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This episode is brought to you by Charles Schwab Timing the Market Fighting Inflation Managing risk Financial decisions can be tricky. Investing isn't just math, it's psychology. Your neurons are playing favorites and the market doesn't care. Financial Decoder, an original podcast from Charles Schwab, can help join host Mark Riepe as he breaks down practical strategies to help overcome the mental traps that may affect your investing decisions. Listen@schwab.com FinancialDecoder
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Ralph Lauren the fashion brand embracing China's version of TikTok in a strategy that appears to be working, we break down the latest SpaceX. Its IPO prospectus has been filed and it's an energizing 277 page read. So we combed through it all so you don't have to to bring you the highlights and Spotify held its first Investor Day under its new co CEOs and I was there in person to see how the music streaming o is pitching its next chapter to investors. For Thursday, May 21, it's blue markets Daily and I'm Ann Berry. More market details to come. But first, Spotify this morning hosting its first Investor Day since 2022 and its first ever with the Co CEOs Gustav Soderstrom and Alex Nordstrom in the big seats with founder Daniel Ek having transitioned of course to Executive Chairman of earlier this year. So I was thrilled to get invited over to the New York Investor Day location to check out the latest from the music streaming OG market cap of around $100 billion and share price having struggled year to date before today. Well, it's a major player of course in the music world, paying out over $11 billion to the industry in 2025 with 3 and a half percent of the world's population paying for a Spotify subscription, that percentage getting as high as 50% in Sweden. And then of course there's the money. With 3 billion dol billion euro of free cash flow last year up from zero in 2022. Now, just to set the scene, Investor days are carefully orchestrated by public company investor relations teams and PR teams. Arrival times are carefully orchestrated, snacks are abundant, and seating is thoughtfully assigned. Literally nothing is left to chance. I've been to a lot of those nothing is left to chance and the production value is high. Sleek displays, well lit stages on point, branded swag. So when you attend, it's actually quite easy to get distracted from the substance delivered in these well written and very well rehearsed presentations. I've got to hand it to Spotify even going in with a slightly cynical view just because I've been to a lot of these. Today was really packed full of product innovation. So here's a couple of initiatives that caught my eye or my ears as I was listening. Number one, taking a leaf out of Disney's book from what is its now canceled partnership with OpenAI's canceled Sora. Spotify has signed a licensing agreement with Universal to let fans create remixes and covers of Universal's artist songs while getting royalty payments back out to those original artists. Pretty big deal. Number two for premium Spotify users Big unveil today the reserved offering, which is where two tickets for concerts are saved for what are called real fans before tickets go on general sale. And the idea of course is to get those real fans access to the shows before scalpers get involved. So how is real fandom determined? Well, Spotify digs into the data looking at a user streams, saves and engagement with an artist catalog over time to make sure that it really is real fans getting access to those reserved tickets. Number three, prompting, prompting, prompting playlist and I've already started messing around with this and experimenting in my own Spotify account. So this is where you can go into the app and you can write in natural language and say something along the lines of I want a playlist for a 20 minute run for a high intensity workout or I want a playlist for background music for a low key dinner party with a certain kind of mood. Definitely my vibe. Really fun to play with. Something leaning in heavily to personalization and number four memberships. And now this is catering to creators who can use this offering to be coming out this summer to offer subscriptions to their most engaged fans. And the idea this will plug into the likes also of Patreon. Well, there are a slew of other updates, more audiobook features building on their big unveil there earlier this year. More group listening and jamming, more personalization, expanded ad platform features with generative AI to maximize engagement and return on investment. There's a lot going on over at Spotify and it was clear if you track the share price today that investors loved the buffet of ways to drive incremental share of listening and just as importantly of course justify higher subscription prices while Spotify shares as a result up over 12% today. We're going to keep on watching but coming up in a moment, spin through the headlines that are moving the markets today, including why a Trump administration announcement is is sending quantum computing stocks soaring. But first, this episode is brought to you by Charles Schwab.
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Is recency Bias Skewing your potential stock picks is attribution bias messing with your retirement plan? Overconfidence describes our tendency to overestimate our abilities. Loss aversion helps explain why losing a dollar hurts more than gaining a dollar. Financial Decoder, an original podcast from Charles Schwab explains how these cognitive and emotional biases can affect the decisions you make about your financial life.
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Host Mark Reape, head of the Schwab center for Financial Research, and his guests offer actionable insights on what you can do to help fight off these decision making biases. Download the latest episode and follow@schwab.com financialdecoder or wherever you listen. Well, after earlier losses, stocks have been moving upward this afternoon on reports that progress has been made between the United States and Iran, with Secretary of State Marco Rubio saying there were, quote, some good signs that a deal to end the war could be in sight. For now, let's take a quick spin through some other headlines that have been sending the markets on the move today, kicking it off with one of our favorites. One of my favorites, Walmart, with shares in the retail giant ticker WMT trading around 7% lower after the company reported earnings that included a somewhat underwhelming outlook versus what the street was expecting. Well, revenue rose in the first quarter, driven by a 26% jump in global e commerce. Same store sales also increased, but it wasn't enough for investors in the retail giant.
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That's right, that conservative outlook that spooked investors stemmed from higher fuel prices. Walmart's CFO said he expects consumers to feel fuel pressure more acutely in the months ahead. He added that tax refunds helped cushion that pressure last quarter, but that tailwind is fading. Well, meanwhile in the fashion world, shares of Ralph Lauren ticker RL are up over 14% after reporting earnings this morning. The fashion company saw quarterly revenue jump 17% to $2 billion, which beat Wall street estimates for your revenue also topped $8 billion for the first time.
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That growth was buoyed by strong sales in Asia, up a whopping 31% for the quarter. And particularly driven by China, where sales grew more than 50%. A market, by the way, where other US struggled over the last couple of years. Well, on the earnings call, Ralph Lauren CEO said that performance was driven by, quote, an exceptionally strong lunar New year. Of course, a big holiday in China, along with further expansion on Doyen, which is the TikTok of China. Ralph Lauren shares up around 4% this year. And from fashion to quantum, or maybe it's fabrics to physics that's because quantum computing stocks spiked today. That's after the White House said it will award $2 billion in grants to nine companies in the sector. That's part of a move to strengthen America's position in what the Trump administration has termed the critical frontier technology. A billion dollars of the package is being given to IBM to establish America's first pure plate quantum foundry. That's in quotes. And shares in IBM as a result are up nearly 11% today.
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Other companies named in the deal also getting a boost, including Rigetti computer ticker RGTI, up over 25% today, and D wave quantum surging 28%. And it should be noted, as part of the deal, the government will receive a minority equ equity stake in each of these companies.
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Interesting. We actually interviewed the Rigetti Computing CEO here on Brew Markets. Going to post a link to that conversation because it's quite interesting context for what we saw unfold today. And finally, SpaceX, not the only IPO making headlines or a health maker of the smart ring that tracks health, fitness and sleep, confidentially filed for a US initial public offering. That's as it looks to capitalize on the growing popularity of wearable devices. The company's CEO said that the wearable tech maker could generate close to $2 billion in sales this year, double what it generated in 2025.
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And this is just some of my own personal opinion. Health and fitness is important, but I think it's really corny when people in the morning look at their phone to ask it if they got sleep that night.
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Why? Why don't you like that?
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Don't you know if you got sleep or not?
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No, it's actually really good. So I have seen people use it and see patterns in their resting heart rate on the quality of the sleep. And it can actually pretend if you're getting sick with something. So even if, like when I feel sick, I'm just in bed and I just sleep constantly. But this can tell me that my, my sleep is for bad reasons.
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I've had many people, including Toby on the morning show, you know, he's all into this kind of thing. They have evangelists, but I haven't, I don't have one.
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I don't need more metrics in my life. I have metrics everywhere else in my life. My sleep is not one where I want it. Well, let's take a quick break and when we come back, this SpaceX IPO, we cannot wait for this one. We have combed through the massive square one filing to unpack how its space, AI and Starlink businesses fit together to stick with us. This episode is brought to you by Charles Schwab. Timing the market, Hedging against inflation, Balancing risk investing is about more than math. It takes both sides of your brain, and those confusing mental traps can sometimes lead you astray. Financial decoder and original podcast from Charles Schwab can help. Join host Mark Reap, head of the Schwab center for Financial Research, as he breaks down practical strategies to help outsmart the mental traps like overconfidence, loss aversion and recency bias that often cloud your investing decisions. Listen@schwab.com financialdecoda or wherever you get your podcasts.
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So good, so good, so good.
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Everything you want for summer is at Nordstrom Rack stores now and up to 60% off. Stock up and save on the brands you love like Vince, Sam, Edelman, Frame and Free People. Join the NordicLub to unlock exclusive discounts. Shop new arrivals first and more. Plus buy online and pick up at your favorite Rack store for free. Great brands, great prices. That's why you rack SpaceX Elon Musk's Space Telecom and AI company has accelerated its IPO timeline now targeting a NASDAQ debut, specifically the Texas version of Nasdaq, as early as June 12th. And yesterday the company publicly released its long awaited prospectus, known as an S1 filing, as it seeks to raise as much as $75 billion at a valuation reportedly between 1 1/4 and $2 trillion, which would make it the largest IPO in history. Well, since the 277 page prospectus dropped, that's on the Edgar website of the SEC. Investors and analysts have been combing through the filing for the first detailed look at the company's finances, as well as Musk's striking vision for orbital AI infrastructure and what Elon Musk control and compensation would look like if the company hits its ambitious, some might say grandiose, milestones. So John and I, we've been glued to the S1 and we're going to get into it all. So let's start with what we learned about the basic structure of SpaceX. Then let's get to the numbers and the vision of Musk for the Future.
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That's right. SpaceX, we learned, is divided into three major categories. I'm going to go over those. Space is the first one. That's the launch business. The SpaceX. SpaceX, we've seen those reusable rockets and the spacecraft that can land back down on its launch pad. Then there's AI. That's the second one that's basically Xai Musk's other company that SpaceX acquired earlier this year. That includes Grok, the AI chatbot and the Colossus supercomputers. And then the third one is connectivity. And that's the Starlink system that we've known for years. That's the low orbit constellation of 10,000 satellites that beam down broadband all around the world. And we learned that starLink has over 10 million subscribers globally. So there's space, AI and connectivity, all within SpaceX.
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So let's talk about where the numbers lie. In 2025, SpaceX, the overall competence company as distinct from the specific space technology piece, generated a total consolidated revenue of just under $19 billion, against which it lost two and a half billion on operations. Now, of that 18.7 billion, 19 billion ish of top line of revenue, the space segment actually only brought in 4 billion. I say only sort of tongue in cheek because any other businesses would be a standalone company. But the point is that SpaceX is no longer at the core of SpaceX in terms of revenue contribution. So let's see where the money is actually coming from. Connectivity that's through StarLink accounted for 61% of total 2025 sales, meaning that for the full year 2025, that connectivity segment, that's what Starlink being called, generated just over $11 billion of revenue. And here's the thing that caught my eye. It's highly, highly profitable against that 11.4 billion of revenue. Again for Starlink, EBITDAR a measure of profit of $7.2 billion. And we're seeing the growth in Starlink already outpace what we saw last year because for Q1, revenue was $3.3 billion. So big chunk of the action coming from Starlink. But let's take a look at AI, what's going on over there.
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Meanwhile, for 2025, AI lost over $6 billion. So Starlink is bringing in the revenue and it's funding a lot of this AI growth. And for the first three months of the year, total CapEx spend at SpaceX was about $10 billion. That was reported in the most recent quarter. 1 billion. Of that, about 10% went to space, 1.3 billion went to the connectivity, and $7.7 billion near the spend in quarter one went to AI. And that's data center expansion, hardware, GPUs, all these things we keep reading about the compute infrastructure in their Colossus supercomputer clusters.
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So when you cut through it, Starlink, to all intents and purposes is the piggy Bank. Yes, it's the cash cow and it is subsidizing both SpaceX, the brand and also the AI business. Especially the, especially the AI business that's really key to all this. Now let's also take a look at where that cash is going because SpaceX overall does have debt, meaning that interest payments and paying down that debt is going to be necessary to keep this equity story alive. SpaceX right now about $29 billion of debt according to the filing. And that includes a $20 billion bridge loan partly used to refinance liabilities amass during his acquisition. If you guessed it, the AI business.
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Exactly. And I just think this is so interesting. Elon Musk has had these different businesses. There was talk of which is he going to combine, Was Tesla going to get X AI? Well, it ended up going to SpaceX and it made me just think back there. Little nugget in the filing. I was thinking about Elon bringing together these different companies. And when he bought Twitter, which he now calls X, there was a lot of question at the time, why is he buying it? Did he overpay? Why does he need to have this social media platform? Because that's all it was seen as. But in the filing we're coming to understand that the company is seeing X as a way to feed its AI and quote, a key competitive differentiator in Grok, that's their AI chatbot, is deep integration with X enabling proprietary access to a real time information stream of approximately 350 million daily posts.
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I'm so happy, John, that you unearthed us and are shining a light on it because can we just for a minute digress and talk about what X could actually turn into?
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Right.
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X clearly is something that Elon Musk wants to turn into a super app. PS Teaser, come back next week because we're talking to one of the CFOs of a big Asian super app called Grab. We're going to drop that interview a week on Friday on the 29th. But X, Elon Musk has said that, you know, cash services are going to start becoming available on X. This is is my hypothesis. This is pure speculation on my part. I would not be surprised if X tried to buy a brokerage at some point or have some kind of partnership to allow for stock trading. We know that when Elon Musk was at PayPal he wanted PayPal to become a super app, somewhat a destination where you could do many, many things. So in my opinion, as X expands and its tentacles start to proliferate and more different, more content Generation comes from it, including on video, but also other services, including around Money. Turn onto X. GROK is going to start getting more and more insight into those kinds of human behaviors.
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Just one person's view, even the nomenclature X A, I, X SpaceX is an
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idea that they could all be totally, totally the convergence of it all. Well, let's, let's talk about AI from a different perspective though. Starting this month, Anthropic is going to pay SpaceX one and a quarter billion dollars per month for the next three years to access compute capacity, namely the colossus and colossus two supercomputers and data centers. So we're now talking about $15 per year coming into the SpaceX company from anthropic alone. And again, one client, $15 billion a year. And in 2025, total SpaceX revenue was just under $19 billion. So we're talking about Anthropic coming in and giving this company almost the entirety of its 2025 revenue per year, which is, which is really kind of extraordinary when you think about it. And I couldn't help but have a bit of a throwback to the Cerebras IPO that we saw recently, where it was very clear that OpenAI was going to become a critical customer. But I'm not sure that folks were expecting this Anthropic tie up to be as significant for SpaceX as it's turned out to be from this filing.
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Right. And I think this filing was the first time that these kind of numbers were put around it.
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Exactly.
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People are digesting it today. So this vision, we've got these three, we've got space, we've got AI, we've got Starlink. What is the vision? And this was laid out, how are these three going together? And the objective is orbital AI data centers. So using the space rockets to launch AI compute satellites into orbit. This is the idea. As laid out then, those would be in sync with the sun. So they're constantly solar powered. This is key, Anne. We keep talking about power and energy for data centers. Well, what if they're solar and they're up there always attuned to the sun's rays? And the AI intelligence would then be beamed back to Earth via Starlink. So that's how those three components will go together for the future. And from the filing quote, the rapid emergence of the AI era is directly dependent on meeting exponentially increasing resources demands. And this supply and demand imbalance is already imposing unsustainable strains on terrestrial power grids. The number of times terrestrial was mentioned in this file. Of course, for SpaceX, it was just saying there's an alternative away from Earth to get things accomplished. One analyst said today, investors aren't paying for today's business. They're paying for the platform that owns the next 50 years of orbital infrastructure.
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So this right here, the way in which these three segments are at least being portrayed as being synergistic is why people can't get enough of Elon Musk.
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Yes.
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As an investor. Right. And it's interesting because he's sort of gone down this road with Tesla. Right. It's no longer a car company or even a robotics company. It's a physical AI company. And those investors who love what Elon Musk is selling are buying this up. And I think the storytelling here when it comes to. Can we just repeat what you just said, John? Because I think it's so articulate. Space rockets launch AI compute satellites into orbit. Solar powered AI intelligence beam back to Earth via Starlink. And of course the AI so brain behind all this being xai. So the idea that it's symbiotic, I think is going to be so core to how this thing performs.
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And about storytelling, I can picture it because over the last several months they've been. There has been talk we're going to put data centers on the moon.
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They tease this, they've breadcrumbed this.
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Yeah, but this isn't on the moon.
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This is.
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This makes sense to me. I can picture this.
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Yeah.
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I mean, there's already 10,000 satellites in space.
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It's fat and it's fantastic storytelling. Right. The substance of it, you know, feels as though that there is there, there, but the storytelling around it and the sort of vision that's laid out and the simplicity, but also the complexity at the same time is the kind of thing that is so important in storytelling when it comes to being a public company stock. Let's talk about Musk's ability to basically do what he wants to get this vision executed against. Let's talk about his control. And this to me is so fascinating, John, because we've seen the battle that's played out with Tesla, right, where Musk clearly regretted that he didn't lock down control of that company, at least technical control of the company before it went public. And it looks as though he's learned his lesson because let's talk about what's going on here. Elon Musk currently owns just over 12% of SpaceX Class A common stock. Think of that as a proxy for the economic stake that he's got. But he has 94 of Class B stock, which gives him more than 85% of the voting control for the company. Which means that SpaceX, the corporation, will adopt a quote controlled company status when it goes public, so its board does not need to have a majority of independent directors and there is no independent compensation committee. Musk effectively cannot be removed as head of SpaceX and whatever actions he dictates are effectively the direction that SpaceX, the corporation, has to go in. So this is it. He learned his lesson at Tesla, Right. It has been a sticking point for him over there. He's totally set this up in a fundamentally different way.
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We covered this in the fall that he said to a judge, I'm uncomfortable growing Tesla to be a leader in AI and robotics without having 25% voter control because he only has about 13%. And we've said, all right, he's the world's richest man or one of them, so what does he need? He needs power and control. He doesn't necessarily need more money.
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He basically says, if I'm going to get out of bed in the morning and put my intellectual capital behind this, I'm literally not going to get out of bed for less than a trillion dollars of potential. Which is again, I'm going to go down a sort of rabbit hole on this. But I've long thought will, at some point Tesla and SpaceX end up being merged into the same entity. And this is so clear, SpaceX is by far the largest business of the two. But if they did end up merging effectively, what would happen is Musk then absolutely gets control of Tesla because that existing shareholder base is so small relative to the one that he controls through voting over at SpaceX.
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Absolutely. So let's cover what is his. How much does he.
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Yeah. How much goes on the line?
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Yeah, well, this is what's on the line. His annual salary at SpaceX, we learned, is $54,000 a year. It's remained unchanged since 2019. So that's the basic part. But let's get into these fabulous performance based incentives. If the company successfully deploys non earth data centers that we've been talking about that deliver, that alone is difficult. That deliver 100 terawatts of compute per year, he gets another 60 million class B shares. And so that could be hundreds of billions of dollars. And to put that in perspective, that 100 terawatts is 20 to 50 times larger than what all of humanity's current electrical grid can handle for compute power.
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I mean, these are just such Big numbers on every level. Not just big dollar numbers, but big energy numbers. I mean it's just extraordinary. The other thing I'm going to just take US to, if SpaceX reaches a seven and a half trillion dollar market cap, okay, so there's the money, but here's the other goal. And if the company establishes a a permanent human colony on Mars with at least 1 million inhabitants, Musk will receive 200 million super voting restricted shares. I'm not even going to bother saying what sort of dollar amount that is. The point is there is no filing right imaginable that has as one of its compensation milestones putting a permanent human colony on mosque with at least 1 million inhabitants. Musk is saying he truly is aspiring to not just getting humans to Mars, period. Not even just getting a couple of dozen of Mars over humans to Mars. He is literally saying in his lifetime. So he becomes the recipient of more shares. A million inhabitants in a human colony on Mars. I mean he has unbelievable vision and chutzpah.
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There's definitely chutzpah in there.
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June 12th, folks. June 12th is when the IPO is happening. It's going to be happening on both the national nasdaq. So that's going to be here in New York. I'm sure there's going to be a big bell ringing. It's also Nasdaq Texas of course. Elon Musk has been moving a lot of his business interest to Texas. We're absolutely going to be watching. Now companies do typically amend an S1. So what happens now is the SpaceX team are going to go on the road and meet with potential investors. People are going to be lining up to take this meeting that I can, that I am absolutely sure about. So there's going to be more to be learned as they go through that process. And tonight of course it starts here. SpaceX scheduled to launch its 12th Starship test flight and the debut of its new Starship V3 mega rocket. That 90 minute launch window opening tonight at 6:30 Eastern Time. So not too long after you hear from us. Well, speaking of time here, we're up on it. It's 4pm on the east Coast. There's the closing bell. The market's wrapping up for the day and we don't have a ticker tape but let's throw it over to our human ticker.
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Our producer John and the major indices all eked out gains at the end of the day. After starting lower. The S&P 500 finished up 2.10 of a percent. The Dow was up half a percent and the NASDAQ finished up up 1/10 of a percent for the day.
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You know, just as a final thought, two final thoughts. We didn't talk about Nvidia much today. Earnings did come out. We'd be remiss to not talk about it. We did see expectations get blown past again. So definitely one that we're going to revisit and do a bit of a wrap up on what's going on in chips more broadly in coming weeks. So stick with us. And then tomorrow we have an absolute treat, even more of a treat perhaps than that SpaceX S1 filing, because we're going to kick off the Memorial Day weekend with a special episode that features my conversation with Haley Sachs. Now, you may know Haley from Instagram as Mrs. Dow Jones. Check out her Instagram account. Content's absolutely hilarious. And we recently got a chance to chat with each other at a Brew Markets live event. So come back tomorrow, check out my conversation with Haley Sachs. You'll learn something. You're definitely gonna laugh. But also, you know, check out her new book too, which we'll talk about tomorrow. That's it for today's Brew Markets Daily.
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Brew Markets Daily is hosted by Anne Barry and produced by John Carteau, Tarka Viltief, Abni Laroya and Em Millern. Our technical director is Uchena Wagu, Brittany De Taco is our audio engineer, and the president of Morning Brew Inc. Is Devin Emery.
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Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby. See you back here tomorrow, same time, same place.