SpaceX and Tesla merger may happen this year

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**SPEAKER_4** (1:30)
SpaceX went public with an initial share price of $135. That hit a $2.2 trillion valuation instantly, making Elon Musk the first individual worth over a trillion dollars.

**SPEAKER_5** (1:42)
Right. That valuation is attached to a company that generated 18.7 billion in recent annual revenue, but they actually recorded an operating loss of 4.3 billion. They lost 8.7 billion over a recent 15-month stretch.

**SPEAKER_4** (1:56)
Yeah, you are really looking at the consolidation of satellite broadband, humanoid robotics, artificial intelligence and electric vehicles into a single synthetic conglomerate.

**SPEAKER_5** (2:07)
And they're essentially rewriting the rules of corporate governance in the process.

**SPEAKER_4** (2:10)
So it brings up this core question, you know, does combining all these futuristic industries under one legally fortified roof create an unbeatable tech empire? Or does it just concentrate an unprecedented amount of financial risk onto a single point of failure?

**SPEAKER_5** (2:23)
Well, the mechanics of the public offering show exactly how much leverage they have over the market right now.

**SPEAKER_4** (2:28)
Oh, absolutely. I mean, they sold 555 million shares. The stock opened at 150, peaked near 176 and then just settled.

**SPEAKER_5** (2:36)
And they skipped the traditional price range building entirely, which is wild. Yeah, it's usually the core mechanism of taking a company public. Normally you have underwriting banks go on a road show. Right. They talk to institutional investors, pension funds, asset managers, all to gauge interest and build a book of demand.

**SPEAKER_4** (2:55)
And then they come back and say, we think the stock will clear somewhere between 80 and 100 dollars a share. They build a safety net to ensure the offering doesn't fail on the first day of trading.

**SPEAKER_5** (3:04)
Exactly. But SpaceX bypassed that entirely. They just used an accepted or leave it pricing model.

**SPEAKER_4** (3:11)
They set the price at 135 and basically let the market decide if it wanted in.

**SPEAKER_5** (3:15)
The market definitely wanted in. Retail demand alone topped 100 billion dollars.

**SPEAKER_4** (3:19)
Institutional heavyweights were demanding massive allocations too. I mean, the debut pushed them right past Saudi Aramco and Tesla in total value.

**SPEAKER_5** (3:27)
But there's the severe cognitive dissonance when you look at the financial reality of those losses versus the market capitalization.

**SPEAKER_4** (3:34)
Yeah. You have massive cash burn and unprofitability and it's being rewarded with a two trillion dollar price tag.

**SPEAKER_5** (3:41)
Which is strange when you compare it to traditional tech valuations. You get Alphabet or Metta.

**SPEAKER_4** (3:45)
Right. Those companies generate tens of billions in actual after-tax profit every single year. They throw off cash.

**SPEAKER_5** (3:53)
Exactly. Whereas this company actively consumes it.

**SPEAKER_4** (3:56)
So the rationale driving that demand is that investors are not valuing the rockets currently launching.

**SPEAKER_5** (4:03)
Right. They are not valuing the current iteration of the satellite network. They're paying a premium for a monopoly on future orbital infrastructure.

**SPEAKER_4** (4:13)
Basically, paying for what the company controls 10 years from now.

**SPEAKER_5** (4:16)
It's a lot like the process of building a transcontinental railroad.

**SPEAKER_4** (4:19)
How so?

**SPEAKER_5** (4:20)
Well, the early years of laying that track are pure capital expenditure. You're digging through mountains, laying steel, taking on terrible losses.