SpaceX & AI: “Bigger Than The Dot Com Bubble” | Jim Chanos

SPEAKER_1 (0:00)

And what's similar versus the.com bubble?

Jim Chanos (0:03)

Well, this one's much bigger.

That's easily the first statement I can say, having been short stocks in 99 and 2000 There are similarities.

John Johnston (0:14)

Hi, everyone, JJ here. Welcome back. Well, it's a new week and the SpaceX IPO has happened. And yes, it was as big as people thought, and the stock popped, at least on the first day. We'll have to see what happens. But today, I wanted to highlight some commentary that's been going on, specifically from Jim Chanos, who's a short seller, a famous short seller. He's been involved in uncovering actual frauds, including Enron back in the day and earlier on in his career. He's had a lot of successes and not so much in the bull market recently. Pretty hard to be a short seller, but there's two interviews that he's done just in the recent days that I really want to highlight, and I'll put links to these in the description.

Now, there's a lot of hype around, a lot of enthusiastic people around, so bearish voices.

Well, I wouldn't say few and far between because a lot of people do see that the SpaceX IPO, on the financials at least, is expensive. I don't think many people doubt that. There's a lot of people trying to justify the price of it now, and there's these other IPOs coming up, Anthropic and OpenAI, which around a trillion dollars, it's expected. So there's a lot going on. The market seems frothy and Jim Chanos has come out and really detailed it. Now I've been following this guy for a long time. He knows what he's talking about. This is not just some YouTuber talking. This is serious professional investor who has had some successes and is well respected. So this one here, SpaceX IPO is a troubling sign for markets, as Chanos says, so I'm not going to play this one, but I do encourage people to look at this. It's a 13-minute interview, Bloomberg Television. But I wanted to highlight this, which was iConnection's channel, and it was a 30-minute interview and the headline here, this is bigger than the.com bubble, Jim Chanos' brutal warning before the SpaceX IPO. So obviously, it's happened now.

He doesn't come out and say exactly what he thinks is going to happen because markets, predicting markets is pretty much impossible. That's the sign of a good investor saying, I don't know exactly what's going to happen. But he's saying the definite warning signs here is comparing it to the.com bubble, even bigger, and he does detail it.

I'm not going to play all this video, but I'm going to comment on parts of it. We're going to jump right to the point of where he talks about this, that it being bigger than.com bubble, and then we'll go back, but let's just get into this.

SPEAKER_1 (2:46)

Can we say that this wave of huge IPOs is a potential problem for the stock market?

Jim Chanos (2:53)

Well, every time we've seen a wave of IPOs, it's generally not been good for the stock market. That's what we can say historically. Maybe this time it will be different.

SPEAKER_1 (3:03)

What's different?

John Johnston (3:04)

It's classic, of course. This time is different. A lot of people are saying that because the total addressable market, that's the target market of AI in space is infinite. This is some warning signs when people start saying that. New paradigm. When people say it's a new paradigm, it's going to be different that often marks near the top. We don't know where the top of this will be. But I do think it's a bubble. I've said that. I'm willing to say that. Don't know when it'll pop. There's a sort of thankless task saying that. Well, you know, when bubbles do pop and people have been warning, that people are dealing with the losses and they don't want to come out and they sort of disappear. The people that were prominent in saying, it's not a bubble, this is a new paradigm, tend to be quiet and go away for a while.

SPEAKER_1 (3:50)

What's similar versus the.com bubble?

Jim Chanos (3:52)

Well, this one's much bigger. That's easily the first statement I can say, having been short stocks in 1999 and 2000 There are similarities, and one of the biggest similarities is the impact on a CapEx tech boom on earnings. So back then, we had Y2K. I remember my firm replaced all its PCs in 1999

We also had the enterprise and telecom build out of the Internet networks, right? You had, not only was the fiber being laid globally, but big companies were basically wiring themselves up to take advantage of the Internet, to talk to each other.