This Huge Divergence Could... Take The Market With It

**Phil Weiss** (0:01)
Welcome to the Money Tree Investing Podcast.

**Kirk Chisholm** (0:04)
Stock market, wealth, personal finance, value stocks. Invest in your life.
Hello, smart money tree podcast listeners. Welcome to this week's show. My name is Kirk Chisholm, and I'll be your host. And today, I'm joined with Phil Weiss. Hey, Phil.

**Phil Weiss** (0:17)
Hey, Kirk, happy to be here on this sunny Friday, much better than we had from Memorial Day weekend, that's for sure.

**Kirk Chisholm** (0:23)
Heck, yeah. My phone says it was supposed to rain yesterday through the next 10 days, but it hasn't, which I'm very thankful for at the moment.

**Phil Weiss** (0:32)
Yeah, it's been a little wet lately.

**Kirk Chisholm** (0:34)
Take it when we can get it. Typical spring in New England, I know you're not in New England, but for us, it's very typical.

**Phil Weiss** (0:40)
No, I know I have some friends that I was talking to earlier, we're going to Cape Cod, and they live in Arizona, they come east and north for the coolness, and he goes, but it's supposed to be cold. We're shipping clothes because the weather is so cool there right now.

**Kirk Chisholm** (0:54)
Cape Cod is great in July and August, I don't know about June. During COVID, when we were down there, we were down there for April, May, and June.
June was fine, but April was really rainy and windy, May was decent, June was hit or miss, but July and August were phenomenal. We go on August, this is the best time to go. This is the last day of May in the markets anyway. As of Monday, it'll be a new month. It's been a crazy ride here this year.
Every month has a different theme, which is kind of funny because it's almost to the day. January was gold and silver month until the last day, and then it was anti-gold and silver month. February was everything month, and then March was the war and it was terrible, and then April was everything. Well, not everything's up, but markets turn around in April, and May has been technology month, pretty much technology has been going up. Who knows what June's going to unfold, but we have some sneaking suspicion it's going to be SpaceX month.

**Phil Weiss** (1:53)
Yes, we do. That's the rumor.

**Kirk Chisholm** (1:56)
So tell us a little bit about SpaceX, Phil. I know you've done a little digging on this.

**Phil Weiss** (2:00)
Assuming this happens, and the word that I'm seeing from at least the newsletter I get from Edjardini is that they expect it to price around June 12th, so we'll figure in the middle of the month. They're expecting it to price at $1.75 trillion, which would easily make it the biggest IPO ever. The company released its S1 recently, and this is something that just boggled my mind when I read this.
Edjardini says that the company cited a total addressable market of $28.5 trillion, which is larger than the entire US economy in its S1. And of that, $22.7 trillion contributed to AI enterprise application. I don't know. That's just, if you look through the details of the S1, it's really hard to come up with anything close to this kind of value, because most of the business is not profitable. It's not at that price. It would be like at 100 times revenues.
That just seemed really excessive to me. Like Facebook came out like 10 or 11, just to give you like a frame of reference. There's some people I know, I've seen a lot of concerns, including there's a website, an analyst, The Blind Squirrel is his website. He wrote a whole thing about that one and talked there and elsewhere. I've seen how typically for a company to be included in an index, it has to be profitable for several quarters in a row. I think it's four. And it has to have at least a year of trading history. Well, you got this case where $1.75 trillion, and there's likely to be a lot of interest, but not a lot of shares traded on this stock. And the NASDAQ 100 index is saying that they could let SpaceX in in 15 days, and it's not profitable yet. And you think about if the S&P follows suit, like then what happens, right? Because now you got a $1.75 trillion company. That means it has to take a big spot in the index, which puts pressure on other stocks. There's lots of things that can happen here. And even the lockup period for the shareholders, the founding shareholders, if you want to call them the shareholders or the private entity, the same lockup rules don't apply, so they could be selling their shares. There's just a lot of questions to me that this raises. It's not your typical transaction. And I guess we think that Elon's involved, and usually when Elon's involved, there's things that are different. So this is no different in that regard.