Animal Communicator

Summary

Money Stuff: The Podcast

Episode: Animal Communicator (July 17, 2026)
Hosts: Matt Levine & Katie Greifeld

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Overview

This episode of Money Stuff kicks off with a highly entertaining story about animal communication and then dives deep into the latest in financial innovation—especially the proliferation of novel Exchange-Traded Funds (ETFs), regulatory responses, and the ongoing saga of companies like Strategy (formerly MicroStrategy) and SpaceX post-IPO. True to form, Matt Levine’s wit and technical fluency carries the show, while Katie Greifeld adds firsthand reporting, market skepticism, and comedic timing.

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Key Sections & Timestamps

1. The Animal Communicator Saga (01:42–05:31)

• Katie’s Animal Communicator Experience
  Katie shares her experience with an “animal communicator”—a session intended to help her explain her pregnancy to her cat and horse. The animal psychic had previously met her animals, and the session “cost $75, which was a great way to spend $75. I would recommend it.” (02:10, Katie)

• The Cat’s Reaction
  The communicator revealed the cat was worried Katie was sick and felt “relieved” after the news.

  “Apparently the cat didn’t know I was pregnant… he thought I was sick.” (02:34, Katie)
  “He’s relieved.” (03:05, Katie)

• The Horse’s Response
  Her horse, Gus, was “psyched” and considered himself to have “known from day one.” He was not on the Zoom call—“just astral plane.”

  “Apparently, the horse is psyched and he’s feeling very proud.” (03:36, Katie)
  “The horse was like, this is our baby.” (04:08, Katie)

• Skepticism and Entertainment Value
  Matt and Katie both frame it as endearing “performance art”:

  “In the same way that we were talking about ETFs as performance art, that’s sort of how you have to go into this.” (03:45, Katie)
  “This is totally reliable information.” (03:43, Matt)

2. Sports Gambling ETFs and Financial Innovation (05:31–13:41)

• Rise of Sports Gambling ETFs
  Discussion shifts to the Subversive All Season Sports ETF proposal—a vehicle allowing professional gamblers to make and wrap sports bets into an ETF structure.

  “The ETF is the modern way to package any sort of bet.” (06:16, Matt)
  “Any fleeting emotion you might have, any idea you might have, is packaged into a bet that is called an ETF.” (06:35, Katie)

• SEC’s Role and Matt’s Involvement
  The hosts discuss the SEC’s “meditations on novel ETFs”:

  “They opened it up for comments. And I wrote a column… someone actually filed it with the SEC.” (08:07, Matt)

• Entertainment vs. Utility
  The debate centers on whether letting someone else place the bets saps the fun:

  “If someone else is placing the bets, it’s less fun. Like, you’re missing the point.” (09:44, Katie)

• Future of Prediction Market ETFs
  Discussion of rolling, systematic, and single-event ETFs; skepticism about long-term viability; fun speculation on “leverage single sports bet ETFs.”

3. Leveraged Single Stock ETFs—South Korea’s Crackdown (15:14–21:14)

• Regulatory Clampdowns in South Korea
  Recent South Korean regulatory interventions into the “craze” of leveraged single-stock ETFs, especially for blue chip equities like Samsung and SK Hynix.

  “There’s a Bloomer article saying that 70% of the stock market is just Samsung, SK Hynix, and leveraged single stock ETFs on Samsung and SK Hynix.” (16:01, Matt)

• Reasons for Concern
  Matt explains leveraged ETFs as “perfect distilled margin debt,” increasing volatility and exacerbating booms and busts.

  “A leveraged single stock ETF is like perfect distilled margin debt because every day if the stock goes up, it borrows more money to buy more.” (17:02, Matt)

• Comparing US and Korean Regulation
  Katie details her interview with Gary Gensler, former SEC chair, regarding disclosure in the US.

  “If there’s proper disclosure… the American public gets to decide what they want to invest in.” (19:39, Gary Gensler)
  The US has preferred to rely on disclosure, but FINRA and regulators have considered knowledge checks for complex products.

4. Strategy & Bitcoin—The Treasury Company’s Gamble (22:03–27:20)

• Katie’s Interview with Strategy CEO (Formerly MicroStrategy)
  The hosts dissect the company’s transformation into a “Bitcoin treasury company” and its labyrinthine balance sheet structure.

  “Their philosophy is we’re going to issue stock at a premium to buy bitcoin and… borrow against bitcoin at very high floating rates.” (23:37, Matt)

• What Happens if Bitcoin Falls?
  The CEO claims only prices below $8,000–$10,000 for bitcoin would threaten solvency, but Matt and Katie see warning signs before that.

  “The whole experiment stops working well before you get to that point.” (24:50, Matt)

• Preferred Stock Drama
  They discuss the STRTCH preferred stock: originally designed to always float at par, now paying 12% and trading at a discount—far from the plan.

  “When they issued it… they were like going to float the rate so that it always trades at par… and they’ve abandoned defending par.” (25:10, Matt)

5. SpaceX Post-IPO—Lockup Expiries and Share Dynamics (28:29–32:56)

• SpaceX Stock’s Decline After IPO
  Shares dip below the IPO price of $135.

  “It is below the IPO price, which is a traditional source of shame and failure.” (29:19, Matt)

• Upcoming Lockup Expiries
  The release of locked-up shares post-earnings could double float and drive volatility.

  “The shares that will be released after earnings… is more than the shares they sold in the IPO.” (30:19, Matt)

• Speculation on Insider Behavior
  They muse on whether engineers and insiders will sell upon lockup expiry.

  “If I were a rocket engineer who was sitting on $30 million of SpaceX stock, would I take money off the table at my first opportunity? Like, yes, at any price.” (31:32, Matt)

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Notable Quotes & Moments

• On Animal Communicators as Performance Art:
  “Again, in the same way that we were talking about ETFs as performance art, that’s sort of how you have to go into this. I’m just here for energy, entertainment, and I was entertained.” (03:45, Katie)

• On Leveraged Single Stock ETFs:
  “A leveraged single stock ETF is like perfect distilled margin debt… it really concentrates the volatility effect of margin lending.” (17:02, Matt)

• On the ETFification of Everything:
  “Any fleeting emotion… is packaged into a bet that is called an ETF.” (06:35, Katie)

• On Regulatory Philosophy:
  “If there’s proper disclosure… the American public gets to decide what they want to invest in.” (19:39, Gary Gensler)

• On MicroStrategy/Strategy’s Perpetual Bitcoin Play:
  “We’re going to issue stock at a premium to buy bitcoin and… borrow against bitcoin at very high floating rates. And this will be great as long as bitcoin keeps going up… And now it stops.” (23:37, Matt)

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Tone & Dynamic

The tone throughout is wry, irreverent, but carefully explained—mixing high-concept financial analysis with banter and playful skepticism. Matt Levine’s unique style comes through, especially in his dry framing of even the most eccentric topics (animal psychics, ETF arcana, corporate finance experiments gone wild), while Katie balances reporterly detail and comic relief.

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Wrap-up

The episode closes with Katie planning for her upcoming parental leave, speculation about what the market landscape—and her horse’s attitude—will be on her return, and a tease of more “stuff” to come.

For both finance enthusiasts and casual listeners, this episode delivers the perfect mix of wit, market insight, and the occasional metaphysical detour.

Transcript

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[Bloomberg Studio Announcer]

Bloomberg Audio Studios Podcasts Radio News

[Matt Levine]

Wait,

tell me about the Animal Communicator.

Dude, have we talked about it on

the podcast or just after the podcast?

[Katie Greifeld]

Probably.

[Matt Levine]

I think we just thought about it after.

[Katie Greifeld]

Just like a real life Eddie was

[Matt Levine]

going to Animal Communicator.

[Katie Greifeld]

Yes.

[Matt Levine]

To explain to her animals.

[Katie Greifeld]

Yes.

[Matt Levine]

That she's having a child.

[Katie Greifeld]

Yes.

[Matt Levine]

So it was like Katie and this

person and her horse and her cat sitting around in a circle and my

husband holding paws and hooves.

[Katie Greifeld]

My very patient husband was also there. It was over FaceTime. But I do want to point out no, I do want to point out that this woman has met all of my animals. So maybe, maybe that makes it a little bit more legit. Most interesting headline from, from the 30 minute session which cost $75, which was a great way to spend $75. I would recommend it. Apparently the cat didn't know I was pregnant.

[Matt Levine]

Okay.

[Katie Greifeld]

And so we told him that. And the animal communicator said that he was relieved because he thought I was sick. Like he thought I Just happened.

[Matt Levine]

On the call, you're sitting on Zoom

with a cat sitting next to you, like his little headphones on.

[Katie Greifeld]

Yeah.

[Matt Levine]

And you're like.

You turn to him and you're like.

[Katie Greifeld]

Well, you see, she establishes a connection with the cat. You know, she sort of goes into the space where her and the cat are communicating. So I thought that was pretty interesting.

[Matt Levine]

Okay, so he's relieved.

[Katie Greifeld]

He's relieved.

[Matt Levine]

He feels good.

He understands the situation now.

[Katie Greifeld]

Yes.

[Matt Levine]

And the horse.

[Katie Greifeld]

The horse apparently was psyched. His name is Gus.

[Matt Levine]

He wasn't on the Zoom call.

[Katie Greifeld]

He wasn't on the Zoom call. By her telling, Gus has known since day one that I was pregnant.

[Matt Levine]

And she knows. Did she separately chat with Gus or.

This is just like, astral plan, can I say.

[Katie Greifeld]

So she says goodbye to Catrick, and then she goes back into the headspace, connects with the horse.

[Matt Levine]

But not on Zoom.

No, just astral plan.

[Katie Greifeld]

Yeah, exactly. You've got it. You've got it. Apparently, the horse is psyched and he's feeling very proud.

[Matt Levine]

This is totally reliable information.

[Katie Greifeld]

Again, in the same way that we were talking about ETFs as performance art, that's sort of how you have to go into this. I'm just here for energy, entertainment, and I was entertained.

[Matt Levine]

No, you're not. You're here.

[Katie Greifeld]

No, I believe it.

[Matt Levine]

Right, of course.

[Katie Greifeld]

Full throat.

[Matt Levine]

Okay. Why is the horse proud?

[Katie Greifeld]

Apparently, he just likes babies. He really likes me.

[Gary Gensler]

He.

[Katie Greifeld]

He's considering.

[Matt Levine]

Invested in your success.

[Katie Greifeld]

And let me again say, my husband was sitting right next to me. My very patient husband. Apparently, the horse was like. He's approaching this as like, this is our baby and he wants to use the baby as soon as possible. Like, it's the horse's baby. Some of this we might have to cut because it's insane.

[Matt Levine]

No, no, no. We have 20 more minutes on this.

[Katie Greifeld]

Knowing my two animals, it definitely tracks with both of their personalities. Gus is probably much more outwardly friendly than my cat. My cat likes two people, and that's me and my husband.

[Matt Levine]

Right. This is what we call cold reading.

[Katie Greifeld]

Yeah.

[Matt Levine]

The animal psychic is like, this is an outgoing horse. This is a nervous cat.

[Katie Greifeld]

Yeah, yeah. But I did think it was endearing that apparently the cat just thought I was getting, like, worse and worse as the months wore on. Like, less and less mobile, and maybe he didn't have that much longer left with me.

[Matt Levine]

So we're gonna check in in, like, seven months.

[Katie Greifeld]

Yeah, we'll bring her on.

[Matt Levine]

We'll get a sense of, like, was the horse proud?

[Katie Greifeld]

Yeah, like, nay.

[Matt Levine]

Proudly, like, look at his body language. Yeah, right, right.

[Katie Greifeld]

Perhaps trot about.

[Matt Levine]

Right.

[Sponsor/Announcer]

We'll see.

[Matt Levine]

Right, right. We'll get a sense of whether this

was entirely accurate information that you got from the horse psychic.

[Katie Greifeld]

We will.

[Matt Levine]

This is amazing.

[Katie Greifeld]

Yeah.

[Matt Levine]

I really should have just recorded it.

[Katie Greifeld]

That is this podcast. It was so good.

[Matt Levine]

Yeah. It's all downhill from here.

[Katie Greifeld]

Yeah.

[Matt Levine]

Hello and welcome to the Money Stuff Podcast, your weekly podcast where we talk

about stuff related to money. I'm Matt Levine and I write the Money Stuff column for Bloomberg Opinion.

[Katie Greifeld]

And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.

[Matt Levine]

I guess we have to just get right into the sports gambling etf.

[Katie Greifeld]

Yeah.

[Matt Levine]

Which is like my white whale.

[Katie Greifeld]

I just want the audience to know, I think they do that. This is your idea. You want to start off strong with ETFs.

[Matt Levine]

You're misunderstanding.

[Guest or Interviewee]

Okay?

[Matt Levine]

I don't care about ETFs.

I do care about it. I've said this before.

The ETF is the modern way to package any sort of bet. So it's like, yeah, sure, in the

olden days it was like the bet

that they were pitching to you was like, buy the S&P 500. So there are S&P 500 index ones.

But now there's anything you can think of, like buy rate strategies and long Tesla short forward. All these things.

[Katie Greifeld]

Any fleeting emotion you might have, any

[Matt Levine]

idea you might have, is packaged into a bet that is called an etf. Because an ETF has some good properties which I'll now enumerate for you. One, you can buy it in your brokerage account.

Two, you can buy it in your retirement account. Like if you have like an ira. Kind of.

Yeah, kind of.

So, like, it's just like a very

good package to sell to retail investors.

There are other ways to package these ideas.

You can sell structured notes, but like the most general use retail investor package is an etf. And obviously now sports bets have come to financial markets. Cal State and polymarket are sports betting sites that everyone pretends are financial institutions.

And so now there's going to be a sports gambling etf. It's called the Subversive All Season Sports etf.

They will hire a professional gambler who

will make sports bets unkalshi and they will be wrapped into an etf and

you can buy shares in the etf.

[Katie Greifeld]

It's just a filing.

[Matt Levine]

So we've talked about this.

The SEC are meditating on, I think they've called this on novel ETFs, which

means sports gamble ETF? Yeah, like, weird leverage, single stock.

All the ETFs that are not S&P 500 funds, they're like, how should we handle these things? And obviously, one big aspect of that is prediction markets, by which I mean sports gambling ETFs. And so they did. And we've talked about this. They opened it up for comments. And I wrote a column about the sports gambling ETF in which I said,

consider this my comment for the ETF's comment file. Someone actually filed it with the SEC. So it's now on the SEC's comment file.

Like a comment from Matt Levine. I didn't file it, but congratulations.

[Katie Greifeld]

Yeah. So we have seen prediction marketing.

[Matt Levine]

So I'm probably going to be cited in the decision. They ultimately.

I don't know. Never mind.

[Katie Greifeld]

I would love that for you. There's been prediction market ETF filings, like, for elections and stuff. This is the first sports specific.

[Matt Levine]

It's also a little different for the other ones.

The election ones are.

[Katie Greifeld]

Those are more binary.

[Matt Levine]

Yeah, they're time limited, so they're binary. They're like, you buy shares in the, like, Republicans win etf, and then if the Republicans win, you, like, double your money or whatever. And if the Republicans lose, you, like, go to zero. Right. So the ETF has a finite life and then it ends.

[Katie Greifeld]

Right.

[Matt Levine]

And this one is, I think, designed

to solve the problem of, like, if you're an ETF manager, you don't want it to end.

So this is like, it's rolling.

Like, they make bets, and if they win, they make more bets and they

hopefully make more money than they lose. And they keep the ETF around forever. Yeah, that's the idea.

And when I first heard that, I was like, oh, yeah, that makes sense. Like, you want to keep the ETF around forever.

But now I'm not so sure.

Like, I wrote about this.

Like, they should offer, like, the weekly,

like, chats, win etf, like, what's the

[Katie Greifeld]

hot game of the week?

[Matt Levine]

Right? And like, if it goes to zero, it goes to zero, and you launch a new ETF the next day. And if it wins, then, yeah, people

take their money out.

[Katie Greifeld]

Yeah. So you wrote about this also, Athanasio Sarah Fagas from Bloomberg Intelligence wrote about this, and the title of his note was just what's the fun in a prediction market etf? And he's basically making the same point that I think you did, that if someone else is placing the bets, it's less fun. Like, you're missing the point.

[Matt Levine]

It's very fun for me.

As a person who has been predicting

sports gambling ETFs, it's not that fun for sports gamblers.

[Sponsor/Announcer]

No.

[Katie Greifeld]

You're buying like a diversified portfolio of bets placed by someone. Someone else.

[Matt Levine]

One thing I'm not really clear on

is like, I feel like actively managed ETFs have a range of like, how they disclose their positions. But like, clearly as a marketing matter, you would want to disclose and hype your positions in this etf. Like you'd want to send your shareholders

like a daily, like, here are the

games you should be watching and here's how we're betting. Right.

[Nathan Hager]

Yeah.

[Matt Levine]

Just so they like have an emotional investment in the bets that you have made without their input.

[Katie Greifeld]

I think you can do that to an extent.

[Matt Levine]

Yeah, yeah, sure you can do it.

[Katie Greifeld]

You have to be clever.

[Matt Levine]

Yeah. I think some active ETF managers would prefer to not disclose their positions in real time because then they shouldn't be. They're like stock traders. But like, these people are not stock traders.

These people are, well, sports gamblers.

[Katie Greifeld]

On the topic of active ETFs, I was thinking about this. Like, again, you're outsourcing your picks to someone else, a professional gambler, which is a financial decision.

[Matt Levine]

It's probably, you know, you probably do better with a professional gambler gambler than with your own like emotional biases. But that's not why you're a sports bet.

[Katie Greifeld]

But you think about like active management within the ETF world. I mean, you do have some old school stock pickers, but that is very much not in fashion right now.

[Matt Levine]

Right.

[Katie Greifeld]

All of the. But like the active boom within the ETF wrapper, it's like, okay, either it's like systematic and defined outcome strategies or it's the exact other end. It's leveraged single stock bets. Like, there's not a lot of money to go around for someone else to put together a portfolio for you. And I feel like this ETF and things like it probably run the risk of also struggling to find an audience.

[Matt Levine]

Yeah, I agree.

I think there's a good chance that all of this is just fake and I have willed it into existence by joking about sports gambling ETFs. And there will never actually be a sports gambling ETF. And the SEC will say no, or investors will say no.

But if you imagined in five years

there was a flourishing sports gambling ETF

industry, I think it would look like what you just said.

There would be systematic strategies, which. I don't know quite what that looks like, but I think we've talked about one on this podcast, which is like if you bet heavy favorites in college football, that appears to have positive expected returns because nobody likes to bet heavy favorites. And so you get some good odds. This is not gambling advice. And then on the other end you'll have leverage single stock, which is just like the Mets win etf where if every day it either doubles or goes

to zero and then you put your

money in the next day, this will exist.

[Katie Greifeld]

For a very finite moment in time,

[Matt Levine]

this ETF or like it exists the

next day they bet 99% of the money and then like, you know, if they lose, like there's a little bit of money in the pot, but like,

yeah, you basically have to re up

to bet to bet again.

Yeah, I think the single sports bet etf, the leveraged single sports bet etf.

[Katie Greifeld]

I'm getting like a little bit excited, don't you?

[Matt Levine]

Like, like, what else is there?

[Katie Greifeld]

Well, now that I'm about to like again clock out for six months. We've talked about this before. I'm so excited to see what the world looks like when I come back and maybe we'll be further along that timeline.

[Matt Levine]

I'm a little worried. I feel like the column that I wrote was not explicitly anti sports gambling etf, but was like a little bit implicitly anti Sports Gambling ETF. I'd be sad if like my column in the SEC comment file is what kills Sports Gambling ETFs. Submit another comment to be clear. Well, because like they're bad as like, you know, for the world but like

for me, for comedy for this podcast,

[Katie Greifeld]

it's like do you think about yourself or the greater good?

[Matt Levine]

The problem is that my SEC comment

sort of directed towards the greater good. And for me to file an additional comment being like. But I think it would be funny if you approve. These would be sort of self defeating.

[Katie Greifeld]

Wait, wait, wait, wait, wait, wait.

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[Matt Levine]

You want to talk about the other leveraged single stock etf? That's exciting.

[Katie Greifeld]

Yeah. I feel like I proposed this topic a few weeks ago and you said that's boring.

[Matt Levine]

Yeah, because you proposed like the South

Korean regulators are Sad about leveraged ETFs,

[Katie Greifeld]

which is like, okay.

[Matt Levine]

But now they've expressed their sadness by like sort of banning them.

[Katie Greifeld]

They actually did something, which is cool. So late in June, South Korean regulators, as Matt said, were enumerating their regrets. They were also considering whether they should take action to basically intervene in the leverage single stock craze, ETF craze that's been happening in South Korea. And they have.

[Matt Levine]

South Korea has a levered single stock ETF craze, right?

[Katie Greifeld]

Yes. They only recently launched.

[Matt Levine]

There's a Bloomer article saying that 70% of the stock market is just Samsung, SK Hynix and leveraged single stock ETFs on Samsung and SK Hynix.

[Katie Greifeld]

Yeah, it's nuts, right? It's a very interesting petri dish. But the news from this week is that now South Korean regulators are going to temporarily halt new listings of new single stock leveraged ETFs. But that's not all. Stay with me here. They're going to lift the minimum deposit requirement for leveraged ETF trading. They're going to increase the mandatory training requirement for leveraged ETF investors to three hours from two.

[Sponsor/Announcer]

And they're also going to bump up

[Katie Greifeld]

the minimum trading lot size to 20 units from one. So that's a lot. That's a lot of things to do.

[Matt Levine]

Yeah.

So they're trying to crack down on

these because they're bad.

Incredibly volatility announcing.

[Katie Greifeld]

Yeah, they're just eating the South Korean stock market.

[Matt Levine]

I was thinking about this.

I wrote about this on Thursday. Everyone understands that margin debt leads to or exacerbates boom and bust cycles. Right. Stocks are going up. You borrow money to buy more stocks. That pushes stocks up more. Then stocks go down and people get margin calls and they have to sell stock and that pushes stocks down Some more. That's a phenomenon that people understand. But there's friction to that phenomenon because it's not like every time stocks go up, everyone who owns stocks borrows more money to buy stocks. It's like a more approximate thing. Stocks go down 10%. Most people don't get margin calls because they have 50% margin. A leveraged single stock ETF is like perfect distilled margin debt because every day if the stock goes up, it borrows more money to buy more. And every day if the stock goes down even a little bit, it sells stock to pay back some loans. So it really concentrates the volatility effect of margin lending. So in some sense a leveraged ETF is a better way for a retail investor to get margin debt. But from a regulator's perspective, it's just much worse because it's just super volatility announcing.

[Katie Greifeld]

Yeah.

[Matt Levine]

And they seem very unhappy about it.

[Katie Greifeld]

Yeah. And they're actually taking steps to dampen this enthusiasm, which I think is interesting because, you know, I'm a dumb American. So I approach everything from the US perspective. And it's hard to imagine a world where the SEC would take such steps.

[Matt Levine]

I hear you.

I mean it's not that hard to imagine a world. It's hard to imagine a world where the current SEC would take.

But I will say that there's a difference between 70% of the stock market and whatever percentage US leverage ETCs represent. Now that's like your whole stock market

becomes a that's fair wild gambling casino.

[Katie Greifeld]

If we were in that situation, perhaps some action would be taken. I did speak to Gary Gensler on Bloomberg Television last Friday. So before South Korea, former chair of the ncc. Right. If you don't know, friend of the pod Gary Gensler goes without introduction. I did ask him because we operate in a disclosure based system. An issuer has to outline the potential risks and then it's on you if you want to lose all your money. For the most part, at least when it comes to ETFs. He was vocally against leverage single stock ETFs when they launched, which is funny because he was the chair of the sec. But he said he had some line that they present particular risk like he was in public against these products. And I asked him about does the current system go far enough in the US to protect investors?

[Gary Gensler]

And he said if there's proper disclosure, material disclosure, the basic bargain is the American public gets to decide what they want to invest in. Or even better, I think that's the right way.

[Katie Greifeld]

He still doesn't like them.

[Matt Levine]

But by the way, you say it's

hard to imagine the SEC doing anything about it. But like it's put out a request for comment, right? Like we just talked about it, right?

It's, it's like I call it sports

gambling but it's, it's all weird ETFs including.

[Katie Greifeld]

So you're right, they've requested comment. In the meantime you have things like the prediction market ETF in purgatory right now. But I don't know, it's hard to imagine training trading is my chance.

[Matt Levine]

Although there is like I think trading

options, you have to get some options disclosure and like there's some notion that you have to like inquire if your customers are sophisticated enough to trade options. You could imagine a sophistication inquiry.

[Katie Greifeld]

I don't know.

[Matt Levine]

I don't know either. We have that in the U.S. with like, you know, the accredited and investor standard. People are always trying to make that, you know. Right now if you want to buy private stuff you have to be accredited, which like largely means you have a certain amount of money. But they've like over time qualifications have leaked in where if you've passed the securities licensing exams, that's good enough. There's some of that in the U.S.

[Katie Greifeld]

also, I think it was four years ago FINRA was considering whether or not there should be knowledge checks on complex products, which at the time just meant leverage single stock ETFs and they got a lot of passionate letters and ultimately dropped that.

[Matt Levine]

A lot of passionate letters. I don't have to know anything to buy.

[Guest or Interviewee]

Yeah.

[Bloomberg Studio Announcer]

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[Matt Levine]

So you emailed me on Monday, on Monday to be like, I'm talking to the Strategy CEO that is Huang Lee, the chief executive officer of the company called Strategy, formerly called MicroStrategy, I.e. a Bitcoin treasury company. And we discussed what you might ask and we agreed that you would conduct the entire interview about Strategy's software business,

which exists and employs hundreds of people.

[Katie Greifeld]

That's the thing.

[Matt Levine]

And you didn't do that.

[Katie Greifeld]

Well, I did ask him a question

[Matt Levine]

about it and he was like, we have a software business.

[Katie Greifeld]

Well, I said why didn't you business, you have 1500 employees. What do they do? No, I didn't say that. But I said how, I mean how?

[Matt Levine]

This is your white whale. What do those people do all day?

[Katie Greifeld]

I said, how much of your time do you spend with the bitcoin treasury component of your business versus the actual underlying software business?

[Matt Levine]

And 100 0.

[Katie Greifeld]

He was like, you know, some days it's 60, 40, some days it's 50. Yeah.

[Matt Levine]

Oh wow.

[Katie Greifeld]

Oh wow. You didn't watch the interview.

[Matt Levine]

I did watch the interview.

[Katie Greifeld]

I get it.

[Matt Levine]

I missed that part.

[Katie Greifeld]

He did say that the fact that they are a 25 year public company gives them a little bit more maturity than maybe some of the other DATs that have listed publicly.

[Guest or Interviewee]

Sure.

[Katie Greifeld]

You know, sure.

[Matt Levine]

I did watch the interview and I

found it somewhat crazy.

[Katie Greifeld]

It's a pregnant plus.

[Matt Levine]

It's wild.

[Katie Greifeld]

I know.

[Matt Levine]

They're a wild company.

[Katie Greifeld]

They really are. And it's so interesting too. It's not just Michael Saylor.

[Matt Levine]

No, it's more of the entire philosophy of the thing.

Their philosophy is we're going to issue stock at a premium to buy bitcoin and we're going to then borrow against

bitcoin at very high floating rates. And this will be great as long as bitcoin keeps going up and as long as we can keep doing it. And now they, now it stops.

Right. Like bitcoin has gone down also. Like they no longer can issue stock at really any premium, can issue stock at a material premium to buy bitcoin. And so like the whole trade ended.

[Katie Greifeld]

Yeah.

[Matt Levine]

And so you were like, so what now? And I found the answers strange.

[Katie Greifeld]

I did ask him, I mean, do you have a break glass plan? Like what if bitcoin goes down to 30,000 or 20,000, you know, just picking numbers. And he said actually when bitcoin gets down close to 8,000 or 10,000, that is when we have to consider the risks associated with our debt. Until that point in time, we feel secure about our balance sheet. So circle that on your chart.

[Matt Levine]

That's like their actual debt. Like so. So their capital structure is like they

have a lot of stock, they have a lot of preferred stock which I

think of as debt, but it's perpetual debt.

They don't have to pay back. And they have a certain amount of senior unsecured convertible bonds where they have to pay them back.

And so if bitcoin goes down to

8,000, then they don't have enough money in their bitcoin account to pay back their debt. But they, the whole experiment stops Working well before you get to that point.

[Katie Greifeld]

Yeah, there's a lot of preferred stock, a lot of stuff that will happen on the way to 8,000.

[Matt Levine]

It's such a wild company. One of their wild things is Stretch, their preferred stock that has a floating rate.

And when they issued it one year ago, they were like going to float the rate so that it always trades at par. Because the idea of it is it's

like a zero duration bitcoin credit instrument. It's like a bank deposit or a money market fund backed by bitcoin.

And then the rate, I think they

issued at like 9% or something and

the rate has now gone up to

12% and it does not trade at par. And they've abandoned defending par. They're like, we can't raise the rate that high, so we're just going to

pay you 12% on this preferred stock

and it'll trade at like 85.

And in the interview that you had with him, you were like, what are

you going to do about stretch? And they're like, we're going to try to get it back to par. Not by raising the rate but by basically improving our credit. Basically we're going to build up a cash reserve so people will know that

we can pay the dividend and that will improve their credit enough that it'll

go back to Paris. It's just like.

Yeah, it's just like it's not a. You've built this capital structure and like

we're going to sell these like par.

Zero duration securities and like. No, we're not. It's fine. It'll come back though. It'll be fine.

[Katie Greifeld]

Yeah, I've been thinking of it like scaffolding, the different vehicles that they've built

[Matt Levine]

out, I guess, but like they've sort of like kicked away the scaffolding.

[Sponsor/Announcer]

That's true.

[Matt Levine]

In like mid construction. I don't know, man.

[Katie Greifeld]

Still hanging there.

[Matt Levine]

It's so weird.

Yeah, I'm really.

I feel like we talked about this like a week or two ago and you're like, what is the.

[Katie Greifeld]

What happens?

[Matt Levine]

And I feel like I know less

now after watching that interview than I did before.

Like one doesn't get the sense they know what's going to happen. I don't know.

[Katie Greifeld]

They are raising that cash reserve. They sold stock.

[Matt Levine]

They're selling stock which is like now, not the accretive, selling stock at a

premium that they were doing for years.

The whole, the whole trade. Just like. Yeah, it was such a virtuous cycle trade for so long. And if anyone Was like, this doesn't make sense.

As you know, Tim Chanos was. Or I was, if anyone was like,

this doesn't make sense. You could be like, well, but it's a virtuous cycle. You sell at a premium, it always goes up.

It's fine. It's like no problem.

And now.

[Katie Greifeld]

Well, at least their stated intention is to issue more stretch when it gets back to par.

[Matt Levine]

Their stated intention was to pay a dividend that would keep it apart, but that's not anymore.

[Katie Greifeld]

Also to return to buying bitcoin. They've famously started selling bitcoin.

[Matt Levine]

Right. It is true that on the one

hand, this is a trade where if the stock is at a premium, you issue stock to buy bitcoin. If the stock is not at a premium, you sell bitcoin to buy back stock. As a corporate finance matter, that sort of makes sense.

But as keeping this whole thing afloat

matter, the only thing you can do

is sell stock to buy bitcoin. Yeah, well, it's just one way.

[Katie Greifeld]

We'll see. Apparently they have enough cash now to cover dividend payments for two years.

[Matt Levine]

Okay, okay, okay.

[Katie Greifeld]

Again, circle, you know, 8,000, 10,000 on your chart and also we'll check in in two years.

[Matt Levine]

Yeah, this is another one where like

you're going to be watching with interest on your.

Oh, yes, parental leave.

[Katie Greifeld]

I will. I feel like in some ways it'll be more exciting because I'll probably only remember to do it a few times. Right. You know, like, what's going on with strategy?

[Matt Levine]

Let's add M. Nav today.

[Katie Greifeld]

All right.

[Matt Levine]

All right, let's talk about SpaceX. Speaking of trades, that stopped working when we came in here on Thursday afternoon, SpaceX was at like 1:32, which is below the IPO price, which was 135.

Wow.

[Katie Greifeld]

Yeah, it got there pretty quickly. Like it round. Tripped pretty quickly because it went back.

[Matt Levine]

I mean, it was a couple weeks.

[Domino's Advertiser 2]

Yeah.

[Katie Greifeld]

I don't know. It feels kind of quick.

[Matt Levine]

It's kind of quick, I guess.

[Katie Greifeld]

Yeah, I guess I'm just more patient.

[Matt Levine]

I think when we talked about it

the week after the IPO, I was like, it had a perfect IPO, pop. They priced the IPO at 135, which is not a price that was come to during IPO marketing, but just a price that Elon Musk made up, apparently. And they priced it at 135 and the stock immediately traded up exactly 20%, which is exactly what you want in an IPO. And then it traded up from there.

And I was like, great.

Great.

Ipo.

And now it is below the IPO price, which is a traditional source of shame and failure.

[Guest or Interviewee]

Yeah, I don't know.

[Matt Levine]

I don't know much.

[Katie Greifeld]

And I wonder what happens from here because as we've discussed on this podcast, we are going to get those lockup expiries pretty soon.

[Matt Levine]

Pretty soon.

[Katie Greifeld]

So there's going to be an interesting waterfall, potentially, of selling.

[Matt Levine]

Yeah. I was writing about this a bit this week. The lockups start releasing after earnings, which is like, they haven't said their earnings date, but it's like early to mid August.

[Katie Greifeld]

I'm so bummed I'm going to miss it.

[Matt Levine]

You're going to Ms. SpaceX.

[Katie Greifeld]

I'm so bummed. I would have loved to be on television for that.

[Matt Levine]

For SpaceX earnings, for the lockup release.

[Gary Gensler]

Yeah.

[Guest or Interviewee]

Okay.

[Matt Levine]

Okay. Are the earnings suspenseful?

[Katie Greifeld]

It's fun. You have to break the numbers and then talk about them.

[Matt Levine]

The lockups, they have six month and one year lockups, but they release early, over time. And the shares that will be released after earnings in August is more than the shares they sold in the ipo. They're more than doubling the supply of the stock. And I don't know, but I assume

that's part of why the stock is down in anticipation.

Everything happens in anticipation. I think the stock was up until

a couple of weeks ago in part

because everyone knew that index demand was coming. So you're like, oh, you can pencil out how many shares the NASDAQ funds are going to buy. And so there's both psychologically, but also just hedge funds are buying those shares to deliver to the NASDAQ funds. And so there's a lot of tailwinds for the stock from everyone knowing that the index funds are going to buy now that's over.

And the next thing that's going to

happen, besides earnings and rocket launches or whatever, but like the next like, you know, supply and demand thing that's going to happen is hundreds of millions of shares are going to become available to trade.

[Guest or Interviewee]

Yeah.

[Katie Greifeld]

Unless, I mean, the insiders don't sell.

[Matt Levine]

I just think about this like they were going to become available to trade.

[Katie Greifeld]

Right.

[Matt Levine]

Will they sell?

I don't know. It depends on the price. Right. Like at 130, will the insiders want to sell? Like, I think a lot of people are true believers and will not want to sell. I think a lot of, I don't know, I don't have a really good psychological model of the average current or former early SpaceX employee.

[Katie Greifeld]

Whale and SpaceXers.

[Matt Levine]

Yeah, it's not Big Whale, it's employee. Right.

And if I were a rocket engineer who was sitting on $30 million of

SpaceX stock, would I take money off the table at my first opportunity? Like, yes,

at any price, I would take money off the table.

But I'm.

I'm not a SpaceX engineer and I think those people have different risk preferences from me. But I don't know. I think some stock is going to become available.

[Katie Greifeld]

Yeah.

[Matt Levine]

The other thing that I don't understand is that SpaceX has said in its

IPO filings they sold 5% of the stock and the rest of it is like 100% of their stock is subject to lockups. I don't know if that's true.

I don't know if people find some

ways to sell stock between the IPO and the lockup release. I don't know if, like, only the IPO shares are actually available on the market, but this is all speculative.

[Katie Greifeld]

Yeah, that's why it's fun. So that's something to keep an eye out for.

[Matt Levine]

Also going to happen on your.

[Katie Greifeld]

I know.

[Matt Levine]

We're really just getting into stuff that, like, you're not going to see through.

[Sponsor/Announcer]

I know.

[Matt Levine]

I'll text you.

[Katie Greifeld]

I'm so excited.

[Matt Levine]

Look at Mike's strategy. Just did.

[Katie Greifeld]

That would be so sweet. And I'd be like, matt, I don't know my name.

[Matt Levine]

Matt. I'm busy.

[Katie Greifeld]

Even if I just put my hand over the chart of, like the six months where I'm out, I'm interested to see where it is in six months. You know, even without the details of, like, all the ways the line moved, I'm excited to see.

[Matt Levine]

Yeah, a lot to.

A lot to talk about when you get back. Yeah, mostly the horse psychic.

[Katie Greifeld]

If I come back. Just kidding.

[Matt Levine]

And that was the Money Stuff podcast. I'm Matt Levine.

[Katie Greifeld]

And I'm Katie Greifeld.

[Matt Levine]

You can find my work by subscribing to the Money stuff newsletter on bloomberg.com

[Katie Greifeld]

and you can find me on Bloomberg TV every day on the close between 3 and 5pm Eastern.

[Matt Levine]

We'd love to hear from you. You can send an email to moneypodloomburg.net Ask us a question and we might answer it on the air.

[Katie Greifeld]

You can also subscribe to our show wherever you're listening right now and leave us a review. It helps more people find the show.

[Matt Levine]

The Money Stuff podcast is produced by Anna Mazarakis, Moses Andam and Alexis Haut.

[Katie Greifeld]

Our theme music was composed by Blake Maples.

[Matt Levine]

Amy Keen is our executive producer. Thanks for listening to the Money Stuff podcast. We'll be back next week with more stuff.

[Francine Lacqua]

This week on Leaders with me, Francine Lacqua, I speak to tennis legend Rafa Nadal about how he stayed competitive despite injury.

[Guest or Interviewee]

I was able to enjoy the victories probably more than if I will not have this issue.

[Francine Lacqua]

One iconic match in my mind was

[Guest or Interviewee]

I am almost dead and whether he misses playing, I don't miss tennis because who has nothing else to offer?

[Francine Lacqua]

Listen and watch Leaders with me, Francine Lacqua on Bloomberg Television or wherever you get your podcasts.