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Chapter 1: What is the significance of SpaceX's IPO?
It's SpaceX IPO day and Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoy. I'm joined today by Lou Whiteman and John Quast. And we have to start with the news of the day. That is the SpaceX IPO. This has been coming for a while. It's been a huge topic.
Retail investors, who are the people that we talk to, are going to be a huge, huge piece of this. So I want to go through kind of an overview and... Get all the way down to when are some of these big owners going to sell? But Lou, let's start here.
For investors who are maybe new to this IPO process, who've never bought an IPO or a stock that has started their initial trading, like SpaceX is going to do today, what is an IPO and why is it important?
So an IPO, initial public offering, is the process through which a private company becomes a publicly traded company. All companies have shares, private or public. But before the IPO, SpaceX shares were held by investors who had invested early on, venture capitalists, insiders, not easily traded on the open market.
So what SpaceX is doing is they're selling a small sliver of themselves, some percentage of their shares. In this case, you know, I think under 10 percent. Over time, all of the shares will become tradable. This allows both retail investors like us, non-venture capitalists to get in. It also allows for big holders to get out.
So it is it's just the process of becoming more easily tradable or as we call it publicly.
Yeah, we'll get to that selling piece in just a moment. But John, why is this IPO in particular such a big deal?
Because it's the biggest IPO of all time and it's not even close. So 2019, Saudi Aramco went public in its IPO. It raised about $25 billion. SpaceX is looking to raise $75 billion. So three times the size of the last biggest IPO. So this is absolutely enormous. And when you think about the timing here,
I know we're going to get into this more, but when you look at Anthropic, OpenAI, also looking to go public in the near future, you look at even a company, we shouldn't forget about SK Hynix from South Korea, looking to go public here in the US. It's already publicly traded in Korea, but... publicly traded here in the US at maybe a trillion dollar valuation as well.
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Chapter 2: Who are the key stakeholders selling SpaceX stock?
We haven't seen that before.
Lou, this does seem like a unique moment. And we had a little bit of this during the pandemic. There was a lot of those SPACs, SPAC mania. That was very different companies that it seems like we have today. SpaceX is a very real company. doing very real things. We've done shows, if you want some deep dives, we have some of those in the back catalog for Motley Fool Hidden Gems Investing.
And you're going to be doing some content on the Motley Fool today and over the next few weeks or so about this. But this is a moment where you're going to see potentially three... trillion dollar companies coming to public markets in 2026. The scale of that is just something we've never seen.
Yeah, this is not what the IPO market was made for, if we're honest. And some of these things, all this talk about, well, they're bending these rules, they're changing these rules. I'm sympathetic to that, but also the rules never envisioned companies this size. it's important to say, yes, a lot of money is coming on. There's a lot of questions.
And I don't think any of us really know the answer to what this will do for the market. Cause it should pull money away from elsewhere. Uh, by the St. Louis fed, there is a trillion dollars on the sidelines as they call it. That's money and money markets. Not all of that is looking to get in, but there is a buffer there. Uh, I'm trying to do the back of the envelope.
If all three go public, what we're thinking, maybe five to six percent of total market capitalization of the of the U.S. markets. So not that's a huge number, but it's not a relatively massive number. I think over time the market can handle this. But I do think that, yeah, we could be in even if you have no desire to get in on this offering and just want to watch it from the sidelines.
between your index funds and just what it does, the pulls on other stocks. Almost everybody invested in U.S. markets is going to feel this somehow, at least in the short term.
Yeah, John, let's be honest about what this is for a lot of investors. This is liquidity, a liquidity event. This is an exit for them. You know, I follow a lot of venture capitalists on Twitter and places like that. They're looking at this as a huge day because this is when they get their money out of So talk to me about exactly what that means and what the IPO means.
If you're Elon Musk or if you're investors in SpaceX, you don't typically want to do this in a down market. You want to do it in a market like we have today where, hey, what's a trillion dollars here or there when you're talking about valuations?
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Chapter 3: How does the SpaceX IPO impact Alphabet's strategy?
When we come back, I want Lou and John's thoughts on the latest from Apple. You're listening to Motley Fool Hidden Gems Investing.
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Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Guys, I wanted to touch on WWDC. This used to be one of those huge events from Apple. They had a couple events every year that in the late aughts, early 2010s, these were some of the biggest events
moves for the market because this is when new products came out, when new software came out. But WWDC was, I would say, a little bit of a dud this year. Just not a lot happening. There's a lot of under-the-surface things that are going on. Siri is apparently what they promised a couple of years ago. And they talked a lot about parental controls.
If you're a parent, maybe this is going to be really helpful. I'm kind of excited about some of those features. But Lou, when you look at something like WWDC, Is Apple just kind of moving out of the spotlight? They're not spending a bunch of money on AI.
You know, it's not, there's not really a huge AI story, but maybe from an investor standpoint, that means they're not burning a bunch of cash and maybe that's okay.
Yeah, I think they're fine on AI. We've talked about this, but using someone else's stuff and getting it out over your massive customer base, that's the way to go. That's a lot better than reinventing the wheel. But look, Apple has replaced Microsoft as the most boring big tech company. Whoever thought this company could be so boring? And I mean that as a compliment.
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