SpaceX Pounces on $60 Billion Cursor Takeover Days After IPO

Summary

Bloomberg Intelligence Podcast: "SpaceX Pounces on $60 Billion Cursor Takeover Days After IPO"

Release Date: June 16, 2026
Hosts: Paul Sweeney & Scarlet Fu
Featured Guests: Seth Fegerman (Bloomberg AI team leader), Gautam Mukunda (Yale School of Management & Bloomberg Opinion), Poonam Goyal (Bloomberg retail analyst), Michael Halen (Bloomberg restaurant analyst)

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Episode Overview

This episode explores major developments in tech, retail, and M&A, centering on SpaceX’s swift $60 billion acquisition of Cursor—a leading AI coding startup—just days after SpaceX’s IPO. The hosts and expert guests analyze the strategic rationale behind this bold move, its implications for the broader AI and investment landscape, and what it signals about the evolving power dynamics in tech, wealth, and retail. Other segments probe Amazon Prime Day’s influence, AI’s growing retail applications, and Yum! Brands’ divestiture of Pizza Hut.

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SpaceX’s $60 Billion Cursor Acquisition

[01:49 – 05:51]

Key Discussion Points:

• Significance of the Deal:

  • SpaceX confirmed its $60B purchase of Cursor, an AI coding company. This follows hints given before the SpaceX IPO.
  • Cursor, only a 3-4 year-old company, is seen as a favorite among Silicon Valley coders and is now a rapid success case.

  "Cursor is one of the leading startups that focuses on AI coding... really, you know, a three or four year old company that just got bought for $60 billion. So quick turnaround."
  — Seth Fegerman, Bloomberg AI Team Leader [02:18]

• Strategy & Synergies:

  • SpaceX is repositioning itself as not just an aerospace company but an AI powerhouse, following its merger with X AI, Elon Musk’s AI venture.
  • Cursor’s tools and talent are expected to reinforce SpaceX’s push for a viable, competitive AI product in a crowded field.

  "I think the bet here is that bring Cursor in there, bring their talent in there and you can help supercharge SpaceX's own efforts to build a more viable, credible AI product."
  — Seth Fegerman [02:52]

• Deal Terms & Financial Structure:

  • Details still emerging; the deal involves cash and stock, pending closure in Q3.
  • Going public arms SpaceX with leverage in talent and M&A compared to rivals like OpenAI and Anthropic.

• M&A as Growth Engine:

  • SpaceX’s growth will likely continue to include further AI acquisitions and infrastructure tie-ups with companies such as Anthropic and Google.
  • The liquidity from IPO enables more aggressive expansion, but debt financing remains a possibility.

  "I would be shocked if this is the last time that we see them pursue an AI company to build a real credible in house product"
  — Seth Fegerman [03:57]

• Market Dynamics:

  • The shift away from flat-rate ("all you can eat") models—premium and usage-based pricing is becoming standard for AI services.
  • Anthropic and OpenAI are both rumored to be preparing to go public, possibly accelerated by SpaceX’s IPO reception.

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Extreme Wealth in Tech: The Musk Trillionaire Era

[08:15 – 15:31]

Key Discussion Points:

• Musk's Wealth in Perspective:

  • Elon Musk’s net worth stands at $1.273 trillion, dwarfing #2 Larry Page’s $313 billion.
  • Massive year-to-date increases due to SpaceX’s public market valuation.

  "Year to date, he's up $650 billion. That's representing the public markup and value of SpaceX here. So the question is a trillionaire. I mean, what are we doing here?"
  — Bloomberg Intelligence Host [08:41]

• Societal and Political Implications:

  • Historic constraints on using wealth for direct political influence have eroded; Musk’s capacity to shape policy is unprecedented.

  "He can spend more money than two Senate campaigns combined. The most powerful, most expensive Senate campaign in history. About as casually as you or I buy a cup of coffee or a soda."
  — Gautam Mukunda [09:31]

• Power Dynamics at the Top:

  • The mega-wealthy operate more like monarchs than private citizens, surrounded by gatekeepers focused solely on pleasing them.
  • At this level, wealth is less about material goods and more about power—"what you can buy are governments or immunity from the law or just the fulfillment of your every whim" [13:06].
  • Shareholder accountability is minimal due to super-voting stock structures.

• Democratic Responses:

  • The US has previously tamed outsized wealth/power (e.g., J.P. Morgan, Rockefeller). Democratic constraints—while limiting—are healthier for both society and the ultra-rich themselves.

  "Constraints can be good for you, even if you're a trillionaire. And democratic constraints aren't just good for the whole of society, they'll end up being good for the wealthiest members of it, too."
  — Gautam Mukunda [14:01]

• Public Reaction to Commentary:

  • Mukunda notes overwhelming positive feedback on these themes, with exception of strong criticism from Musk’s online fandom.

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AI and Retail: The Future of Shopping with Prime Day

[18:22 – 23:50]

Key Discussion Points:

• Prime Day Influences Consumer Behavior:

  • Amazon’s Prime Day, now scheduled in June, remains a major driver for deal-hunting consumers amid persistent inflation.
  • Prime Day is exclusive to members, but it’s also used as a recruitment moment for new memberships.

  "More than ever, deals matter today... consumers are looking to find ways to stretch their dollars and more and more are looking to shop on Prime than last year."
  — Poonam Goyal [18:53]

• AI-Driven Retail Experiences:

  • Amazon’s search function is now AI-powered: it’s conversational, context-aware, and transactional.
  • The system can price-track, alert, and auto-purchase on user-specified terms.

  "The Amazon search bar is no longer just a search bar. It's an AI powered agent LED tool..."
  — Poonam Goyal [21:01]

• Competition Follows Amazon’s Lead:

  • Retailers from Walmart to Target emulate Prime Day strategies, mounting their own summer promotions.
  • Walmart’s digital sales soar, now approaching $200B, yet still far behind Amazon’s projected $1T global GMV.

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Restaurant Sector: Yum! Brands Divests Pizza Hut

[26:55 – 31:52]

Key Discussion Points:

• Transaction Details:

  • Yum! Brands sells Pizza Hut for $2.7B to refocus on the more successful Taco Bell and KFC operations.
  • Proceeds to go into share buybacks to offset the operating profit dip.

  "It allows their very talented management team to focus on their two real growth brands. Taco Bell, which is a monster. It's the gold standard in qsr. Best marketing program. Phenomenal same store sales for years now..."
  — Michael Halen [27:16]

• Pizza Hut’s Decline:

  • Loss in market share primarily to Domino’s and Papa John’s, compounded by expensive real estate and falling foot traffic.
  • Franchisees less likely to invest in upkeep, creating a spiral of decline.

• Industry Trends:

  • Aggressive discounting prevalent as chains try to battle inflation pressures; consumer spending reported as "holding in," but with worries rising.

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Memorable Quotes & Moments

• On SpaceX’s strategic shift:

  "They're trying to position themselves as more of an AI company... build a real credible in house product."
  — Seth Fegerman [03:57]

• On Musk’s unprecedented accumulation:

  "Imagine being the second wealthiest man in the world and thinking, wow, I’m a trillion dollars behind."
  — Gautam Mukunda [09:13]

• AI taking over Amazon’s interface:

  "It's an AI powered agent LED tool... you can say what was the cheapest price that this power washer sold in the last three months? Six months. And it will give you a price chart..."
  — Poonam Goyal [21:01]

• Constraints as a societal good:

  "Constraints can be good for you, even if you're a trillionaire."
  — Gautam Mukunda [14:01]

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Timestamps for Key Segments

| Time | Segment Description | |-----------|---------------------------------------------------------| | 01:49 | SpaceX acquires Cursor – implications & strategy | | 02:18 | Why Cursor? — Analyst explains AI landscape | | 03:42 | Deal terms and future M&A strategy | | 04:41 | AI product/pricing trends (OpenAI, Anthropic, etc.) | | 08:15 | Extreme wealth: Musk’s $1.273T net worth | | 09:31 | Political influence of ultra-wealthy in the US | | 11:30 | The ‘king and courtier’ effect in large Tech companies | | 14:01 | Democratic constraints on billionaire power | | 18:22 | Retail: Amazon Prime Day, inflation, and deal-hunting | | 21:01 | How Amazon uses AI to transform shopping | | 22:25 | Walmart’s digital growth | | 26:55 | Yum! Brands sells Pizza Hut – strategy explained |

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Tone & Language

The episode balances analytical discussion with a conversational, occasionally tongue-in-cheek style, especially when assessing the outlandish scale of wealth and market power. Insights are candid, with experts speaking plainly about both the promise and the risks of consolidation and tech-driven disruption.

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Takeaways for Non-Listeners

• SpaceX is making an aggressive pivot into AI, leveraging its new public status and deep pockets with a $60B Cursor takeover—signaling more AI-focused M&A to come in the sector.
• Elon Musk’s wealth, inflated by SpaceX’s IPO, now surpasses $1.2 trillion—raising vital questions about power, accountability, and policy in modern capitalism.
• AI is thoroughly reshaping retail, from Amazon’s smarter search and purchasing tools to a broad industry shift toward digital sales and event-driven marketing.
• In the restaurant business, strategic focus and leaner portfolios reign: Yum! Brands dumps Pizza Hut to double down on faster growing KFC and Taco Bell.
• Through dynamic discussion and expert analysis, the episode spotlights how technology, wealth, and industry are converging to rapidly redraw boundaries and opportunities on Wall Street and Main Street alike.

Transcript

[Brookfield Announcer]

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[Gautam Mukunda]

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[Bloomberg Intelligence Host]

Lost in all the SpaceX discussion is that they made it $60 billion m and a trade today. And it's like you don't even talk about it.

[Bloomberg Intelligence Analyst]

Well, partly because they had indicated before their IPO that this was something that they acquired the rights for. So now they've just kind of pulled. Pulled the trigger on it.

[Bloomberg Intelligence Host]

All right, let's talk to somebody. It's his job to do what's going on with this stuff. Seth Fegerman Bloomberg AI team Leader I didn't know we had an AI team leader, but we do. And it said, that's awesome. What is Cursor and why did SpaceX buy it?

[Bloomberg AI Team Leader]

Sure. Cursor is one of the leading startups that focuses on AI coding. So basically building AI tools that streamline the process of writing and debugging code. You know, it's one of the fastest growing startups in terms of its revenue run rate, but it also faces a lot of competition with the likes of OpenAI and Anthropic. But it has historically been quite beloved by coders in Silicon Valley. I should say historically, this is really, you know, a three or four year old company that just got bought for $60 billion. So quick turnaround.

[Bloomberg Intelligence Analyst]

Quick turnaround indeed. So what does owning cursor allow SpaceX to do that it couldn't do before?

[Bloomberg AI Team Leader]

Yeah, I mean, it's important to step back and think that, you know, SpaceX merged with the required Elon Musk's AI Venture X AI and since then has tried to position itself as not just a rocket play, but an AI play. But today they really haven't made too much of a dent in the AI landscape. And coding has really been the most lucrative early market for these AI tools. There's a certain irony there. They're kind of disrupting their own folks in their own backyard. But I think the bet here is that bring Cursor in there, bring their talent in there and you can help supercharge SpaceX's own efforts to build a more viable, credible AI product.

[Bloomberg Intelligence Host]

All right, I'm asking for all Cursor shareholders here. Did I sell my company for $135 stock or stock today? Do we know the terms?

[Bloomberg AI Team Leader]

I'm not sure we know at the moment, but the deal should close in the third quarter.

[Bloomberg Intelligence Host]

I like the $60 billion valuation on $135 stock. Yeah, said I get the upside.

[Bloomberg Intelligence Analyst]

Well, let's see how good Cursor was at negotiating all this.

[Bloomberg Intelligence Host]

Okay. I mean, do we know how, how M and A might figure into their growth strategies?

[Bloomberg Intelligence Analyst]

Good question.

[Bloomberg AI Team Leader]

Yeah. Again I think like they're trying to position themselves as more of an AI company and I think they're doing that along two prongs. One is through deals like this one. I would be shocked if this is the last time that we see them pursue an AI company to build a real credible in house product. The others with these infrastructure tie ups that they're doing with the likes of Anthropic and Google, kind of using the chips and data centers that they already have to make money while they figure out how to build a credible AI product.

[Bloomberg Intelligence Analyst]

Space X is using cash and stock to buy Cursor. If they're going to be buying more companies, are we going to see SpaceX taking on debt as well? You know, selling bonds for instance?

[Bloomberg AI Team Leader]

Possible. But again, I think the fact that it just went public gives a leg up on rivals like OpenAI and Anthropic as they compete not just for talent, but for acquisitions like this one, they have something big they can offer that other companies can't.

[Bloomberg Intelligence Host]

All right, you're, you're the dude. Where are we on that spectrum of let's spend money, spend money, spend money to now let's really see what we're getting in return for that money?

[Bloomberg AI Team Leader]

I think we're still, I think we're still on the spend money, spend this money. But I will say what we are starting to see is companies opening I, Anthropic are thinking about how much they're charging for this stuff across, across different spectrums. That includes sort of getting rid of this all you can eat model where we just kind of charge you a flat fee and then you kind of use as much as you want. Now they're starting to charge based on the usage that you do. Or maybe they'll charge more money for premium subscriptions.

[Bloomberg Intelligence Host]

So where are we on? So Anthropic and OpenAI have also filed confidentially for public. Do we have any sense as the timing for either of those two deals?

[Bloomberg AI Team Leader]

You know, the most recent that we've reported is that both were targeting the fall. Now I should say that could be fluid, but the fact that SpaceX is doing so well right now in its early days, but the fact that they're doing so well probably does open up an opportunity for those companies to go public then or sooner. You know, it's always a vibes thing on some level and this kind of creates a positive moment to try to bring it to market sooner.

[Bloomberg Intelligence Analyst]

I go back to that idea that OpenAI's S1 filing indicated that it wasn't necessarily in a rush to go public either. You know, it said that there are things I could do as a private

[Bloomberg AI Team Leader]

company that I think that they probably were a bit more explicit on that than Anthropic was. So it's certainly possible that OpenAI pushes this. We don't have updated reporting on that timetable yet, but they certainly indicated that perhaps they could still do financing on the private market as opposed to having to tap the public market. But at the end of the day, all these companies, including Space X, are spending tens if not hundreds of billions of dollars on chips and data centers and talent. You need capital for that and public market is a good place for that.

[Bloomberg Intelligence Analyst]

Stay with us. More from Bloomberg Intelligence coming up after this.

[Gautam Mukunda]

At Brookfield, we invest in the thing behind the thing, behind the next big thing. Our focus across infrastructure, energy, real estate, private equity and credit is helping build the backbone of the global economy. We combine deep operational expertise with disciplined long term investing. Uncovering value and partnering alongside clients to

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[Podcast Host]

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[Bloomberg Intelligence Host]

One of my favorite functions on the Bloomberg terminal is Rich Go Rich. It's the best accounting for the wealth of the wealthiest folks out there. The methodology is outstanding. The data is outstanding. Elon Musk is number one. 1.3. Let's go exact here. $1.273 trillion, number one. Number two is Larry Page at 313 billion. Just give it a little bit of money.

[Bloomberg Intelligence Analyst]

It just so outpaces everyone else. It's laughable.

[Bloomberg Intelligence Host]

Year to date, he's up $650 billion. That's representing the public markup and value of SpaceX here. So the question is a trillionaire. I mean, what are we doing here? What's the impact here? Gotham Mukunda he thinks about this stuff. He's a lecturer at the Yale School of Management and he's a Bloomberg Opinion contributor. Gautham, when you think Elon, you think about that wealth. And again, number two is 300 billion. He's at 1.3 trillion. Put that in perspective. How do you think about that?

[Gautam Mukunda]

I mean, just, just imagine being the second wealthiest, wealthiest man in the world and thinking, wow, I'M a trillion dollars behind. You got to feel for them. You got to feel for him. Really. It seems awful.

[Bloomberg Intelligence Host]

So what does it mean for policy? What does it mean for influence?

[Brookfield Announcer]

I don't know.

[Bloomberg Intelligence Host]

The numbers here are getting just extraordinary.

[Gautam Mukunda]

Yeah. And I think we have to layer in that the big difference between the gargantuan wealth of today's sort of wealthiest people and the equivalent 100 years ago in the Gilded Age, when you had people with about the same level of GDP is back then, there were profound normative constraints about. You could not be seen to use your wealth to just sort of like drown the political system. However much political influence they had, there were limitations about what you could do. And you were sort of expected to give money to charity and things like that. All of those things have apparently fallen by the wayside. So the easiest way to think about the level of Elon Musk's political power, even apart from his work with the administration, is in Ohio. The most expensive Senate race of all time. The two campaigns combined spent about $115 million. So that's a lot of money. So that is about less than 1% of a day to day random fluctuation in Elon Musk's net worth. So he can buy, he can spend more money than two Senate campaigns combined. The most powerful, most expensive Senate campaign in history. About as casually as you or I buy a cup of coffee or a soda. If you are a politician and you're worried and you're thinking about what political stances you should take or how you should shape government action, if that's not top of your mind, you should get out of the business.

[Bloomberg Intelligence Analyst]

Okay, well, you've given us a lot to think about here. And one thing that I did like about your column is that you point out these mega billionaires, and I think according to Rich Go, there's maybe like 20 odd people who have it who are worth at least $100 billion. So let's just call them the mega billionaires and 1 trillionaire. They run companies, they own companies, and those companies employ a lot of people. And a lot of those people reach out to you for advice. And as you put it, the conversation always goes like this. These are people who have accomplished a lot of things and they're very successful, what they do. But right now they're struggling in this company that they work for. Why is that? And what do you tell them?

[Gautam Mukunda]

Because when you operate at this stratosphere of wealth and power and influence, we should stop thinking about you like a private citizen. You're a king and you're surrounded by a court and there are people around you whose only desire in life, whose only goal in life is to please you. That's. That's being a courtier. So, you know, I talk to people who, you know, they've been Army, Special Forces, or very senior executives, and they go to these companies and they're like, nothing makes sense. I need. I have been trained to succeed, but I don't even know what success means. And I said, that's right, because you've always been trained. Success means winning a war or making a profit. Success means keeping the king happy. That's what it means. And that's a completely different way of looking at the world. And so now you have these people. They have the power and resources of a nation state. In fact, most of the nation states in the world don't have the resources of someone like Elon Musk. And it changes everything.

[Bloomberg Intelligence Host]

You know, I was thinking Gotham just when you were speaking there. Well, he's got an answer to his shareholders. And then I'm like, no, he doesn't, because he's got the super voting stock. So there goes that argument.

[Bloomberg Intelligence Analyst]

Nominally he might, but in reality he doesn't.

[Bloomberg Intelligence Host]

So go.

[Gautam Mukunda]

That's right. And in a real sense also, like, there's this wonderful term post economic right. If Elon Musk fails to answer his shareholders and they sell the stock and his net worth goes down by 75%, he'll still have $300 billion. I'm sure he'll be okay.

[Bloomberg Intelligence Analyst]

Yeah. I mean, although for those who are keeping score, that that's not okay with them. I mean, you don't get to that level without keeping score.

[Gautam Mukunda]

So I think that's completely right, you keeping score. And it is striking, right, that it seems like the one thing that they can't buy is enough. But let me put it differently. At that level, I think keeping score isn't just about the number on the Bloomberg billionaires list. It's about power. You have transcended the things where. The things where you can buy material things. What you can buy are governments or immunity from the law or just the fulfillment of your every whim, no matter what it is that you. What that might be. And at that point, the amounts of money that you have can translate to power in ways that we just haven't seen in democratic societies before.

[Bloomberg Intelligence Host]

Is there any. I'm not saying there's a problem, so I'm not going to ask you for a solution, but is there any way that you think Society may change or bend or try to deal with some of this newfound extraordinary wealth and influence there is.

[Gautam Mukunda]

Because we've done this before, right? The United States has dealt with people of this kind of wealth and power relative to society. Society not in absolute terms before. Theodore Roosevelt did that with JP Morgan and, you know, the antitrust people did that with John D. Rockefeller. And there are two big lessons that we should take away from that, right? One is that however powerful, wealthy and powerful these people are, when the government backed by the people, decides to go and say do things, the government is still the government. And in a democratic republic like the United States, the people still rule. Not individual wealthy people, not individual oligarchs. But the second thing to remember is that over the long term, that outcome was much better for the wealthy people than the fulfillment of their whims. Would you rather live in a state like Russia that bends to the whims of whatever the handful of wealthiest people who run the state. Would you rather live in the United States? The answer is you would rather live in the United States. Hard as it is to hear, constraints can be good for you, even if you're a trillionaire. And democratic, constraints aren't just good for the whole of society, they'll end up being good for the wealthiest members of it, too.

[Bloomberg Intelligence Analyst]

Gautam, have you gotten any feedback on writing this column? I'm wondering if any readers have reached out to you and what they've said

[Gautam Mukunda]

more than any other column I've written for Bloomberg, actually, and so far I would say of people who have reached out to me directly. The result? The response has been sort of enormously positive of people who responded on Twitter who seem to be big fans of Elon Musk, let's just say that they were not so positive.

[Bloomberg Intelligence Analyst]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Podcast Host]

you're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Bloomberg Intelligence Host]

Stuck a little retail here. We just got through a lot of the earnings from the retailers. They always kind of bring up the rear of their different calendars here. Bloomberg Intelligence they get a survey looking at Prime Day deals and there's a lot to talk about there. I want to talk about how AI influences how we shop. Who do we talk to about that? We talked to Punum Goyal. She covers all the e commerce and the retailers for Bloomberg Intelligence. Punum, I know you have a new survey out here. What did you find here? What were you looking to find?

[Punum Goyal]

People are still interested in deals and shopping. Amazon's Prime Day, which comes earlier this year, it comes in June versus July last year. So part of 2Q, not 3Q in terms of their financials, I think what we found just confirmed what we believed, which is that more than ever, deals matter today, especially in the face of rising inflation, where you have tariffs and higher gas prices, consumers are looking to find ways to stretch their dollars and more and more are looking to shop on prime than last year.

[Bloomberg Intelligence Analyst]

This is a dumb question, but I'm going to ask it anyway. It's called Prime Day and Amazon has that prime loyalty program. But do people who shop Prime Day, are they all prime members or is there a significant number that actually has not signed on to the program yet and will do so because of these offers?

[Punum Goyal]

No, dumb question, but the answer is Prime Day is for prime members. So to take advantage of the deals, you have to be a Prime member. So Amazon does have over 200 million prime members around the world that will be taking advantage of these deals. But it is also a time where many people sign up for deals that don't have the membership. Some of them sign up to take advantage of the deals and cancel, and many of them do stay on. In fact, in our survey, that was one of the questions we asked is, do you have a Prime membership? And if not, are you planning to get one? And the answer was very consistent with last year that there is a select group of respondents that plan to get the prime membership and hold it indefinitely. So just growing that prime member base, which is always a key win for Amazon.

[Gautam Mukunda]

All right.

[Bloomberg Intelligence Host]

Yesterday I pulled a John Tucker. I said, you know what, I need a power washer for my back patio.

[Bloomberg Intelligence Analyst]

So I was like, it sounds like you could borrow that from him.

[Bloomberg Intelligence Host]

I could probably borrow from John Tucker. So instead of going to Google, I just went into Amazon.com search bar, power washer, boom. A lot of stuff comes up, lot of good descriptions. I found one. Boom. Didn't even go to search and it's coming tomorrow. For those that care, you didn't want

[Bloomberg Intelligence Analyst]

to wait for Prime Day?

[Bloomberg Intelligence Host]

No, I'm not. Just, I don't know, I.

[Bloomberg Intelligence Analyst]

You wanted it right away.

[Bloomberg Intelligence Host]

I want it right away. I put them. How are people using AI for shopping? How are retailers using AI?

[Punum Goyal]

Yeah, I think Amazon is furthest along when you think about how a retailer is using AI. You know what you just explained about the search bar. I think what many people still don't know is the Amazon search bar is no longer just a search bar. It's an AI powered agent LED tool, which means if you don't have to no longer go in the search bar like you did and say power washer, you can say I'm looking to clean the bricks or the pavers outside of my house and I want the strongest power washer. And it will provide you with an answer. Not only that, when you get to it, you can go ahead and say what was the cheapest price that this power washer sold in the last three months? Six months. And it will give you a price chart. Then you can go ahead and further say, okay, when this power washer drops to this, this price, go ahead and purchase and long behold, if it drops to that price next week, you'll have it at your door without you having to go back really, really further along.

[Bloomberg Intelligence Host]

I thought I was like doing really well yesterday just going into Amazon search but apparently put them says I could do a lot better.

[Bloomberg Intelligence Analyst]

Yeah, you can make it work for you as opposed to doing the legwork yourself. Given all of this, how are competitors responding? We've seen how Prime Day and you know, the fact that it's an annual sales extravaganza has really forced other companies like targets of the world like Wal Mart to come up with their own kind of sales extravaganza in the middle of summer.

[Punum Goyal]

Yeah. And they won't be any different this year. So as soon as Amazon launches its prime day dates, what happens is the larger retailers and some of the smaller ones just follow. Right. To make sure that they can capture some of that wallet share. To remember this Prime Day comes before the July 4th sales. So it's actually a move to pull sales forward even more than it has been ever in the past. And we do expect online sales across the board, not just for Amazon, but even the Walmarts, the targets, best buys of the world, to feature deals to try to lower that customer spend because it's a time when consumers are prepared to stretch their wallets to take advantage of the deals.

[Bloomberg Intelligence Host]

Putam, you mentioned Walmart and I'm just amazed. Every quarter whenever they report earnings, I go right to their digital sales and every quarter they don't disappoint it. You know, teens 20%, 25% growth in digital Walmart's, they go toe to toe with Amazon, don't they?

[Punum Goyal]

Absolutely. I mean Walmart's done an amazing job at capturing the online shopper. You know, if I was speaking to you five years ago, they were very, very small when it came to the online presence that they have. And today they're approaching roughly $200 billion in almost online sales. So quite a move since then. But when you compare it to Amazon, you know, we're expecting Amazon to get to a trillion dollars in gmv. So still, you know, Amazon is further along on a global basis, but Wal is catching up fast for sure.

[Bloomberg Intelligence Analyst]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Podcast Host]

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Bloomberg Intelligence Host]

One of the M and A trades today, Yummy brands selling its Pizza hut division for $2.7 billion to focus on its KFC and Taco Bell chains. I'm in on all three of those. Those are all good with me. Michael Halen, he joins us here, senior restaurant and food service analyst for Bloomberg Intelligence. Michael, talk to us about this transaction. What's yum doing here?

[Brookfield Announcer]

Yeah, and it's been expected. They've since last fall they had announced that they were looking for strategic options here for Pizza Hut, which has been struggling for years. Right. And so we think it's a great deal for them. You know, it and it allows their very talented management team to focus on their two real growth brands. Taco Bell, which is a monster. It's, it's the gold standard in qsr. Best marketing program. Phenomenal. Same store sales for years now probably since I've been, you know, an analyst. So probably about 15 plus years.

[Bloomberg AI Team Leader]

Great.

[Brookfield Announcer]

Same store sales and KFC, which is phenomenal overseas, strong net unit growth overseas and starting to turn around here in the United States in the last couple of quarters. So, you know, with the cash, it's going to be about 2.3 billion after tax. They're going to pour that right into, into share buybacks to, to offset some of the operating profit loss that they're going to have here. And, and you know, we think it's, it's a good deal. It's going to have a much higher operating profit and net unit growth, faster revenue growth and all of that is, you know, turning into a higher multiple is what we're seeing in the market today.

[Bloomberg Intelligence Host]

Stocks up 2.3% today on this news, up about almost 5% year to date and up about 11% over the trailing 12 months. KFC and Taco Bell, do you think they're going to maybe think about growing via acquisition? Is there something for them to go out and buy? Is that part of their strategy, their DNA?

[Brookfield Announcer]

You know, we could Be, you know, it has historically they, they purchased Habit Burger a few years ago, but it was just really too small to make a big difference in the, in the top and bottom line. But that could be an option. You know, Chris Turner, he was the prior CFO as the new CEO and he's more aggressive. You know, the company was run pretty conservatively under their prior CEO. You know, good solid company, you know, but not very exciting. And so, you know, as you can see with this deal, Turner hasn't wasted any time and, and he's being more aggressive with, with the moves that they're making. And so I could see, I could see M A being an option going forward.

[Bloomberg Intelligence Host]

So what was the problem with this Pizza Hut? Was it simply Domino's? What was kind of the problem?

[Brookfield Announcer]

Domino's was a big part of it because since 2009 and, and in 2009 Pizza Hut was number one in the country. Domino's has taken share year after year after year. So that's been a big part of it. Papa John's had some good years in there too where they were taking some share. So that's a big part of it. But you know, I'd say a big issue is like food quality and the real estate, right? Like they have these really big boxes that, that cost a lot of money. These franchisees are paying big rents. And when you don't have people coming into the restaurants anymore, because in addition to the Domino's and Papa John's competition, you had more competition at sit down restaurants, higher quality sit down pizza joints cropping up locally, you know, and it just starts this downward spiral that the, that the, you know, people aren't coming in, so the franchisees aren't going to spend money on improving, you know, the, the look and the feel of the restaurants. You know, restaurants fall into disrepair. And so it's kind of been, been this spiral here in the US Anyway that, that's, you know, been going on for quite some time.

[Bloomberg Intelligence Host]

I've been telling the story today back in the 80s in college in Richmond, Virginia. It was our savior, it was our go to place. But that was a long time ago.

[Brookfield Announcer]

Listen, the breadsticks were phenomenal.

[Bloomberg Intelligence Host]

Exactly. All right, so all the restaurant companies that you cover, you cover them all. What's the theme you're hearing from your restaurant companies about kind of how the consumers doing out there?

[Brookfield Announcer]

The theme is that they're holding in. Right? And I think part of that was the tax refund checks, you know. You know, as you probably know, I was pretty bullish coming into this year because inflation was close to 2%. We had these refund checks coming. We're less, much less bullish now based on the inflation that we're seeing. You know, like I said, a lot of them are talking about kind of holding in beef. Inflation continues to be an issue. So some of those chains are kind of worried there. You know what they're saying. I'm paying closer attention what they're doing. And what we're seeing is the, the most aggressive discounting we've seen in this business business for a while. And, and that's, that's really worrisome.

[Podcast Host]

This is the Bloomberg Intelligence Podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live each weekday 10am to noon Eastern on Bloomberg.com, the iHeartRadio app TuneIn, and the Bloomberg Business App. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal Foreign

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