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Chapter 1: What is the main topic discussed in this episode?
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From The New York Times, I'm Michael Barbaro. This is The Daily. On Monday, the AI giant Anthropic filed paperwork to go public, turbocharging a coming wave of blockbuster IPOs that could mint the world's first trillionaire and remake American capitalism. The first of those IPOs will be Elon Musk's SpaceX, set to begin selling shares as soon as next week.
Today, business reporter Ryan Mack takes us inside the plan for SpaceX's record-shattering debut on the stock market and explains how it's already changing the rules for investing in ways that mean its success or failure will affect all of us. It's Tuesday, June 2nd. Ryan, welcome to the show.
Hey, Michael. Thanks for having me.
My pleasure. A confession here, it's very rare for The Daily to cover an IPO. And that's because it's pretty rare that an IPO generates a level of interest and excitement and worry that the one we're going to talk to you about today does. So my first question to you is, why does this initial public offering of SpaceX matter so much and feel so monumental to so many people?
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Chapter 2: What is the significance of SpaceX's upcoming IPO?
And so Elon Musk sees this as his opportunity to do that and to raise these tens of billions of dollars to fund a lot of the goals that SpaceX has for the next 10, 20, 30 years.
You must have solar-powered AI satellites in deep space. So this is where it's kind of handy to have a space company, I guess.
LAUGHTER I'm talking about visions to launch data centers into space for AI. You can mine the silicon on the moon, refine it, and create the solar panels, the solar cells and the radiators. I'm talking about landing humans on the moon and building factories to do mining.
We are going to be able to take astronauts to Mars and ultimately build a self-sustaining civilization on Mars. That is the long-term goal of the company.
Ultimately, he's talked about making humans multi-planetary, getting them to Mars and making us a species that exists on more than one planet.
It is very important, essential, that over the long term that we become a multi-planet species and ultimately even go beyond the solar system and bring life with us.
Right, those very modest goals.
Yes, very modest goals.
And it sounds like you're saying that those kinds of literally otherworldly business goals require the kind of money that you cannot just go to Wells Fargo and get from the bank.
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Chapter 3: How is Elon Musk's leadership influencing the IPO process?
But there's no guarantee that this necessarily goes up. And what happens if shares start to fall after the first couple of days of trading? You mentioned Google there. But I think of something like Facebook when it went public and the trials and tribulations it faced. Its stock went down shortly thereafter. Of course, it's gone up many times over since that time.
But in those first early days of trading, there were a lot of questions. If SpaceX doesn't hit its milestones or some of these very pie-in-the-sky goals that Elon Musk has set out for the company... you may have a lot of investors asking, why was this allowed? Why am I holding this stock? Why was it in these indexes to begin with?
So quite clearly, the story of this IPO so far is how clearly it's seeking to put this stock, put a piece of SpaceX into the hands of a lot of regular people. And that, of course, means that if this is a great IPO, the upside for lots and lots of people is going to be unusually spread out. But if it goes south and is bad, then the pain is going to be felt.
by a lot larger group of people than normal.
Right. When you think about that, you have to think about what kind of business is essentially holding up those valuations. With an IPO, every company has to file what's called an S-1 to disclose their financial health and their projections for the future. And so I've been covering Elon Musk for many years now.
This is the first time I've been able to see the full picture of what's going on at SpaceX. And after spending a couple of days with this document, which is 277 pages, I and many others just have a lot of questions as to whether or not the business that we're seeing here, the numbers that it's putting up, can justify these trillion dollar valuations that people will be investing in.
We'll be right back.
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Chapter 4: Why is SpaceX raising money through an IPO now?
You know, you're not doing your traditional analyses of shares or financials here. A lot of this is simply hype. And I say that looking at a number that the company put out in their own document that something called total addressable market. This is the market that the company projects it will be able to attain in the future.
And it estimated in its own financial documents that its total addressable market is the largest ever in human history, and that it estimates it to be $28.5 trillion. Wow. Put that number in a context. I don't know if I can. I mean, it's so massive. It's close to the US GDP, I believe. Wow.
And the company is telling investors that if you invest in us, we may become a company that controls a market that is $28.5 trillion. Wow.
Right, that basically does the kind of commerce that the entirety of the United States economy does someday.
Yeah, someday. And that is AI and rockets to space and Starlink and all that is $28.5 trillion. That's the type of hype that Elon Musk is able to sell. And I think people buy into that largely because he's been successful in the past. You look at his net worth, for example. Yeah. which can fluctuate anywhere from $600 to $800 billion these days.
And you might see that and be like, wow, this man's been very successful. And he's telling me he's going to hit these trillion dollars in total addressable market. Let me put my faith into him and let me bet on him because he seems to be going places.
Well, let me put that proposition to the test. Elon Musk's track record in the past. Quickly summarize it. We have a couple of examples to play with. Obviously, we have Tesla. We also have X, formerly known as Twitter.
So let's take Tesla. He took the company public and the company has mainstreamed electric cars around the world. It has been wildly successful from a stock price perspective. It's made folks a lot of money and it continues to be a strong public company from a stock price perspective.
Right, and so have investors. I mean, I think I was looking up before we spoke that if you invested $1,000 in Tesla at its initial public offering, you'd have something like a quarter million dollars today. That is a hell of a return.
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