SpaceX’s $101 Billion Unlock Heaps Pressure on Battered Shares

Summary

Bloomberg Intelligence Podcast Summary

Episode: SpaceX’s $101 Billion Unlock Heaps Pressure on Battered Shares
Date: August 5, 2026
Hosts: Paul Sweeney and Scarlet Fu

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Episode Overview

This episode dives deep into the financial turbulence facing SpaceX after a multi-billion dollar IPO lockup period ended, with the stock plummeting and questions mounting regarding its aggressive investment in AI and expansion ambitions. The episode features expert analysis from George Ferguson (senior aerospace and defense analyst), Mandeep Singh (global tech research head), and others. Broader discussions also touch on AMD’s AI chip positioning, Disney’s strategic realignment, and challenges at Lululemon.

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Key Segment Summaries and Insights

1. SpaceX’s Stock Plunge and Strategic Questions

Timestamps: 01:49–09:47

Discussion Points:

• Stock Movement & Investor Sentiment:

  • SpaceX shares dropped 8.5% (low of 12.5%) after the lockup expired, raising concerns about the company’s spending versus its ROI.
  • Analyst George Ferguson discusses the disconnect between visionary tech investments and investor demand for visible profit timelines.

• Valuation and Profitability Debate:

  • Ferguson notes SpaceX valuation projections only begin to make sense post-2028, paralleling hyperscalers like Microsoft.
  • “At some point you got to give me profit, right? ... You're spending $60 billion... the spend is large. They doubled capex inside the AI business and that's still very loss making.” – George Ferguson (04:18)

• Investor Base & Vision Premium:

  • Comparison to Tesla’s shareholder base, where faith in Elon Musk’s future vision trumps near-term profits.
  • “This is not an old school payoff kind of company. But give us some guardrails… let us know kind of where we are in the trajectory…” – Ferguson (05:47)

• Lockup Expiry Implications:

  • Significant internal selling risk as employees/investors consider liquidating at prices well below IPO (135/share).
  • “The trend definitely has been down. So that's, I think, a really hard calculus for people that have been locked up in this.” – Ferguson (07:00)

• Funding and Liquidity Outlook:

  • SpaceX sits on $93–100B cash but is burning rapidly, with capex largely focused on the AI buildout.
  • “Doesn't seem like it's going to last long.” – Ferguson on current cash cushion (08:25)
  • Maintaining investment-grade debt rating is tied closely to keeping high cash reserves.

Notable Quotes:

• “The vision is grand… I love all of that. The question always comes down to me and… people in the markets, at what price?” – Ferguson (05:47)

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2. SpaceX’s AI Megaproject Dilemma

Timestamps: 12:33–18:19

Discussion Points:

• AI as Growth Driver:

  • Mandeep Singh summarizes SpaceX’s radical pivot to AI: “They gave a $100 billion revenue run rate number by the end of this year. So this company is going from about 18 billion at the time of IPO to $100 billion run rate in a span of six months.” (15:56)
  • Goals: Become the largest “neo-cloud” via a $200B capex ramp—massive buildout of GPU data centers.

• Funding Skepticism:

  • Investors question how SpaceX will raise the necessary capital (options: debt, equity, possibly Nvidia partnership).
  • “If you are hyperscaler, you have the balance sheet… SpaceX literally implied last night is they will do $200 billion in capex by 2027 but investors are not buying it because they don't have the balance sheet…” – Singh (16:18)

• Dependency on Nvidia:

  • SpaceX plans to rely solely on Nvidia GPUs, shunning AMD, further affecting AMD’s share outlook.
  • “If Nvidia is doing the backstop… We will support SpaceX.” – Singh (17:18)

Notable Quotes:

• “There's a ton of demand and it's not commoditized in any way.” – Singh on the current state of the new AI cloud market (18:15)

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3. AMD AI Outlook and Competitive Position

Timestamps: 12:33–15:38

Discussion Points:

• Sales vs. Expectations:
  • Despite triple-digit AI growth guidance, AMD’s perceived as only “holding share,” not gaining (compared to Nvidia).
• Headwinds:
  • All major hyperscalers are working toward custom silicon—AMD must fight harder for significant deals.
  • “They ended up giving some equity to Meta for that 6 gigawatt commitment. That just goes to show they're not playing from a position of strength like Nvidia is.” – Singh (14:42)

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4. Disney’s Strategic Reinvention

Timestamps: 21:26–27:18

Discussion Points:

• Earnings Power:

  • Experiences division (~theme parks) now accounts for <40% of Disney’s revenue but ~60% of profit.
  • Streaming profit margins are emerging as a differentiator.

• Leadership and Pivot:

  • New CEO Josh D’Amaro praised for decisive moves: selling non-core stakes, new TikTok partnership, and reimagining Disney+ as an “Amazon Prime for all things Disney.”

• Competitive Position:

  • Disney’s integration of parks, studios, streaming, and sports (ESPN) is unique among rivals.

• Paramount’s Risky Merger:

  • Large synergies possible, but heavy leverage (6.5x) and imminent dilution from delayed closing and “ticking fees” are red flags.

Notable Quotes:

• “Disney has a really unique hand to play here… theme parks… movie and studio business… streaming… ESPN and sports.” – Geetha Ranganathan (25:00)
• “Massive dilution here… number of shares outstanding is 1 billion, it's going to go to close to about 5 billion when all of this is said and done.” – Ranganathan on Paramount (26:01)

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5. Lululemon’s Identity and Product Crisis

Timestamps: 30:25–35:42

Discussion Points:

• Brand Troubles:
  • The company that “basically invented leggings” faces competition from new brands like Alo and Vuori, ongoing quality snafus (sheerness issues), and high prices.
• Leadership Overhaul:
  • Longtime founder Chip Wilson, after a public proxy campaign and disputes, negotiated board representation and a quarterly meeting arrangement with incoming CEO Heidi O’Neill (ex-Nike).
  • O’Neill is positioned to leverage Nike-esque direct-to-consumer strategies and product innovation.
• Market & Shareholder Pressure:
  • As a premium brand, Lululemon is increasingly challenged from both high and low-end competitors.

Notable Moments:

• “They had to pull almost 20% of their women's pants from stores. That led to management changes. And just recently, earlier this year, they had another issue with sheer leggings.” – Lily Meyer (32:01)
• “In May, [Chip Wilson] reached a settlement with Lulu. So the settlement is granting him two board members… he has to stay quiet for 18 months.” – Meyer (33:09)
• “It's a product story… she has to win over shareholders as well and win over the street.” – Meyer (34:55)

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Notable Quotes by Timestamp

• George Ferguson (SpaceX Valuation):
  “At some point you got to give me profit, right?... You got to turn this into a profitable enterprise. And right now the vision looks like a lot of AI and CapEx for as far as the eye can see.” (04:18)

• Mandeep Singh (SpaceX AI Spend):
  “They gave a $100 billion revenue run rate number by the end of this year. So this company is going from about 18 billion at the time of IPO to $100 billion run rate in a span of six months.” (15:56)

• Geetha Ranganathan (Disney’s Ecosystem):
  “Disney has a really unique hand to play here… they have theme parks which, really, other than Comcast, nobody else has… But the one thing that they do better than everybody else is ESPN and sports.” (25:00)

• Lily Meyer (Lululemon Founder Settlement):
  “In May, he reached a settlement with Lulu. So the settlement is granting him two board members. So he'll have a bit of a foothold in that sense. ... In return, he has to stay quiet for 18 months.” (33:09)

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Segment Timestamps (for Navigation)

• SpaceX’s Post-Lockup Volatility: 01:49–09:47
• SpaceX’s AI Roadmap and Funding Fears (w/ Mandeep Singh): 12:33–18:19
• AMD AI and Hyperscaler Competition: 12:33–15:38
• Disney Earnings and Strategic Shifts (w/ Geetha Ranganathan): 21:26–27:18
• Lululemon’s Product & Leadership Challenges (w/ Lily Meyer): 30:25–35:42

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Conclusion

This episode delivers a comprehensive look at high-stakes bets in growth industries—SpaceX’s AI and data ambitions, Disney’s streaming/park-centered realignment, and Lululemon’s reinvention struggles. Stern reminders abound about the dual mandates of visionary investment and profit discipline, as illustrated by SpaceX’s dramatic swings and the strategic changes faced by other major consumer and tech brands.

Transcript

[Host/Interviewer]

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[Scarlet Fu]

SpaceX the stock down about eight and a half percent right now, but at its low it was down about 12 and a half percent and that raises a lot of questions about the results and what we learned. Alexis mentioned a lot of spending. Let's bring in George Ferguson. He's our senior aerospace, defense and airlines analyst, joining us from Princeton. And George, it's tempting to chalk this up to investors were not in the mood to hear of plans for more spending when they're not seeing how the spending is paying off just yet. But is this kind of decline that we're seeing an overreaction given the set of results that Space X published?

[George Ferguson]

Well, you know, we put out a report right around the IPO time talking about valuations for Space X. Right. And we, we, we don't tell people to buy or sell. But we said was look, you had to get out to like 2029 and projections for a lot of growth in revenue and then turning profitable in 2028 just to start to be able to compare to the other hyperscalers like Microsoft. So look, I think that the challenge here is valuations are living in the stratosphere compared to some of their peers. And so you're challenged to kind of see what's the advantage of SpaceX over some of those other companies. I think there was selling going on in the stock prior to earnings call yesterday. Sorry, for days and weeks before that. Yesterday was a bit of a, you know, a turnaround where there was a bit of a rally. But I think you're back to a sale. It's still, I think the same story. They resold us the story that we heard at the ipo.

[Host/Interviewer]

So what, I mean in terms of the actual revenues and cash flows and so on from, from the quarter that just reported, they came in better than expected here. So I mean they are delivering on kind of what they're talking about. It's just a question of you. So much of the valuation hinges on I guess Elon's vision longer term.

[George Ferguson]

Yeah, I mean, you know, again it's on this vision. But you know, when I looked at the numbers yesterday, they were a bit better than consensus, frankly. They were on top of BI's numbers, to be honest with you, which, so I'll blow our horn here for this. Maybe we're better seers, I don't know. But you know, again, you know, what we're talking about is, you know, really strong revenue growth. And I think Elon Musk laid out all the revenue opportunities in the call. But look, I'm an old industrial aerospace defense analyst. At some point you got to give me profit, right? You got to. And you know, you're spending $60 billion on these companies. You've got $93 billion of cash in your balance sheet. The spend is large. They doubled capex inside the AI business and that's still very loss making. At some point you got to turn this into a profitable enterprise. And right now the vision looks like a lot of AI for you know, and CapEx for as far as the eye can see. And I think that's, it's hard for people to put their arms around plus there is no guidance. Right. So you know, so I don't even. No one even gave us a handle to try to hold on to right now when we would start to see profits or you know, at least losses starting to improve.

[Scarlet Fu]

So this is something that you say you as a kind of an old school analyst would be looking for and I suspect many investors in industrial companies are looking for something similar. But Elon Musk is trying to turn Space X into this next gen tech AI behemoth. And you know, he cast his own spell over his shareholders. I just wonder how much overlap is there between Space X's investor base and Tesla's investor base, where he usually goes through this playbook and does very well because they want to hear about the hopes and dreams and they're less concerned perhaps with the immediate payoff the way that old school analysts and industrial investors might be.

[George Ferguson]

Yeah, look, again, I, you know, old school payoff, I get it. This is not an old school payoff kind of company. Right. But, but give us again, some guardrails, I think, you know, or some, you know, give us a middle line to the road and let us know kind of where we are in the trajectory. Trajectory where those, those profits come. And I think you saw it on the call, right? Elon Musk showed up in the beginning to discuss his version of the world and the company. And look at the tech is amazing. It's outstanding. Right. And the vision is grand. Right. I love all of that. The question always comes down to me and I think clearly to people in the markets, at what price? How do we put a price on this opportunity? And there's going to be a fight in the marketplace, like you said, between the people that just love the vision and love the tech and others that say, when can you bring some cash? Because you got heavy investments coming on here. Right.

[Host/Interviewer]

We also have a big lockup expiring tomorrow. How do you think that's kind of weighing on the shares? That's a lot of stock out there potentially potentially coming on the market tomorrow.

[George Ferguson]

Yeah, yeah. I mean, look, you know, I think about this sort of maybe, you know, through my own sort of thought processes. I guess if I was internal, you know, I don't know. You know, it depends how much of your comp is wrapped in this. Would you start to sell out? Do you feel bad because it's well below the IPO price? Do you wait out things? But the trend definitely has been down. So that's, I think, a really hard calculus for people that have been locked up in this.

[Scarlet Fu]

So how important do you think it is for Elon Musk and his management team to get the stock back above that 135ipo price? Do you think that's something that they're concerned with?

[George Ferguson]

Look, so I think if I'm Elon Musk, I want to be able to attract more investors to my shares. And losing money isn't a great way to attract investors. So I think they, I think they absolutely want to, I don't know that they have a window here to influence that, you know, for another quarter until they have another sort of earnings call. So I don't know. So what they do, I know there's rumors in the marketplace about merging with Tesla. I can't say that I totally understand all the logic there. I think they want to get it, get it up. I think they want to be able to come back to the markets, the equity markets an issue again. I'm not sure in the near term though, what you do to change some of the trajectory here.

[Host/Interviewer]

George, you mentioned they've got, you know, $100 billion of cash on the balance sheet. How long does that last, you think, before they do have to yell markets?

[George Ferguson]

Yeah, look, I mean, I think you got, it was 93 billion when I looked yesterday. They got this buy of 60 billion out there. I got to figure out how they're going to fund that. You know, there was, I think it was 15 billion in capex during the quarter, you know, out to the AI businesses. I think this is not a technical answer. Doesn't seem like it's going to last long.

[Host/Interviewer]

Yeah. And it's just, I mean it's a lot of cash, but they have a lot of needs.

[Scarlet Fu]

They have a lot of needs. Are they going to go dip back into the bond market again, do you think, George?

[George Ferguson]

Well, look, I think that's, that's really going to get predicated on whether or not they can maintain their investment grade rating. Right. Because I think you don't want to let that slip too much. And everyone I talk to about the investment grade rating tells me it's a function of the cash on the balance sheet. Right. Because you don't have a company here that's sort of a heavy cash generator.

[Carol Massar]

Yeah.

[George Ferguson]

And maybe the ability to tap markets again. Yeah, I think you rather go to the debt market but again, I don't know how long that that remains open as you're spending.

[Host/Interviewer]

I think the big thing is going to be the former creditor. It's the cash, it's actual equity value that's underneath me, supporting me. That's the only thing. And that's the same thing it was with Tesla.

[Scarlet Fu]

Yeah. And now you're looking to stock again, well below that 135ipo price.

[Host/Interviewer]

Yep, yep.

[Scarlet Fu]

Stay with us. More from Bloomberg Intelligence. Coming up after this,

[Host/Interviewer]

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[Carol Massar]

is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT Work. Hi, I'm Carol Massar. Globetrotters hunting for airfare bargains are in for a rude awakening as the days of stumbling across a cheap seat on a popular flight could soon disappear. Bloomberg's Wan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seed prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fares. Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seat inventory and seasonal trends, while also continuously tracking competitors fares and capacity changes to update prices in near real time. The technology could lead to higher fares on busy routes as airlines pack flights closer to capacity, but may also result in lower fares on off peak and lower demand routes. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get [e-mail] today by selecting work mode available on plus and Pro plans.

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[Host/Interviewer]

You Mandeep Singh joins us here, Global tech research head for Bloomberg Intelligence Advanced Micro Devices amd. I thought the sales outlook was good, but people are calling it an underwhelming sales outlook. How can a chip maker have an underwhelming sales?

[Mandeep Singh]

Well I guess partly that has to do with the valuation and where I think this stock has run up. But you know you're being compared against Nvidia. And that's where Nvidia's data center sales is probably at this point 12, 13 times bigger than AMD's. Even though AMD grew over 100% and they guided to triple digit growth going forward. But the fact that Nvidia is still growing 75% at their rate, which is 12 times bigger, it just goes to show that right now AMD is just holding share. It's not in any way gaining share. And this market is lifting boat. So AMD does have a role. And the other thing that I noted last night is so they have this new architecture coming up in the second half. Everyone seems to be holding off for that. Like why would they buy something that's going to be older generation three months from now? So that's the other thing when you announce a new architecture that doesn't happen with Nvidia, by the way, because everyone feels their supply constraint with Nvidia gear. But for someone like amd, you've said, you know, you've got a much better chip coming three months down the line. So I feel there is some hold up in that aspect. Like no one wants to commit big when they know there's another something better coming.

[Scarlet Fu]

So that strategy only works if you're the market leader, not if you're the number two. And it feels like intel has Intel. It feels like AMD has been number two for a long time. It was the number two to Intel. It's now bigger than intel, it's now the number two to Nvidia. But, but as we've said, there's not enough supply to meet all this demand. So AMD should be in a good position. Is it because all the other companies have come out and decided to make their own chips go proprietary that AMD is kind of left on the outside?

[Mandeep Singh]

I think that's also a long term factor when it comes to AMD's prospects. You know, three years, five years from now. I mean every hyperscaler has ambitions to make their own chip. Google has done that successfully, others want to do the same. So from that perspective, I mean, yes, AMD has a deal with OpenAI Anthropic. They have committed to Meta as well. In fact, they ended up giving some equity to meta for that 6 gigawatt commitment. That just goes to show they're not playing from a position of strength like Nvidia is. So they really have to coerce these hyperscalers, especially the new ones like OpenAI and Anthropic, and make sure they end up using AMD chips and not just, you know, other chip makers. So overall I think the print was great, the valuation is rich. So they, they sort of met expectations. They didn't. Wow. And that's why you see that sort of reaction.

[Host/Interviewer]

All right, we were just chatting with George Ferguson about SpaceX and he was giving us the angle from the satellite side, which is good. I know you just published something regarding the AI part of the story here because the Stock's down another 8% today. Can't find a bid here. If you're buying this thing, you're buying it for the AI play, I would

[Mandeep Singh]

say thing you are. And it's amazing how much they have pivoted to. In fact, they gave a $100 billion revenue run rate number by the end of this year. So this company is going from about 18 billion at the time of IPO to $100 billion run rate in a span of six months.

[Host/Interviewer]

And that's for the AI business, all AI driven.

[Mandeep Singh]

And that's where 70% of that, like they could be the biggest new cloud out there by the end of the year simply because they have that ramp up in CapEx. And that's where, you know, the investors may find holes in how are they going to raise money? If you are hyperscaler, you have the balance sheet to do $200 billion in capex. I mean, what SpaceX literally implied last night is they will do $200 billion in capex 2027 but investors are not buying it because they don't have the balance sheet, unlike the hyperscaler. So are you doing a debt raise? Are you doing an equity raise? How are you raising the funding? Or maybe Nvidia is doing the backstop because they said we will rely solely on Nvidia chips for this build out. And in fact that's why AMD is down, because they could have said, you know, we'll give AMD a 10% share. That didn't happen with Space Explains last time.

[Scarlet Fu]

Is that feasible that they're going to rely solely on Nvidia for the build out?

[Mandeep Singh]

If Nvidia. If Nvidia is doing the backstop and saying they need the funding. In this case of Space X, the biggest apprehension is how is this company going to find the funding for $200 billion in capex, which Elon Musk said will have 10 gigawatt capacity by end of 2027, that definitely amounts to $200 billion plus just in purchases of Nvidia chips and other components. How are you going to raise that funding? So that's where Nvidia comes in with its balance sheet and saying we are supporting all the new clouds. We will support SpaceX.

[Host/Interviewer]

What is a NEO cloud again?

[Mandeep Singh]

I mean it's just, you know, renting your data centers with GPUs with power. So it's, it's not a commodity business. Don't think right now all these, eventually it may become one, but right now sourcing the power, getting these servers online and getting it ready, it's, it's, there's

[Scarlet Fu]

a ton of demand.

[Mandeep Singh]

There's a ton of demand and it's not commoditized in any way.

[Scarlet Fu]

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

[Carol Massar]

This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work, I'm Carol Massar. Globe trotters hunting for airfare bargains are in for a rude awakening as the days of stumbling across a cheap seat on a popular flight could soon disappear. Bloomberg's Juan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fares. Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seat inventory and seasonal trends, while also continuously tracking competitors fares and capacity changes to update prices and in near real time. The technology could lead to higher fares on busy routes as airlines pack flights closer to capacity, but may also result in lower fares on off peak and lower demand routes. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get [e-mail] today by selecting work mode available on plus and Pro plans.

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[Scarlet Fu]

It's really earnings power that is driving the stock market certainly today with the S and P making yet another record high. If we close at these levels, it'll be the second straight record close and earnings is behind all of that. So let's talk to Geetha Ranganathan, our analyst on US Media in Princeton, about the latest earnings from Walt Disney Company, the entertainment giant. And Geeta, there's a lot to like in this earnings report. The stock is up about 2 1/2% right now. Is it the entertainment division, which saw 64% rise in profit that kind of drove everything, or is it once again the parks and cruises, the Experiences arm, which saw a smaller increase in profit, but really has become the crown jewel of Disney's empire?

[Geetha Ranganathan]

Yeah, absolutely, Scarlet. And it's actually a bit of both. So, you know, the, the Experiences division or the theme parks division, as you just pointed out, makes up less than 40% of total company revenue, but almost 60% of profit. So really it is the crown jewel, as you rightly alluded to it. And you know, again, the profit there was really strong. And I think coming in, investor expectations were really, really low. Profits were up 20%. Remember, consensus was at about 10 and a half percent increase. So again, really strong numbers. And what it really did was allayed fears because Comcast, which just reported a few weeks ago, talked about weakness and a slowdown, a demand slowdown in their Universal theme parks, especially in Orlando. And now seeing Disney come out with such strong numbers really shows that, you know, they're executing really well and demand continues to be strong as they head into fiscal, the fiscal fourth quarter as well. But then as you again said, streaming, which is part of that entertainment division, is really the growth catalyst for this company. And it's all about streaming profitability and how far and how far ahead they can get on operating margin for the streaming business. And they proved that they did a really good job this quarter. And there's obviously a lot more growth levers going forward.

[Host/Interviewer]

Geetha, this is the second straight quarter of better than expected profitability for the CEO Josh d', Amaro, who succeeded Bob Iger in that role in March. Talk about big shoes to fill. What's the early read from investors on Mr. D'? Amaro?

[Geetha Ranganathan]

I think they're really liking Paul, what they see. Josh obviously has a very clear strategy. He's made some pretty big changes. So just today, for instance, they announced that they got rid of their 50% stake in AE Global Media. They got about 1.2 billion dol in cash and they're going to deploy that towards share repurchases. Then again, you have this new deal they had to get out of their SORA deal after obviously sort of shut down. But now they have today they announced this new deal with Tick Tock. So again, Josh is, I think, really kind of taking a hard look at all of the different businesses. He obviously knows that they need to reduce their exposure to, you know, linear media, linear tv. But you know, they're doing all that they can in terms of streaming. And of course he's a parks veteran so he knows exactly, you know, how that business works, networks. But it also looks like he's positioning Disney plus to become this major hub for the entire Disney ecosystem, something almost akin to Amazon prime for all things Disney, starting in spring of 2027. And so I think that's going to be pretty exciting for the company.

[Scarlet Fu]

Yeah, that sounds very strategic. How do you think about how that's going to change the entertainment industry and how other media companies respond to that kind of positioning?

[Geetha Ranganathan]

Yes, I mean, Disney has a really unique hand to play here, Scarlett. I mean they have theme parks which really, other than Comcast, nobody else has. Obviously they have this great movie and studio business and of course that their streaming business too. And the one thing that they have or they do better than everybody else is ESPN and sports. They have huge, huge exposure there to all of the marquee sports rights. So you know, again, it's all come down to one thing in the streaming world, which is engagement. And if they can build on that engagement and keep you within that Disney ecosystem for everything, I mean, whether you're buying a theme park ticket or wanting to watch a movie or wanting to watch a show on Disney plus or Hulu, I mean, right there, that's a major differentiator versus their peers.

[Host/Interviewer]

So Geetha, Paramount also reported numbers here. I'd love to get a sense of kind of what the company saying these days about their, I guess, stalled merger with Warner Brothers Discovery and, and how they plan to operate as a new single entity over the next 12 months.

[Geetha Ranganathan]

So their numbers yesterday, Paul, were actually pretty decent. And a lot of that was just the cost savings from the Skydance acquisition. So it's pretty clear that once they are able to get their hands on Warner Brothers and they're able to close on that transaction, they're obviously going to do all that they can to deliver on those 6 billion in synergies. But it's really been a very long and arduous road and it's not looking easy at all. So one of the things that I think people still are extremely concerned about is leverage. It's going to be about six and a half times at closing whenever that happens. And then the other thing that you have now is kind of the sticking fee, right? And so that's because this deal is going to get delayed by at least two full quarters. It was supposed to close on September 30th. It's going to be maybe closer to a March, end of March time frame, but we're going to see close to almost about $1.3 billion in ticking fees. And guess how that's going to be funded? More share issuance. So we're looking at massive dilution here. I mean, Paramount share, Paramount Skyd, you know, number of shares outstanding right now is 1 billion. It's going to go to close to about 5 billion when all of this is said and done. So this is just, you know, it just is not a very, very encouraging outlook at all from an investment perspective.

[Scarlet Fu]

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

[Carol Massar]

This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work, I'm Carol Massar. Globetrotters hunting for airfare bargains are in for a rude awakening as the days of stumbling across a cheap seat on a popular flight could soon disappear. Bloomberg's Wan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fare. Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seat inventory and seasonal trends, while also continuously tracking competitors fares and capacity changes to update prices in near real time. The technology could lead to higher fares on busy routes as airlines pack flights closer to capacity, but may also result in lower fares on off peak and lower demand routes. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get [e-mail] today by selecting work mode available on plus and Pro plans.

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[Host/Interviewer]

Amazon Pharmacy presents Painful Thoughts

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[Scarlet Fu]

line with pee pee pants.

[Host/Interviewer]

Next time skip the pain and get fast free delivery. With Amazon Pharmacy healthcare just got less painful.

[Podcast Announcer]

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.

[Host/Interviewer]

One of the most read articles on the Bloomberg terminal in a long time is to do with Lululemon and the management team there and some of their product challenges that they have. And it seems like Lululemon pants are everywhere, but it's been a journey. Lily Meyer joins us here, retail reporter for Bloomberg News. Lilly, what was your focus here when doing this story on Lululemon?

[Lily Meyer]

Yeah, so the story chronicles how the company that basically invented leggings as you know it today got to this point where they're really struggling. You know, they have an influx of competitors. They have a CEO who's starting in September. They've been without a CEO for several months and until recently they had a founder who was really criticizing many of their moves.

[Host/Interviewer]

So how did they get here? What happened here? Because we've had a lot of reporting on Lululemon over the years here at Bloomberg.

[Lily Meyer]

Yeah, so you know, Lululemon was founded by Chip Wilson, who is a executive from Vancouver, and he came up with this idea. He was going to yoga classes to help with the back problem he was having and saw that many of the people in the class didn't really have, you know, the athletic wear that they needed, the company has, since, you know, gone public, become a $14 billion company, gone through multiple executives and through throughout the way, they've had these problems with sheerness in their leggings. So in 2013, Sheerness? Yes.

[Host/Interviewer]

Like see through?

[Amazon Pharmacy Advertiser/Voice]

Yes.

[Host/Interviewer]

Not good, right?

[Scarlet Fu]

Yeah.

[Lily Meyer]

So in 2013, they had their first big issue. They had to pull almost 20% of their women's pants from stores. That led to management changes. And just recently, earlier this year, they had another issue with sheer leggings.

[Host/Interviewer]

Okay, so new management we have, I guess, in April. The company has selected Heidi o', Neill, a former top executive at Nike, to be its next CEO. What do we know about Ms. O' Neill and maybe what her agenda or what her strategy is going to be? Be here.

[Scarlet Fu]

Yeah.

[Lily Meyer]

So Heidi is a really interesting pick. She was a top executive at Nike under its previous CEO, John Donahoe, who presided over a period of Nike's history where, you know, they cut ties with many of their wholesale partners. They went too deep into lifestyle sneakers. And Heidi led product and led Nike's direct to consumer push.

[Host/Interviewer]

So talk to us about this founder here. I mean, he didn't go quietly into the night, did he? He's still pretty active on social media, kind of taking potshots at the company, it seems like. Right?

[Lily Meyer]

Yeah. So he launched a proxy campaign against the company last year, advocating for changes. He criticized management, the board, you know, the CEO left shortly after. And in May, he reached a settlement with Lulu. So the settlement is granting him two board members. So he'll have a bit of a foothold in that sense. And he also is going to get quarterly meetings with Heidi when she starts. And in return, he has to stay quiet for 18 months.

[Host/Interviewer]

18 months. What do we know about. Does he support this selection's new CEO, Heidi o'? Neill?

[Lily Meyer]

He was pretty critical about the CEO process. He, you know, criticized the way it happened. He, he, he took some, some shots there. But he also reached out to Heidi, congratulated her on the role, said he looked forward to meeting her soon. So it'll be really interesting to see what these quarterly meetings are like between them.

[Host/Interviewer]

So is it for Lululemon? Is it a product story? Is it a promotional story? Where's. Where do most people think the, the challenge? Or is it maybe it's just a competitive story? I don't know. What do people think this. The, the issue?

[Lily Meyer]

Yeah, it's kind of all so on on the product side. You know, new competitors like Aloe and Vori have come in. They've launched product that customers have found really exciting customers have switched over and, and Lulu product, some of it has fallen short. You know, the get low leggings that came out in January and had to, they had to pause sales on because they were see through. Lululemon pushed into Sneakers, which hasn't really panned out. They have this collaboration with Disney which they got a lot of critique over. So it's a product story. You know, she has to win over shareholders as well and win over the street.

[Host/Interviewer]

So it's, I guess when I talk to like Scarlet Fu or Alix Steel or anybody, I kind of get the same story, which is they love Lululemon but it's just too expensive for a lot of people. So it's a premium product at a premium price. But I don't know, that's kind of the feedback I get. Yeah, I mean, does a company acknowledge that?

[Lily Meyer]

I don't know if they've really acknowledged that. I mean, I think their price points have remained pretty stable for many years, but obviously they're on the more premium side, which adds more pressure when the product doesn't meet customers expectations. In addition to Aloe and Viori, they've also gotten more competitors on the lower end. So you know, people are buying leggings from Target, they're buying leggings from Old Navy and so that that's taken some of their share as well.

[Podcast Announcer]

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.

[Scarlet Fu]

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[Host/Interviewer]

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