through the roof.

Ed Ludlow

Explains the lockup structure: Elon Musk has 84% voting power and is locked up for 365 days. After Q4 2026 earnings, at least 20% of existing shares are free of lockup. Today, only those who participated in the $75 billion offering can sell.

Carol Massar

Introduces Nick Colas, co-founder of DataTrek Research, to get his view on whether to own the stock.

Nick Colas

The simple math doesn't add up; this is a very expensive stock relative to any rational measure of value. It's a calculus based on faith in Elon Musk's track record.

Ed Ludlow

Asks how to model the orbital data center business, noting that existing cap table holders extrapolate from Starlink's $4 billion operating income and rate of deployment.

Nick Colas

You have to use faith because there are no orbital data centers in space right now. It's a faith-based process, not based in any math you can rationally model.

Anthony Hughes

Asks if index inclusion could put a floor under the stock, given the need for people to buy.

Nick Colas

Index inclusion (Q, July 5th) is a factor for the next couple of weeks. The lockup expirations for employees and insiders are earlier than usual, which should balance out. Most IPOs underperform in year one.

Carol Massar

Introduces Ross Gerber, president and CEO of Gerber Kawasaki Wealth and Investment Management, who is a SpaceX owner.

Ross Gerber

He invested in Twitter four years ago, wrote it down to 25%, then XAI bought Twitter, then SpaceX bought XAI. He has now made over three times his money. He is holding his SpaceX shares.

Carol Massar

Asks if he will continue owning the stock or if the valuation is a concern.

Ross Gerber

He is not selling. He thinks it will be easier to go to space than New Jersey in 10 years. He personally owns the shares, not his firm's clients, because Elon didn't want to do the Twitter deal so he didn't sell it to clients.

Ed Ludlow

Asks about the hypothesis that people didn't sell Tesla shares to participate in SpaceX because they see a Tesla-SpaceX merger as imminent.

Ross Gerber

He tweeted about it again this morning. Gwen Shotwell didn't poo-poo the idea and said it makes sense. It's a foregone conclusion. It props up Tesla stock because people don't want to sell if it's going to be acquired by SpaceX.

Carol Massar

Plays a clip of Nell Minow, Value Edge Advisors, criticizing the governance structure: Musk has appointed himself CEO for life, has all voting control, and has built a moat with alligators around himself.

Ross Gerber

He finds the outrage humorous because that's how Tesla has worked for 15 years. The board is not independent, index funds just push yes. Elon takes advantage of a system where 20% of his company is owned by robots that don't make decisions.

Ed Ludlow

Reads from the S1: Musk's compensation package is tied to establishing a permanent human colony on Mars with at least 1 million inhabitants. Asks what that goal means to Ross as a shareholder.

Ross Gerber

It means he might have a chance of not having to pay Musk the billion shares. He doesn't think we'll have a million people living on Mars. He thinks the robots will be the ones doing the work in space and going to Mars.

Carol Massar

Asks about Gerber Kawasaki's rules on buying IPOs and when he would start getting clients in.

Ross Gerber

His firm does not buy IPOs on the first day. He has talked clients out of it today. IPOs are really difficult due to volatility and investor psychology. He advises buying 20% of what you want today and dollar-cost averaging in over five months, or better yet, waiting until lockups expire.

Carol Massar

Asks about succession planning, given the Elon universe is getting bigger.

Ross Gerber

If Elon died tomorrow, SpaceX would be fine. They have great management that has been very independent. Many employees don't like Elon either. A lot of what Elon does hurts SpaceX. SpaceX has a much better management team than Tesla when it comes to succession.

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