SpaceX Wavers Near $2T Market Cap After 3-Day Rout

**SPEAKER_2** (0:02)
Bloomberg Audio Studios, podcasts, radio, news. Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.

**Ed Ludlow** (0:23)
This is Bloomberg Tech coming up. SpaceX shares feeling gravitational pull as Musk company launches its debut bond sale. Plus tech stocks sell off worldwide as Wall Street gets an AI wake up call. Is the AI boom sustainable? And we go big on private markets. Menlo Ventures raises its biggest ever haul with $3 billion to back AI startups. Partner Venky Ganesan joins us on set in San Francisco. The headline on the Bloomberg is that Wall Street gets an AI wake up call, but there has been a global sell off in technology shares. It started Monday in the US, but in career overnight is where it was felt most. The cost fee, the best performing index in the world so far this year dropping 10%.
From a record high, it is Samsung, it is SK Hynix, which led questions about the sustainability of the AI trade. Let's go over to the US session, where actually we're off session lows, but there is still severe selling. The SOX is down 7%, the NASDAQ 100 is down 2.6%.
All of this about sustainability, durability of what's happening in AI. Our top story, SpaceX shares. The stock actually briefly dipped below $150, which was its trading debut price from June 12 We're getting new details on the company's first ever bond offering, a five part investment grade deal expected to raise at least $20 billion and rank among the biggest debt sales of the year. The sale would primarily refinance debt, while also giving investors a fresh look at how Elon Musk companies are funding growth across AI satellites and space. Joining us now, the team, Bloomberg Sr., Markets Report at Bay Lipscholz, and Emily Grafio on the corporate credit side. Em, let's start with you. What do we need to know about this debt sale, the structure of it, the terms?

**Emily Grafeo** (2:06)
Well, look, we need to know that this deal is probably going to be one of the biggest investment-grade bond seals of the year. And it already got $30 billion of demand, even before the deal was announced. It's pricing. Later today, bankers are taking orders from investors right now. We do expect the deal to go pretty well. So even though the stock is down today, Ed, this bond sale, expect it to be successful. And it's getting an investment-grade rating, despite the fact that SpaceX is saying it's going to be blowing through cash here. Really, what the ratings analysts are focusing on is the fact that they have recurring revenue from their Starlink business. They have a dominant launch provider, central to the US space program. And of course, they have access to enough liquidity to keep funding that AI expansion. So it's a unique investment-grade rating here, but one that, at least for right now, investors are putting their confidence behind.

**Ed Ludlow** (2:57)
Bailey, on yesterday's program, BI Credit Analyst Robert Schiffman said, equity investors trade on hope. Looking at the stock now up almost 3% in the session, but briefly in negative territory, we're all talking about it hitting its trading debut price. What's going on in this post-IPO trade?

**Bailey Lipscholz** (3:14)
Ed, we're just still seeing supply and demand trying to be matched. Obviously, at the euphoria of listing day, retail traders continuing to plow through the stock. Last week, as we saw it hit a bit of an airpark and we see the volatility today, we still have to remember that we're only looking at about 5% of the flow available for trading. So we're still well ahead of the lockup when insiders and long-term investors and long-term employees are able to be selling the stock. So the big question now going forward is, what is the catalyst to keep buying? As you mentioned, we saw some volatility on an intraday basis. That's kind of par for the course. And if we look back a few months to Sarebros, a really strong debut, a lot of chop and then kind of settling out in the few months ahead of their first earnings report as a public company. So when you're just looking at this, again, it's kind of typical playbook that we've seen with a lot of these high profile, highly anticipated IPOs.

**Ed Ludlow** (4:05)
I would say that maybe one catalyst is they did this demo, the Starfall mission, where they had this reusable capsule in space. The idea is it was a demo for in space manufacturing. Maybe not. We'll get into that later on. And what I want to understand with this is the significance of the investment grade rating that SpaceX got, because the difference between SpaceX and some of its peers in that domain is this is a company that's going to be burning cash and with negative free cash flow for a really long time. How does that work?