Should You Buy Space X? | IPO Special

**Morgan Brennan** (0:00)
The space business is very much a pioneering business, and I think it also speaks to this idea of when Elon Musk says he's going to set out and do something, he's not necessarily going to do it, and the crazy forecast that he puts forward, but he almost always does it. And so the space business within SpaceX, I think is a good example of that, because even right now, what they're designing with Starship, the next generation rocket, which unlocks the future overall for SpaceX, and this like huge hefty valuation that they're asking for as they come public, all of that has been said by everybody else to not be possible, and yet they've done it. And now they dominate the market. And so it puts them in a key tentpole position to now be able to go out and carve out other pieces of the market.

**Wilfred Frost** (0:40)
Hello and welcome to this special episode of The Master Investor Podcast, where we focus on the SpaceX IPO. By this Friday, the 12th of June, it will be the biggest IPO of all time, set to raise about $80 billion of fresh capital, valuing SpaceX at some $1.8 trillion.
To debate the attractions and detractions of this IPO, we are joined by four fantastic guests. My former colleague and friend from CNBC, Morgan Brennan, the host of Morning Call, but also the network's lead anchor when it comes to space. Then, to outline the bull case, we will be joined by Dan Ives of Wedbush Securities, who you will know from previous episodes, followed for the bear case by Morningstar's Nicholas Owens. And to round things off, another friend of the show, Larry McDonald of The Bear Traps Report, who will outline what he thinks this mammoth IPO will mean for the broader markets. All of that coming up. The Master Investor Podcast is sponsored by ELSEG, Interactive Brokers, The World Gold Council and BNY Investments. Please do remember the views expressed in this podcast are for general information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice or a personal recommendation. More on that in the show notes.
First up, we're joined by Morgan Brennan, of course, the anchor of Morningcall on CNBC and the lead reporter on all things space for CNBC. Morgan, it's great to see you.

**Morgan Brennan** (2:28)
Well, if the pleasure is all mine, it's wonderful to see you again and keep up all the great work. Just huge congratulations to you and excited to talk about this major moment. That to be honest, I wasn't sure we were going to see in our lifetime.

**Wilfred Frost** (2:38)
Well, I mean, quite. It's well, firstly, congrats back to you with the new show. It's going so well. And as you say, we didn't know if we'd see it in our lifetime. And I guess we didn't know it would be quite this size.
Just talk to us through the core numbers. It's Monday, the 8th of June. By Friday, the 12th of June, this company will be listing. What sort of numbers are we talking about?

**Morgan Brennan** (3:02)
Yeah, and we're talking about the largest IPO, Initial Public Offering, in the history of the world, literally. And it's a space company that's doing it. It's a space company that under the hood obviously has a variety of different multi-billion-dollar, highly disruptive businesses that all come together to create, I think in the eyes of SpaceX, a company where the sum is greater than the value of the parts. So in light of that, you're talking about a company that's also losing a lot of money here, but is growing rather quickly and is really basing its valuation. This nearly $1.8 trillion valuation, if everything comes together according to plan here come Friday, $1.8 trillion valuation on a bet on the future, on the long-term future. So 555 million shares, priced at $135 a share. That is not expected to change.
As of right now, according to some reports, two times oversubscribed and just a small float. So not a lot of shares being offered to market.
But what is being offered to market is expected to raise more than $75 billion. 20 billion of that will go to paying down debt and the rest is going to go to this massive spend on everything from their next generation Starship, to Rocket, to AI Compute Infrastructure and of course Data Centers in Space.

**Wilfred Frost** (4:16)
So as you said, raising $75 billion at a valuation of about $1.8 trillion. So selling about 4, 4.5% of the shares only. What exactly does SpaceX do, Morgan? You alluded to it that it's not just Space, there's three parts of the business as they describe it, Space, Connectivity and AI. Talk us through Space first of all, what falls under that?