SpaceX IPO Skepticism (with Becky Quick, Joe Kernen, Andrew Ross Sorkin)

Steve Eisman is not a fan of the SpaceX IPO, citing extreme capital intensity (CapEx 215% of revenue in Q1 vs 42% in FY2023), the shift from Starlink to AI, and that Grok is not a world-class AI company. He argues the entire company is being bet on AI, not space or Starlink, and that AI is becoming a commoditized business with no moats.

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SpaceX IPO Skepticism (with Becky Quick, Joe Kernen, Andrew Ross Sorkin)

ndx

The NASDAQ had its worst performance since April of last year exactly one week before the SpaceX IPO. Retail selling of levered ETFs to free up cash for the IPO could create disproportionate pressure on the NASDAQ 100 and semiconductors.

Becky Quick

Joining us to talk all things markets is Steve Eisman. Let's talk first about the SpaceX IPO.
Steve Eisman

I'm not a fan of the SpaceX IPO. If you read the prospectus, there's some amusing stuff - one of the things SpaceX wants to do is asteroid mining. The probability of that happening anytime soon is pretty low.
Steve Eisman

Grok, with all due respect to Elon Musk, is not a world-class AI company. I don't think anybody speaks of Grok as being at the leading edge.
Steve Eisman

The whole tech sector is being transformed from an asset-light business to an asset-intense business. Despite the incredible sums being spent, what's being produced in terms of LLMs and agentic AI is not really differentiable. It's very commoditized.
Becky Quick

So why do you think Berkshire Hathaway stepped in and took $10 billion of that Google offering?
Steve Eisman

I have no idea. Google, there's a lot of other reasons to own Google other than AI. But there's no question the business has become capital intensive with no moats.
Andrew Ross Sorkin

SpaceX right now in terms of getting things into orbit is a monopoly power that will be able to charge monopoly rents. They may be 2, 3, 4, 5 years ahead of others. Betting against Elon has never been a great bet.
Steve Eisman

If you look at the S1, the TAM is defined at $28.5 trillion. 85% of that TAM is AI. So even if everything you say about SpaceX and Starlink is true, the entire company is being bet on AI in terms of its future, not on space and not on Starlink. Those are his words, not mine.
Becky Quick

Your bigger concern is that there's a lot of good news here, but you think it's already all been baked in?
Steve Eisman

It's more than baked in. The $28.5 trillion TAM is almost as big as the entire GDP of the United States. The S1 reads like a science fiction novel.

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