Indexes rewrite rules for trillion dollar IPOs

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**SPEAKER_4** (1:30)
SpaceX, OpenAI and Anthropic are forcing the most powerful stock indexes in the world, specifically Nasdaq and FTSE Russell, to rewrite their fundamental rules just to accommodate their upcoming trillion dollar public offerings.

**SPEAKER_5** (1:44)
Which is just wild when you step back and look at it. You have these three private entities with combined valuations approaching $3 trillion.

**SPEAKER_4** (1:53)
Yeah, and they have completely bypassed that traditional growth phase that companies use to experience in the public markets.

**SPEAKER_5** (2:00)
Right, they are arriving fully formed, well, at least in terms of their market caps.

**SPEAKER_4** (2:03)
Exactly. So the real question we have to figure out today is whether forcing passive retirement funds to buy these unprofitable companies immediately upon listing is actually going to transfer the risk of a massive tech bubble directly on to everyday investors.

**SPEAKER_5** (2:18)
Because you look at the targets here and they just rewrite the historical record. I mean, SpaceX is aiming for a valuation of up to $2 trillion, and they are looking to raise $75 billion.

**SPEAKER_4** (2:29)
And Anthropic filed confidentially targeting nearly $1 trillion, which is based on a private funding round of $65 billion.

**SPEAKER_5** (2:37)
Yeah, and OpenAI is holding a private valuation near $1 trillion following its own record-breaking private financing.

**SPEAKER_4** (2:45)
But the financials underlying those numbers present a pretty stark contrast to the valuations.

**SPEAKER_5** (2:49)
Oh, absolutely.

**SPEAKER_4** (2:50)
I mean, SpaceX reported nearly $19 billion in revenue, but they paired that with a net loss of roughly $5 billion.

**SPEAKER_5** (2:56)
Right, and Anthropic is projecting a steep revenue run rate, but they are operating at a heavy loss too. OpenAI is openly projecting continued losses for years as they build out their models.

**SPEAKER_4** (3:07)
Yeah, and I struggle a bit with the categorization of SpaceX in this context.

**SPEAKER_5** (3:11)
Oh, so?

**SPEAKER_4** (3:12)
Treating them purely as an aerospace company ignores the internal restructuring that just happened. SpaceX absorbed XAI in a cashless stock transaction.

**SPEAKER_5** (3:22)
Right, the paper swap. For anyone listening who doesn't spend all day reading corporate filings, a cashless stock transaction basically means they just swapped pieces of paper.

**SPEAKER_4** (3:30)
Yeah, no actual money changed hands. SpaceX simply absorbed the artificial intelligence company by issuing them shares.

**SPEAKER_5** (3:37)
Exactly, and because of that paper swap, they are positioning themselves as an artificial intelligence infrastructure company.

**SPEAKER_4** (3:44)
Which is a very different pitch.

**SPEAKER_5** (3:46)
It is. The pitch relies heavily on building orbital data centers for decentralized AI computation.
The public markets have established frameworks for pricing launch providers, right?

**SPEAKER_4** (3:57)
Yeah, they know how to value rockets.

**SPEAKER_5** (3:59)
And they have frameworks for pricing artificial intelligence software. But pricing a company that blends rocket launches with decentralized AI computation in low Earth orbit is a completely different exercise.

**SPEAKER_4** (4:12)
You really see that friction in the revenue multiples. SpaceX is targeting a valuation that sits at nearly 90 times its trailing revenue.

**SPEAKER_5** (4:20)
Hold on. Let's just clarify trailing revenue for a second. But that basically means looking in the rear view mirror at the actual cash they brought in over the last 12 months.