Pod Insights Equity Podcast The SpaceX IPO has finally arrived About this episode The biggest IPO in history dropped this morning on the Nasdaq — a debut so big, our team thought it deserved its own bonus Equity podcast episode.
On this special bonus episode, Senior Reporter Sean O'Kane called up our AI Editor Russell Brandom to help him break down the $2 trillion valuation, Elon Musk becoming the world's first trillionaire, and what it all means for Anthropic and OpenAI still waiting in the wings.
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Transcript 0:00 Speaker 00 Hello and welcome to a special edition of Equity Tech Crunch's flagship podcast for the business of startups. And we're here today because we just have been staring at and admiring and having questions about the biggest IPO in history. You know, the thing that we've been talking about for many, many weeks now, SpaceX has gone public. It debuted as we're recording it this morning on the NASDAQ Stock Exchange. And after a little bit of back and forth, the company was able to debut at around $150 per share. Right now, it's up to about a $2 trillion or a little bit higher valuation. And SpaceX is a public company. Elon Musk now runs two public companies, exactly what he's always wanted. He's become the world's first trillionaire.
0:44 Speaker 00 And there's a lot to get into. I'm joined today by Russell Brandom, our AI editor. Russell, what's sticking out to you? What do you, what kind of questions do you have? What kind of things are rattling around in your head as you watch this company race up the charts of the most valuable in the world?
1:01 Speaker 01 Yeah, I mean, I think the basic like shape of a lot of the questions around it were like, can Elon actually pull this off? And I do think the answer is just yes. Like, this is, I think particularly in the run-up, you know, from the AI perspective, XAI is like very fledgling as an AI business. There are a lot of questions around it. SpaceX is much more mature in its launch business, but the launch business is much smaller. There was a lot of like weird kind of hedging. I don't want to say like, we're gonna do all these compute deals to sort of make the revenue picture rosier. We're projecting these insane sort
1:46 Speaker 01 of figures for the space that the AI future. And there was kind of like a, you know, we're used to Elon making big promises and people just sort of rolling along with it. But I think there was a sense of like, can he actually pull this off? Or is the market just gonna like, not buy it? And he did pull it off. Like at a basic level, the market bought it. Like, I don't know that this means like, certainly, it would be foolish to be like, the stock will never go down, right? Like, it's gonna, we can envision a bumpy ride, but like, the basic prospect of the IPO was successful,
2:25 Speaker 01 and it's the largest IPO ever. I mean, just the scale of it required a lot of unprecedented things happening.
2:33 Speaker 00 Yeah, pretty much every bank in the world, it seems like, worked on this IPO. You know, we've seen a lot of challenges with big IPOs in the past, especially tech IPOs that drive a lot of interest where trading doesn't start for a long time. This one, you know, it took about probably almost two hours after kind of where people thought it was originally going to start trading. But otherwise, we haven't seen any major hiccups. Robin Hood seemed to have had a brief hiccup due to all the retail interest in this stock, but they say that's resolved. They say they've set record traffic to their, to their platform today. But otherwise, it does not seem like anything has, has gone wrong in that sense, and people are freely traded, and many, many people, I mean,
3:14 Speaker 00 as of recording this, it's something around nearly 300 million shares have exchanged hands, because, you know, at the price that it's trading at right now, you know, something like $40 billion. There's a lot of hot potato going on in the, in the market. And I bring that up because, you know, one thing I think is important for people to consider, especially as we go forward with this company being public now, is SpaceX only offered around 4% of its total shares in this IPO. And so it's a relatively small float, which means we're going to see a lot of dynamic action on the, on the price as, as this goes forward. I'm very interested to see where, you know,
3:55 Speaker 00 the price has gone up mostly today so far, but I'm very interested to see how it reacts sort of in a, in a macro environment, because now SpaceX is sort of subject to all of these things that can change a stock price, change of valuation, whatever Trump decides about Iran at any given moment, any of those things. You know, Musk is the first trillionaire. We have many SpaceX employees who have the ability to cash out and become millionaires now, and a lot of firms that have been backing SpaceX for a long time, making a lot of money. I'm curious, I know you were looking with me at some of the insiders who filed this morning. We got a sense of sort of the ownership that the board of directors have in SpaceX. I'm curious if there's anything on that end,
4:38 Speaker 00 especially folks who may also be backing a lot of the other AI companies. What do you think about that? As you know, a lot of these people have said they're going to hold continually past, you know, this IPO, but I'm curious what you think that does to the AI landscape?
4:51 Speaker 01 Yeah, I mean, I think the biggest question mark I have is less about the board of directors and more about investors who may be committed to certain lockup periods, which I think, I mean, that's very common. And that would mean sort of more supply coming on as they unload their shares. They are probably like Tim Fernholz had a great piece on the site earlier about just like fully executing the orbital data center plan that Elon Musk has laid out is going to require like three different, completely unprecedented, near impossible engineering
5:33 Speaker 01 feats. I think that's not like, of course, Elon Musk has pulled that off before. I think people who are betting on this are not surprised or dismayed to hear that. But if you're like running a venture capital firm, you're like, maybe we, we get some of this out and back in circulation, which may, you know, especially with such a small float, it may affect the share price. You know, these things happen, like stock prices, sometimes they go up and they go down. I think the other interesting thing is because there was so much excitement about this, about SpaceX as a private company, we saw all of these secondary offerings where
6:15 Speaker 01 you're sort of buying a box that had another box inside it that somewhere in the nesting doll had some SpaceX shares in it, but like. There was, unless you're really, really good at learning the fine or reading the fine print, a lot of people are going to find out that their payoff wasn't as big as they thought, or the terms are sort of more negative, there are more fees than they thought. And I think unwinding all of that system, this by the way, is also true of OpenAI and Anthropic and Android and a lot of the sort of hugely valuable private companies that exist in this generation of sort of tech companies.
6:56 Speaker 01 But we haven't really seen that system tested this way before. And I do think a lot of people are going to sort of end up with a lot less money than they thought they were going to get. And I don't know how that ricochets down if we end up with new regulations, if we start to kind of get a bit more serious about these secondary markets. That whole ecosystem is sort of being challenged for the first time.
7:24 Speaker 00 I think that's a really good way to think about that piece of this, especially as we consider Anthropic likely going public later this year, OpenAI possibly going public later this year. Both of them have filed confidentially, but we don't know what that exact timing will look like. And yeah, there has been this sort of big mystery. I love box within a box. What has ever gone wrong in the tech industry and investment? When we, when we've talked about things as boxes, looking at you, FTX. You know, I want to, I think I want to end with those two other companies in the IPOs that are looming, but in the meantime, you mentioned this idea of orbital data centers. There are a lot of challenges there to making that idea work. Elon Musk clearly does not believe that there are as many challenges as other people think.
8:07 Speaker 00 But, uh, you know, that's a long ways away, even in the best setting, uh, you know, at least a couple of years, if not longer, as far as something that is meaningful to SpaceX's business. But in the meantime, I know you and I have both been paying a lot of attention to these two deals that the company signed with Google and Anthropic to basically rent out compute that XAI isn't using in Tennessee.
8:30 Speaker 00 We've seen Musk really distance himself a little bit from the Anthropic deal. He's been relatively quiet on the Google one. Those seem important in the short term, though, because they're essentially almost tripling Starlink's revenue from last year. You know, what do you think about when you think about SpaceX as a sort of NeoCloud? And how people should think about that? Like, are we going to have to be, you know, reading between the lines during the first few earnings calls with SpaceX and listening to them about the strength of those deals? And whether or not they can build a business off of that? Or is that just something that was kind of helpful in the run up to the IPO and we'll forget about later down the road?
9:05 Speaker 01 So, okay, if you are going to build an AI, a frontier AI lab, and you're behind OpenAI and Anthropic and all of these, which XAI is, right? You need a lot of compute because there's, we're going to have a scarce market for compute. And you also like need a frontier AI model and products that people are buying and like AI services, right? I think it's pretty clear, if you look at the public comments and like the staff turnover within XAI, that they're a lot farther ahead on building the compute than they are on building models or AI services, right?
9:50 Speaker 01 So if you are betting on SpaceX as an AI company, which is really the premise of this IPO, is that they are on track to be a frontier AI company, then you're sort of betting that they can catch up on the software if the hardware is in place, right? Which kind of makes sense. I think there are a lot of doubts generally people have with like what future compute markets are going to look like, which is a whole other podcast to talk about. But generally, if the answer, like if you ask the question, okay, how are you going to catch up? Elon's answer is, well, compute is going to be super scarce in the future, and we're the only company that can launch things into space.
10:35 Speaker 01 And so we'll be able to build this orbital compute data or compute sort of cluster that no one else will have access to except through us. And so that's how we'll build the AI system. And like, I guess that makes sense. I do think there's a question of like, when you turn the corner and you start to say, okay, no, we're using this compute now to build an AI model and AI services. And they're AI services that people want to use and aren't just like creating legal risk for us because they're producing like horrific imagery. Right? So I think that's like an unanswered question.
11:15 Speaker 01 And it is like, this is not straightforward to do to like pull an AI model. Right? Like, for instance, the another scarce resource is like talented AI engineers who probably right now, working for XAI is third place behind doing your own startup or working for like OpenAI, Anthropic or Google. Right? And like, so you have to induce them somehow. And like, it's not clear that money is really going to do it. So I think all of that is an open question. How long can we keep kicking the can down the road? Like, I don't know. But, but also that has to do with like, the relevant
11:59 Speaker 01 resource is like, how much, how long will people keep trusting Elon on this? Which has proven durable in the past in other contexts.
12:09 Speaker 00 That's a, that's a kind way to put it, uh, I think. But you're right. And I think that's something that people overlook or, or dismiss at their own risk.
12:19 Speaker 01 Yeah.
12:20 Speaker 00 And I think that's Oh, go ahead.
12:22 Speaker 01 I want to point in one thing before we get into the other labs and the other IPOs, though. I had actually, one thing that had caused people a little bit of anxiety, just in like the last week leading up to this IPO, is you saw, it was actually kind of a bad week for tech stocks up till now. Like the NASDAQ was down like 5% at one point. You saw these huge drops from like Oracle and Broadcom, which had their own issues, their own reasons for that. But like, you start, I think, some people, it was easy to look at it and think, is like the appetite for AI stocks kind of dwindling a little bit? And I think, an explanation that I heard from a fintech founder that, that I think has really borne out, is his point was like,
13:08 Speaker 01 the $70 billion, we call it a $70 billion IPO, and that's before any stock starts trading. That's like, people have committed to buying 70 billions of billion dollars that goes directly to SpaceX, that then they can sell those shares for more money, or less money, it's just in the market. That has to come from somewhere. And like, it's so much money, this is related to it being the largest IPO ever, that like, there's, there's a real dent when people take it out of their portfolio in other places. And it's generally coming out of other IPO stocks, because you don't want to completely shift the balance of your holdings just because now there's SpaceX.
13:50 Speaker 01 So it's kind of coming out of other tech stocks and other AI stocks. And a lot of the volatility that you saw was just people getting the cash ready to make sure that the check would clear when all the action happened on Friday. Which I think is just like, illustrates the crazy financial mechanism that had to happen behind the scenes for all of this. That like, we think of just like, well, yeah, they bought some stock and now the stock's on the market and I can see the number going up and down. And it's like, no, a lot of money had to move out of the other parts of the economy so that it could now be in SpaceX's corporate accounts.
14:30 Speaker 00 I think that's a good way to think about it, but also I will note that as of recording this, the NASDAQ composite is up on the day. Tesla, which was down earlier to start the day, is now green. So whatever money came out to go into SpaceX, there seems to be some backfill happening there. And this is a pretty ludicrous stock market in a lot of ways, and this is only proving that out a little bit further. Let's end with those other labs, because you talk about that durability of Elon Musk, regardless of what's happening, whether Grok is generating CSAM, whether he's inciting violence across the sea. There are all these reasons that people don't like him. Many people don't like him and don't
15:14 Speaker 00 like his businesses. And yet, as far as investment goes, he's able to dangle these outlandish promises and raise money against them. And maybe someday, I think the best way to think about it from their perspective is Gwen Shotwell, who is essentially the person kind of running the day to day at SpaceX, likes to say that they take the impossible and make it late. Whether or not you really want to believe that, it's up to you. But that's how they think about it. But when I think about Anthropic going public or OpenAI going public, I feel like that's the biggest thing to me that is going to be different. Yes, everybody loves AI stocks. Everybody loves piling into data center builders or
15:53 Speaker 00 Neo clouds at the moment. But when they become public companies, do they have that stomach or that disregard, frankly, for the people who are telling them that they're going to be wrong in a way that Elon Musk does? Or do they even need that ability? Because Anthropic, I think, has a more durable business, at least as we understand it from the outside looking in at the moment, than OpenAI. But I'm just curious what you think about all that as we head into the back half of this year and expect to see at least one, if not both of those other companies, go public.
16:27 Speaker 01 It's weird because SpaceX has rebranded into an AI company so quickly.
16:32 Speaker 00 Yeah.
16:33 Speaker 01 But I think it's only ever been an Elon Musk company, and people who are investing in it are betting on Elon Musk. And that is, if you talk to people and you're like, how can you put so much money into this when there are all these questions? They'll say, well, Like, never bet against Elon. And also, a lot of those people have all this money to invest because they invested in Tesla and they did well. Right? Like, he's made a lot of money for a lot of other people, and this is sort of the coin of the realm. Like, this is the one metric of investor success, right? I think the AI bet is a little more complicated.
17:13 Speaker 01 There's more evidence for it, but also you kind of don't have as much of a backstop where like, a year ago, OpenAI was the clear leader. Like, now it seems like Anthropic is the leader and OpenAI is kind of playing catch-up. But like, six months from now, is it gonna be Qwen that we're all using? Like, the thing is changing so quickly that even if you believe in the underlying technology, that like, 10 years from now, this is gonna be at the core of how absolutely everything works. I think there are so many unanswered questions that it's hard to really have certainty. There's just a high uncertainty. Whereas I think the thing that investors get from Elon is they're like, look,
17:58 Speaker 01 whatever happens, he'll figure something out. He'll make it work. Even if all of AI collapses, he'll find some other way to make trillions of dollars from launching satellites into space. Right? This is what it is now, but he's a smart dog, and we believe in him. Right? You don't have that with OpenAI and Anthropic, and so it makes it a kind of different proposition. They have much more coherent, actual businesses, but also there are real questions about those businesses that were really like, I am very interested to see those S1. Whereas the SpaceX S1 was really like, Elon makes up a bunch of stuff about what might happen in the future. Like, we're not expecting a realistic, total addressable market from him.
18:42 Speaker 00 Yeah, you talk about those labs going public and that lack of a backstop. And all it makes me think of is being a child, standing on a diving board, and inching myself further to the edge of the diving board, and the increased terror that you feel as you get closer to it. But, you know, maybe you find out that the end of the diving board isn't so bad if there's, you know, water to land in.
19:02 Speaker 01 Well, this is also, the kids who did it just started running, and then they're like, well, I'm not gonna stop running. And I think that's kind of the Elon approach of just like, yeah, YOLO, we're doing it.
19:13 Speaker 00 Well, that's as good a place as I need to stop for today. There's clearly a lot more that we're going to be paying attention to, not only with SpaceX's historic IPO and the fact that, again, now we have two public companies run by Elon Musk, although we'll see for how long if he decides to merge the two together. And, and the looming IPOs of Anthropic and OpenAI. We'll have much more on all of this on Equity when we come back next week. Follow us at EquityPod on X and Threads, and thanks for listening.
19:47 Speaker 02 Equity is hosted by TechCrunch senior reporters and produced by Teresa Locan Solo with editing by Cal. Subscribe on YouTube or wherever you get your podcasts and find out what's next at techcrunch.com/events. Thanks so much for listening and we'll talk to you next time.
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