Best and Final: WBD, IPO, BNPL

Summary

Money Stuff: The Podcast — “Best and Final: WBD, IPO, BNPL”

Date: December 12, 2025
Host: Matt Levine (Bloomberg Opinion)
Co-host: Katie Greifeld (Bloomberg News)

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Episode Overview

In this week’s episode, Matt Levine and Katie Greifeld dissect three of the hottest topics in finance and markets: the dramatic Warner Bros. Discovery (WBD) bidding war, the shifting winds around mega-company IPOs (with a focus on SpaceX), and the rise of buy now, pay later (BNPL) and private credit. The pair infuse their signature wit and deep analysis to make sense of murky deal mechanics, regulatory weirdness, evolving financial market trends, and why everyone—the market, politicians, and even TV hosts—cares so much about these topics.

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1. Warner Bros. Discovery Bidding War: Netflix vs. Paramount

Main Discussion:

• Matt and Katie unpack a uniquely chaotic merger battle for Warner Bros. Discovery, highlighting both the financial intricacies and the odd strategic choices from the competing bidders, Netflix and Paramount.

Key Points & Insights

• Strange Bidding War Dynamics

  • Netflix signed a deal for ~$30/share (mix of cash + two classes of stock), then Paramount offered a matching $30/share cash tender.
  • Unusually, Paramount made the same bid that Warner’s board already rejected, then publicly said it wasn't "best and final," signaling more may come but not actually raising.
  • Matt: "Ordinarily, you don't negotiate against yourself. And if you do...you raise the bid—but instead they're like, we're not going to raise the bid, but this is not our best and final offer. How could you tender to that?" (04:19)

• “Friendly Deal” Necessary

  • Paramount’s bid is expressly conditioned on being “friendly” and needing board approval—reflecting 2025 trends toward eventual negotiated settlements, not pure hostile takeovers.
  • Matt: "They need the board on side. It is a negotiation, they're waging a public pressure campaign, but they're not just doing a pure hostile offer." (05:17)

• Key Differences in Bids

  • Paramount’s offer is for all of Warner Bros. Discovery, including cable networks (like CNN), while Netflix’s excludes cable networks.
  • Disputes arise in valuing these cable network assets—boards and bidders each place wildly differing numbers on their value.
  • Katie: “It also depends on how you value the cable networks.” (06:45)

• Financing and Succession-Style Intrigue

  • Paramount’s deal structure is essentially a massive leveraged buyout (LBO).
  • Backing comes from Larry Ellison’s personal trust (with a side of social media memes about “your dad buying a company for you”) and controversial figures like Jared Kushner.
  • Matt: “It's weird to be the CEO of a public company and be like, my company is going to buy this prized asset with my dad's checkbook. I don't know. It's fine.” (08:41)

• Politics & Regulatory Risk

  • Trump’s disdain for CNN looms over the entire deal:
    • There’s an expectation that regulatory approval may hinge on making CNN more politically “friendly.”
    • Matt: “...To get a merger done, you have to commit to making television news friendlier to Donald Trump. Yeah, it's really bad.” (09:02)
  • Rumors swirl about possible antitrust intervention, with both real and politically-motivated grounds discussed.
  • Matt: “A lot of the reporting...is that like Larry Ellison is friendlier with Trump and therefore will win.” (11:01)

• Deal Certainty and Impact

  • High breakup fees ($2/share) provide little solace to shareholders facing 18 months of uncertainty while regulatory review unfolds.
  • Uncertainty, especially for employees, is acute; the only sure thing is podcasts.
  • Katie: “In a situation where your company is in this deal limbo for 18 months, I have to imagine the company is in suspended animation...that's a lot of uncertainty.” (13:27)

Timestamp Highlights

• Bidding mechanics & board strategy: 03:28 – 06:45
• Financial backers & “succession” dynamics: 07:34 – 09:02
• Regulatory and political interference: 09:02 – 11:01
• “What happens next?” speculation: 13:06 – 13:59

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2. The IPO Pipeline: SpaceX and the New World of Going Public

Main Discussion:

• The hosts explore why “private forever” mega-companies like SpaceX now appear poised to IPO, and why the scale and timing of these listings are fundamentally different from previous decades.

Key Points & Insights

• Changing IPO Landscape

  • The thesis that “private markets are the new public markets” is challenged; even the biggest private firms (OpenAI, SpaceX, Anthropic) are contemplating IPOs.
  • Differences from the past: These are not small or mid-size firms going public, but trillion-dollar companies.

• Scale and Valuation

  • SpaceX’s speculated $1.5 trillion IPO valuation is enormous—private investors have already captured most of the upside, with public investors entering much later than they used to.
  • Matt: "So much of the upside has been captured already by private market investors." (18:40)

• Capital Intensity Forces IPOs

  • New mega-capex needs (e.g., $30 billion for data centers on Earth and in orbit) render private funding insufficient—even massively successful, cash-flow positive companies like SpaceX must tap public markets.
  • Katie: “There is a limit to how long you can stay private.” (20:41)

• Public Company Risks (and Spectacle)

  • With the move to public markets comes public reporting, investor scrutiny, and potential securities fraud claims for things like failed rocket launches.
  • Matt: "Every bad thing that happens to a public company is securities fraud... every time a rocket blows up or they can get sued, it's really grim." (22:24)

• Elon Musk Leading Multiple Public Giants

  • They joke about Musk potentially being CEO of two or more public mammoth companies and the unique “Elon” factor.

Notable Quotes

• “It's just SpaceX, man.” — Matt (23:31)
• “It’d be interesting when he gets sued for the fourth time at a rocket plane.” — Matt (23:41)

Timestamp Highlights

• The “private forever” myth vs. new IPO reality: 16:28 – 18:40
• SpaceX funding needs and IPO logic: 19:41 – 21:47
• Public spectacle and risk with SpaceX IPO: 21:53 – 23:57

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3. Buy Now, Pay Later and the Private Credit Revolution

Main Discussion:

• The rise of private credit funding, especially via “Buy Now, Pay Later” (BNPL) lenders like Affirm, is changing how consumer lending data is tracked and how risks move through the financial system.

Key Points & Insights

• Data and Regulation Blind Spots

  • Classic bank data (credit cards, balances, delinquencies) is less comprehensive as more consumer finance shifts to BNPL and non-bank lenders funded by private credit.
  • Katie: “This makes data worse in terms of tracking.” (26:48)

• Private Credit vs. Banks

  • Banks are highly regulated due to their risky, runnable funding model.
  • Private credit—think insurance companies, asset managers lending directly—are far less regulated, funded by long-term equity, and thus not subject to bank-style runs (in theory).
  • Matt: "...The tradeoff for [less regulation] is that that's less regulated." (28:13)

• Systemic Risk and Regulation

  • Despite regulatory gaps, Matt contends the fundamental risk is lower, so heavy regulation isn’t warranted. But pressure for more oversight grows as private credit grows.
  • Katie shares an anecdote of a private market executive lamenting, “We’re becoming a bank. It truly sucks.” (29:22)

• Potential for Future Crisis

  • The pair riff on how 2022's crypto collapse echoed 2008 but note that a private credit crisis would require new mechanics:
    • Matt: “Banks get regulated, things that are not banks move into the business, they become big, they move into riskier and riskier funding models, they blow up, they get bailed out by the Fed and they become banks… Could that be the story of private credit? Yeah, maybe.” (29:40)

Notable Quotes

• “If you just like have a pot of your own money and make loans out of it, you’re less regulated. And people get nervous about that because it’s less regulated. But it’s like, that's the trade off.” — Matt (28:14)

Timestamp Highlights

• BNPL’s impact on data and banking regulation: 25:07 – 28:38
• Private credit’s future and “banks everywhere” dynamic: 28:38 – 30:01
• Speculating on the next financial system crisis: 30:01 – 30:40

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Notable Quotes & Memorable Moments

• “How could you tender to that? How could you be like, okay, you can have it for not your best and final offer?” — Matt (04:19)
• “It is very weird to have your dad buy several companies for you. Whatever. I think it's making an expression like, of course my dad would buy companies for me.” — Matt (08:27)
• “To get a merger done, you have to commit to making television news friendlier to Donald Trump. Yeah, it's really bad.” — Matt (09:02)
• “The only sure thing is podcasts.” — Katie (13:57)
• “It's just SpaceX, man.” — Matt (23:31)
• “Every bad thing that happens to a public company is securities fraud... every time a rocket blows up or they can get sued, it's really grim to think about.” — Matt (22:24)

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Conclusion

This episode deftly blends big-picture finance, regulatory intrigue, and cultural commentary. Matt and Katie break down high-stakes M&A, the shifting ground beneath the world’s biggest companies considering IPOs, and the trade-offs of private credit’s quiet dominance. Listeners walk away with insight into how big deals really work, how political winds shape even trillion-dollar companies, and why financial plumbing can shape (and hide) risk in unexpected ways.

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For more:

• Subscribe to Matt Levine’s Money Stuff newsletter at bloomberg.com.
• Catch Katie Greifeld daily on Bloomberg TV’s “The Close,” 3–5pm ET.
• Submit listener questions for future episodes!

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Transcript

[Alex Rodriguez]

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[Matt Levine]

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[Katie Greifeld]

Radio News.

[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 Themoney stuff. Com for Bloomberg Opinion.

[Katie Greifeld]

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

[Matt Levine]

I like a hostile merger fight. But like, yeah, I don't like a media deal because everyone pays attention to the media deals. And the Warner Brothers merger fight has been wall to wall coverage everywhere, including in the Money Stuff newsletter. And it's like, I don't know, I can't keep up with it.

[Katie Greifeld]

Yeah, I was going to say when we were talking about topics, and I suggested Warner Brothers. It seemed like you were not psyched. And it's like, I don't know. Your column that you write would suggest differently. I agree with. I don't really get jazz talking about media. And obviously we're covering it on Bloomberg Television as well. This one, the fact that it's become this bidding war does make it kind of fun and interesting.

[Matt Levine]

Oh, yeah, right. Like a merger bidding war is interesting, although it's like a strange bidding war. Yeah, we're recording this on, like, Thursday afternoon. Who knows? But basically the deal is that on Friday, Warner announced they signed a merger agreement with Netflix for a price, let's call it like 29 or $30, in a mix of cash and two different flavors of St. Mostly cash. But a fair amount of the value comes from two flavors of stock. And then on Monday, Paramount Skydance jumped in with a $30 cash tender offer. And one thing that's weird about the bidding war is that those bids are pretty close. And Warner's board did determine that the Netflix bid was higher because they valued some of the stock higher. So they think that the bid is worth $31 or $32 a share. But also they did an auction. They had advisors, they took bids. Netflix bid, whatever the number, and Paramount bid $30 in cash. And Warner looked at that and were like, we're going to take the Netflix bid because we think it's higher. And Paramount went to shareholders with the same bid that got rejected. It's like kind of an unusual move. Normally you raise your bid to try to be like, look at how great this bid is. And here they're, like, going with the same bid and arguing the value of the stub stock and the Netflix bid. It's a strange way to conduct a bidding war. They've also gone on TV and been like, this is not our best and final offer. Which is a crazy way to conduct a bidding war. Ordinarily, you don't negotiate against yourself. And if you do negotiate against yourself, you do it. We got to raise the bid. But instead they're like, we're not going to raise the bid, but this is not our best and final offer. How could you tender to that? How could you be like, okay, you can have it for not your best and final offer?

[Katie Greifeld]

Well, you point out, too, that it's also an interesting strategy since they need this to be a friendly situation with Warner Brothers as well.

[Matt Levine]

And they don't, like, strictly need it, but, like, they kind of need it and, like, they've Conditioned their offer on it becoming a friendly. Yeah, it's not that weird. Like, people don't usually do hostile deals all the way through in 2025. You know, you do a hostile deal to pressure the board into coming to the table with a friendly deal. Like this is, you know, this is kind of how Twitter worked out. Right? It's like a normal playbook. Yeah, but they're not doing a pure hostile deal. They are not tendering to shareholders and saying, you know, give us your shares and we're closing. And nevermind what the board says. They need the board on side. And so it is a negotiation where they are like waging a public pressure campaign on the Warner board, but they're not just like doing a pure hostile offer.

[Katie Greifeld]

So what happens here? I mean, does Netflix now raise their bid?

[Matt Levine]

I don't know. Who has to move first? Yeah, like right now, Warner has said they're sticking with the Netflix deal. Paramount can't close with tender and it's all just sort of like in limbo. And you could imagine Netflix just waiting it out. But I think given that Paramount has said things like this is not our best and final offer, probably the next move is for Paramount to raise. But I don't know. I think they're sort of seeing what the shareholders say. And if all of the shareholders are tendering into their offer and calling up Warner's board and saying the Paramount deal is so much better, then maybe Paramount can get away with it. But it's just hard to imagine them paying $30 a share when they said they'd pay more. Yeah, so I think they have to raise, but then Netflix has to raise. It goes back and forth.

[Katie Greifeld]

There's also the detail that Paramount is for the entirety of Warner Brothers Discovery, including the cable networks, whereas the Netflix offer is not. It excludes the cable networks, including cnn. So I mean, it also depends on how you value the cable networks.

[Matt Levine]

Yeah, this is why the Netflix deal is of uncertain value, because in that deal the CA or Stay with Warner shareholders, which Paramount says is worth about a dollar per share and the board thinks it's worth 3, 4, 5 dollars a share.

[Katie Greifeld]

It seems like consensus would say that $1 a share is low on the lower end.

[Matt Levine]

Yeah, I think if you add it up, the Netflix bid is worth right around $30 is kind of market consensus. And then the board is a little high and Paramount's a little low, but it's not vastly more, it's around 30.

[Katie Greifeld]

There's also the Ellison of it all because Paramount is a pretty Small company.

[Matt Levine]

It's like it's an lbo. Right. It's like, it's like there happens to be a Paramount attached to it. But, like, basically it's like we're going to borrow a lot of money against the Warner assets. Paramount does not on its own have the capacity to raise, like, you know, $50 billion of debt.

[Katie Greifeld]

Right.

[Matt Levine]

It would raise $50 billion of debt against Warner and then it would have a big equity check from, you know, they have, like, commitments lined up from Jared Kushner and like, some Middle Eastern investors. But it seems that Warner's board expressed uncertainty about the quality of those commitments. And so they also have a backstop from Larry Ellison's personal trust.

[Katie Greifeld]

Not bad.

[Matt Levine]

Where, like, he'll pay the equity check with his PA if he has to.

[Katie Greifeld]

Yeah. There's been a lot of good succession flavored memes on social media about this situation.

[Matt Levine]

It is very weird to have your dad by several companies for you. Whatever it's. It is. I think it's making an expression like, of course my dad would buy companies for me.

[Katie Greifeld]

That was an editorial comment by Matt.

[Matt Levine]

You didn't see the expression. Yeah, it's weird. Yeah, it's weird to be the CEO of a public company and be like, my company is going to buy this prized asset with my dad's checkbook. I don't know. It's fine.

[Katie Greifeld]

There's also, I mean, so Larry Ellison's checkbook is a factor here, but also Larry Ellison's relationship with the white.

[Matt Levine]

I don't know. I try not to write about this too much, but it is like the very depressing backdrop to this is that, like, Donald Trump does not like cnn. He would like his friends to buy CNN and change it to be friendlier to him. And the way merger regulation in the United States in 2025 works is that to get a merger done, you have to commit to making television news friendlier to Donald Trump? Yeah, it's really bad.

[Katie Greifeld]

Yeah.

[Matt Levine]

That's not like, that's not how it used to be.

[Katie Greifeld]

I'm trying to find exactly what Trump said on Wednesday as it relates to cnn. I mean, Trump is.

[Matt Levine]

He doesn't like cnn.

[Katie Greifeld]

Yeah, well, he said, like, when it comes to a potential deal here, I believe he said that CNN needs to be included.

[Matt Levine]

I don't think he really, like, has been paying attention to the mechanics of this merger.

[Katie Greifeld]

Yeah. You don't think he's, like, following along, reading money stuff and, like, watching me on Bloomberg.

[Matt Levine]

He's watching you on Bloomberg?

[Katie Greifeld]

On Bloomberg.

[Matt Levine]

He's Reading Mooney Stoop. I mean, he wants changes at cnn, right? And so if the Paramount deal closes, then Paramount will own CNN and will make it, you know, 24 hour praise Donald Trump Network. Because like that's a small price to pay to get the deal done. Right? I mean they're valuing they're value, not CNN. They're valuing the entire cable package, including CNN at like $1 per share. It's like, yeah, turn CNN into the propaganda channel, who cares? It's not a major part of the business investment. If the Netflix still gets done, then CNN will be part of Discovery Global, which will be a much smaller, more levered public company run by, you know, existing Warner Discovery management. But is that going to be an acquisition target like Jared Kushner? By that it's not obvious that CNN remains independent and with the same editorial posture that it has now. Even in the Netflix deal. Yeah, it doesn't go to Netflix. And by the way, like, you know, a lot of the reporting on this is that like Larry Ellison is friendlier with Trump and therefore will win. Right. And by will win, I mean like Trump will tell the Justice Department, you have to find an antitrust pretext to prevent the Netflix deal from closing and therefore the only way to get the deal done is to sell the Paramount because the Netflix deal can't close. But there's also been reporting that Netflix's management have done a good job of cozying up to Trump. Like, is one possible outcome here that like Netflix says, fine, fine, we'll buy CNN too and make it into the Trump propaganda channel. Maybe let's change the deal. I should say also like I said, it feels like because this is so much about Trump's feelings about CNN that he could tell the Justice Department to find a pretext to find an antitrust reason to stop the deal. Separately, everyone thinks there are real antitrust problems. You don't need a pretext. It's a real concern when the biggest streamer buys hbo. And it's also a real, people in the media industry have real concerns about both, but especially about the idea of Netflix taking over all these iconic films.

[Katie Greifeld]

Yeah, no, it's fascinating I relative to most media news because we've been discussing the media angle on Bloomberg TV heading up into the Netflix deal getting announced. And for Netflix, I mean, Netflix is so dominant in streaming. You know, talking to analysts about this, they were like, this is really a nice to have for Netflix, you know, versus Paramount. This is more of a need to have. So it's an interesting move by Netflix to even pursue this. But you think about the antitrust concerns. It's also built into the deal that they announced. Like, they accounted for a lot of time. Time to work through all the different things, I'm sure.

[Matt Levine]

But, like, you know, whether or not at all we can say no and then.

[Katie Greifeld]

Well, that's part of the record breakup fee, right? $5.8 billion a breakup fee?

[Matt Levine]

No, no, no. It's like 2 bucks a share. You want, you want to deal the good mom.

[Katie Greifeld]

Yeah. It's a nice consolation prize, though it's not really. Okay.

[Matt Levine]

No Warner shareholder is going to be like, let's take the Netflix deal because at least we'll get 2 bucks a share in 18 months when the deal falls apart. Like, they, they want certainty. Right. Like Netflix. Part of their job here is to convince shareholders that their deal will close. And like, that's not. That's like some amount of, like, you know, economic analysis and some amount of like photo ops with Trump.

[Katie Greifeld]

Yeah. I do wonder, like, just to bring it back to the employees. Like, in a situation where your company is in this deal limbo for 18 months, I have to imagine that the company is kind of in suspended animation. Like, things will get done, obviously, but that's a lot of uncertainty to hang over.

[Matt Levine]

Yeah, I don't know about suspended animation.

[Katie Greifeld]

But yeah, it's depressing, being slightly dramatic.

[Matt Levine]

But I think if you work in media, if you work in media, like, the time between now and 18 months from now is a perilous time. Whether or not you're at Warner Brothers.

[Katie Greifeld]

The only sure thing is podcasts.

[Matt Levine]

That's true.

[Alex Rodriguez]

When you give to a nonprofit, how do you measure success? You'll hear a lot about things like low overhead costs and efficient fundraising. But what about the actual impact on people's lives? GiveWell, this episode's sponsor, focuses on that impact. They've spent more than 70,000 hours on research to help donors fund highly cost effective programs that save or improve lives the Most per dollar. GiveWell has spent 18 years researching global health and poverty alleviation and only directs funding to the highest impact opportunities they have found. Over 150,000 donors have already trusted GiveWell to direct more than two and a half billion dollars. Rigorous evidence suggests that these donations will save over 300,000 DOL lives and improve the lives of millions more. If this is your first gift through GiveWell, you can have your donation matched up to $100 before the end of the year or as long as matching funds last. To claim your match, go to givewell.org, pick podcast and enter this program at checkout. Make sure they know that you heard about GiveWell from this program to get your donation matched.

[Tom Keene]

This is Tom Keene inviting you to join me for the Bloomberg Surveillance podcast. It's about making you smarter each and every business day. We bring you a rec of what happened overnight in Europe and Asia. The day's economic data and complete coverage of the US Market open. We cover stocks, bonds, commodities, currencies, even crypto. All the information you need to excel. Bloomberg Surveillance also brings you the analysis behind the headlines. We do that with lengthy conversations with our expert guests, the smartest names in economics, finance, investment and international relations. We do all this live each and every weekday, then bring you the best analysis in our daily podcast. Search for Bloomberg surveillance on YouTube, Apple, Spotify or anywhere else you listen on the east coast, listen at lunch and on the west coast when you wake up. That's the Bloomberg Surveillance Podcast with me, Tom Keene, along with Paul Sweeney and Lisa Mateo. Subscribe today wherever you get your podcasts.

[Katie Greifeld]

Shall we talk about SpaceX?

[Matt Levine]

Yeah, another 18 month. Remember, it's not 18 months. It's like they want to do an IPO.

[Katie Greifeld]

If it's in 2020. If it's in 2026, it will be six months fewer than 18 months. I just remember we spent so much time talking about how private markets are the new public markets. But now all these mega companies that were the poster child of staying private forever are potentially coming public.

[Matt Levine]

Yeah. First of all, it hasn't happened, right?

[Katie Greifeld]

Yeah, hasn't happened.

[Matt Levine]

But the private markets are the new public markets thesis. I mean, look, I have said in my column on this podcast, yeah. You could stay private forever, right? And like, why not? Why not? But if it is the case that SpaceX OpenAI anthropic other names go public in 2026, then that might suggest that you can't stay private forever. But it will be like really different from previous IPOs. Going public at a $1.5 trillion valuation, which is like the number that SpaceX.

[Katie Greifeld]

Is bandying around, depending on what. Second, you're checking it's bigger than Tesla.

[Matt Levine]

Yeah, but that's not how IPOs used to work. No, back when public markets were. The public markets didn't go public when you were like, you know, there was growth still to come. But like going public at 1.5 trillion dollar valuation is like, okay, it's wild in two ways. One is that ordinarily you go from zero in a garage to 100 million or a billion or a $10 billion valuation, and then you go public. And then the next leg up to becoming a trillion dollar company public investors capture so public investors can invest not early, but in the growth trajectory of a company that will eventually become large. That's part of the promise of an ipo, is this is a fairly IM mature company and you can get in not on the ground floor, but on the third floor. You go public at a $1.5 trillion valuation. So much of the upside has been captured already by private market investors.

[Katie Greifeld]

Maybe you're just thinking small.

[Matt Levine]

No, I know. I hear you right then this is every Elon Musk comp package. Well, it's really $100 trillion company. So they're going public at $1.5 trillion.

[Katie Greifeld]

They're tackling the final frontier.

[Matt Levine]

But the other thing, and this is related in the SpaceX case, is if SpaceX goes public next year at a $1.5 trillion valuation, in one sense, the private markets have captured most of the upside. In another sense, it is not a mature company. Bloomberg reported that they're expecting 22 to $24 billion in revenue in 2026, which is a lot of money. It's a big company to go public or whatever, but it can go public at what, 70 times revenue? Yeah, that's really big.

[Katie Greifeld]

That is big.

[Matt Levine]

What has happened here is not they've grow enormous company and then gone public at their enormous valuation. What happens is they've not grown into an enormous company and they're going public at a huge valuation that reflects the next 10 years of growth, which is a crazy thing to do.

[Katie Greifeld]

Yeah. Well, let's talk about why they potentially need to do it. Why now do they need to do it? I mean, you think about some of the things that they're going to build.

[Matt Levine]

Data centers in space, so they need.

[Katie Greifeld]

$30 billion going to build data centers on the moon. Not actually on the moon, just orbiting data centers. Yeah, that's great. It's such a sign of the times.

[Matt Levine]

One theme of the financial markets this year is that everyone is building data centers and have tapped every possible source of financing for data centers. And at some point, selling $30 billion of SpaceX stock is one more way to fill the hole of need for building data centers. And so SpaceX can raise a lot of money staying private. And by the way, it's cash flow positive and doesn't need to raise a lot of money to shoot rockets into, but the capital expenditures are required to build data centers on every inch of the Earth. And also in space so enormous that even SpaceX has to go public and even OpenAI supposedly maybe.

[Katie Greifeld]

Well, that's the thing. I feel like when we really do think big and really put our thinking caps on in terms of how ridiculous things could get, there is a limit to how long you can stay private.

[Matt Levine]

Yeah, right, right. Like, one possibility is that like I've been writing about, you know, private markets or the new public markets for, you know, a decade or whatever, and that was in the context of the biggest, hottest, like most sort of household name tech companies were kind of at bottom like capital light, consumer tech. Right. Like, it's a lot of, like you wouldn't have said Facebook had a lot of capex needs because it was a website. Right now Facebook has a lot of capex needs. But like for a long time it didn't, you know, Uber is like y going to match drivers and riders. We don't have to have anything. It was a real capital light model. And now in that context it was fairly. You have capital light and very scalable. It's very easy to stay private. You need to spend a trillion dollars a year putting data centers on the moon. You have to. The private markets are really big, but they're not big enough for that.

[Katie Greifeld]

And even before we get there, before we get to the moon, SpaceX has a lot of rockets to build.

[Matt Levine]

They're not capital led and yet they've managed in the private markets to become large and build a lot of rockets.

[Katie Greifeld]

A point that has been made is the fact that they have been able to raise large amounts of money in the private markets. We cover rocket launches on Bloomberg TV all the time. A lot of the rockets blow up, a lot of the tests fail. If SpaceX is a public company, it's going to be really interesting to have a split screen of the rocket of a test launch potentially failing and also the stock.

[Matt Levine]

That's so true. Right. I write all the time that every bad thing that happens to a public company is securities fraud. But every time a rocket blows up or they can get sued, it's really grim to think about.

[Katie Greifeld]

We didn't talk about the wrinkle of Elon Musk potentially being the CEO of two public companies.

[Matt Levine]

Yeah, but you can do that. I mean, whatever. But there are five companies, they're big now. I know, I'm just like, I'm curious what the dynamic is of pricing at $1.5 trillion IPO. Because on the one hand it's so big. On the other hand it's like the talk is like they'd raised $30 billion. Tesla trades like $30 billion of stock A day. At some level, you just suspend disbelief and you're like, this is not an ipo. This is just an Elon Musk public company that happened to not be public, and now it's public. And then you work it out in a couple of days. I don't know. There's something when you get to this level of bigness and constantly doing tender offers and price transparency, it's like, no one needs a deck to be introduced to SpaceX. It's just like, yeah, SpaceX.

[Katie Greifeld]

Yeah.

[Matt Levine]

The road shop owns it in weird vehicles. Anyway, it's like, it's SpaceX, man.

[Katie Greifeld]

Yeah, I hope it does go public because, yeah, it's cool. That would be fun.

[Matt Levine]

There was a thing where he tried to take Tesla private. Right. And he complains about the public markets. And it'll be interesting to the earnings calls. Yeah, it'll be interesting to see where what, like a public SpaceX looks like. It'd be interesting when he gets sued for the fourth time at a rocket plane.

[Katie Greifeld]

I mean, to be fair, it happens.

[Matt Levine]

You know, I'm not saying that it's actually security's rod to blow up a rocket or that he should be sued for blowing up a rocket. And like the investors in the current private SpaceX understand that that's part of the deal and they don't sue him when he blows up a rocket. But once you hear public, all bets are off.

[Alex Rodriguez]

In our new podcast, Everybody's Business, we.

[Matt Levine]

Talk about the business news that concerns everybody.

[Katie Greifeld]

From Bloomberg Business Week, I'm Stacey Vanek Smith. And I'm Max Chavkin. Each week we unpack what is happening on Main street and Wall street, all the streets. WrestleMania has taken over the US economy.

[Matt Levine]

Poetry that executives write on LinkedIn.

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A little actual magic in our underrated.

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I decided to ask people how they felt about the penny going away. Listen to everybody's business wherever you get your podcasts.

[Matt Levine]

Should we talk about private credit as any public credit?

[Katie Greifeld]

Yeah, sure.

[Matt Levine]

There's this fascinating Wall Street Journal story this week about how it is harder to know how consumers are doing because the way you traditionally look at how consumers are doing is bank data, credit card data, like bank reports, because banks say things like people are charging a lot of money on their credit cards, or we have a lot of delinquencies on our credit cards and you get a sense of what consumer credit looks like and consumer spending and and what is happening is that some consumer spending, it's like marginal, but it's real, has moved away from credit cards and into other stuff, alternative consumer lending, which I think I shorthand is like buy now, pay later. So it's like a firm and things like this where it's like you charge something, but instead of charging it to a credit card, you charge it to a buy now, pay later lender. And the money for that doesn't mean usually come from banks, it comes from other people. And there are a variety of lenders. But a lot of it is what you'd call private credit. It's like insurance companies and private credit firms that are providing their balance sheet to fintechs that are the front end for these loans that make the buy now, pay later credit decisions. And so the thing that you're seeing is that instead of banks with credit cards providing credit for consumer spending, you have private credit providing credit for consumer spending, which is kind of a weird development and also a thing that I've been writing about for a long time now, which is that banking is getting narrower, private credit is taking over from the banks. But a lot of that has been in LBO lending, business lending, data center lending, and now it's also in consumer lending. It's sort of an interesting shift.

[Katie Greifeld]

Yeah, absolutely. And you point out, as the Wall Street Journal did, that this makes data worse in terms of tracking.

[Matt Levine]

But I don't care that much about the.

[Katie Greifeld]

I care a little bit.

[Matt Levine]

Yeah, it's like a guy who writes about stuff. It's like. But I don't write about, like, oh, consumer credit is much better. I don't care about this data. Other people care about this data. And I'm like, oh, that's bad. But I mean, the broader point I would make is that the worsening of data is because bank regulators collect a lot of data from banks and make it public in some form. And so you can see stuff about what banks are doing. Also a lot of, you know, the big banks are largely publicly traded. And so we'll talk about, you know, consumer credit weakness on their earnings calls. Yeah, private credit is private and so they don't do those earnings calls. I mean, publicly traded managers. So you get a little bit. But like, it's not the same level of interest in that. And like they're not reporting to regulators in the same way that banks do. And the point I make is that like the whole point of financial regulation in the last 20 years is that the banking funding model is systemically important and risky. Right. Like banks have runs. When there's runs on banks, credit tightens and like the economy gets worse. And if you can replace a runnable banking system with a long term funded, equity funded private credit system, then that is structurally better. And the trade off for that is that that's less regulated.

[Katie Greifeld]

Right.

[Matt Levine]

Like that's what happens. Like banks are highly regulated because their funding model is risky. If you just like have a pot of your own money and make loans out of it, you're less regulated. And people get nervous about that because it's less regulated. But it's like that's the trade off that the regulator is meant to strike mostly without always thinking about it. And it's like a sensible trade off and it just makes people real nervous.

[Katie Greifeld]

Well, I mean, does it become more regulated? I have to imagine.

[Matt Levine]

I don't know, man. The people keep talking about it. We're not in an environment that is really gung ho and making anything more regulated.

[Katie Greifeld]

That's true.

[Matt Levine]

And my point is that it doesn't make sense. I mean, whatever makes sense. But there's a reason this stuff is less regulated, which is that it is less risky, just as a baseline funding model is less risky. And so when a private credit firm wants to make bad loans, it's like, all right, that's your mistake, man, it's your money. When a bank wants to make bad loans, it's like, no, no, that's the depositor's money. That's like taxpayers money. We need to make sure they don't make bad loans. So the regulatory, the pressure is less. But we'll see. For now, nothing's getting more regulated. Banks are getting less regulated.

[Katie Greifeld]

This is a turn. But did you see that piece in the FT about Apollo? And it quoted an Apollo executive saying, we're becoming a bank. It truly sucks. It was an unnamed person. Sounds like you didn't see this piece. No, it was kind of funny. I'll send it to you.

[Matt Levine]

Yeah, look, I mean, see, if you.

[Katie Greifeld]

Were still on Twitter, you would have seen it.

[Matt Levine]

But there's like a long running history of like, banks get regulated. Things that are not banks move into the business, they become big, they move into riskier and riskier funding models, they blow up, they get bailed out by the Fed and they become banks. That's kind of the story of 2008. Could that be the story of private credit? Yeah, maybe.

[Katie Greifeld]

I'm excited to find out. Truly as a consumer of news.

[Matt Levine]

Yeah. I don't have in my mind a picture of what it looks like to have the crypto crisis in 2022. It's truly a replay of 2008. I don't have a picture in my mind of what that looks like in the private credit version. I don't have a picture of runs on private credit firms, but it would be cool to write about. Not for the world or whatever, but it would be an interesting development. But again, I can't quite visualize it yet. But we'll get there. 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 moneypodlumberg.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 and Moses Ondahm.

[Katie Greifeld]

Our theme music was composed by Blake Maples.

[Matt Levine]

Amy Keen is our executive producer and.

[Katie Greifeld]

Sage Bauman is Bloomberg's head of podcasts.

[Matt Levine]

Thanks for listening to the Money Stuff podcast. We'll be back next week with more stuff. This is Jim. Hello. Jim started advertising with iHeartRadio way back.

[Tom Keene]

In April and now I have customers out the door.

[Matt Levine]

And this is Sarah.

[Katie Greifeld]

Hi.

[Tom Keene]

She started putting a portion of her marketing dollars in podcasting back in June.

[Katie Greifeld]

Business is booming. That's why I'm working on a Saturday.

[Matt Levine]

Want to be like Jim and Sarah? It's easy. All you have to do is own or manage a business and reach out to iHeart. Get started today at 844-844-IHeart or iheartadvertising.com.

[Alex Rodriguez]

I'm Alex Rodriguez.

[Matt Levine]

And I'm Jason Kelly.

[Alex Rodriguez]

And we're back with more episodes of our show the Deal.

[Matt Levine]

We've got behind the scenes conversations with sports, greatest business people and athletes from Serena Williams and Stephen A. Smith to Bill Belichick and Melody Hobson.

[Katie Greifeld]

I got dangerous in seeing up arrows. Up arrows.

[Matt Levine]

Catch up on the interviews you've missed and listen to all new episodes every Thursday on Apple Podcasts, Spotify, YouTube or wherever you get your podcasts.