B (2:49)

And we're not talking 08.

C (2:51)

But I'll tell you what, but I will tell you, it was not, it was 1987. I was, I was there a month before the 87 crash. You may not remember that one, but it was big at.

A (3:02)

And when did you start covering tech for the ft?

C (3:04)

Oh, I'm getting, I'm getting the whole personal grill here in around. Well, so I was covering tech out of New York in the late 90s when tech, telecom and media were going to merge in some big thing and it was part of the dot com bubble.

A (3:18)

Yeah, Boy, has that idea not worked over the last 30 years?

C (3:22)

I've seen a few, but I've been in, I've been in California since 2002, so I've seen a few cycles.

A (3:29)

Right on.

B (3:30)

So look, tell us, let's start from like basics here for normal people. What, what is SpaceX? Where does it fit in this grand Elon Musk universe where everything has an X in it?

C (3:40)

I think the way we should think about SpaceX as a stock is it's going to be Elon Musk's kind of field of dreams. Part 2. Tesla was an electric car company that turned into many other things. SpaceX is a rocket company that is turning into other things before our eyes. It started out as an incredibly successful, the first private company to put a rocket into orbit. It's an extraordinary thing. And Musk is ferrying astronauts to the International Space Station. Before that the US relied on Russian rockets. So Musk is the US space program in many ways, or became it. And then through his Falcon rockets, he basically established this incredible lead and cost in getting payloads into orbit. So he is the global workhorse for getting anything into orbit. Extraordinary. Absolutely extraordinary.

B (4:36)

So like SpaceX mushed together with Xai, which is his artificial intelligence Grok thing. Tell me how that makes sense.

C (4:45)

You skipped over part two. Part two was putting Starlink satellites, tens of thousands of satellites into orbit. This is now 2/3 of SpaceX revenue. I mean, it's an incredibly successful thing. He's got way ahead of the rest of the industry. Every other business and every other country wants to put up a network, a global network of communications satellites, because they don't all want to be dependent on Elon, which they are at the moment. So that was step two. Step three is let's kind of clutch this thing together with, as you say, Xai, which is Musk's Money Pit of an AI company, which has also been clutched together with X, the former Twitter and let's put it all together and call it, well, what do we call it? And that's the amazing thing here. You know, I've had people say to me, this is some new style, vertically integrated space conglomerate for the 21st century or something, I don't know. But you can start to see some rationale. You can say, well, let's put data centers into space and generate AI in space. And, hey, we're one step ahead of OpenAI. So the storylines are starting to proliferate, and as with Musk, we always find this. They're just going to keep coming. We're just going to see the story shift to fit the mood.

A (6:07)

Let me put a question to you, Richard. There's kind of two sides to the Elon Musk story. On the one hand, he is this person who can build incredible things at a scale and with a speed that other people just can't do. An electric car company that challenged the world's incumbent carmakers, an electric car charging network in the United States, a satellite communications network, a commercially viable rocket company. I mean, this stuff is amazing. And that's the kind of earthbound reality side. And then there's the kind of out in outer space wild hype side where, you know, what is Tesla anyway? It's going to make robots. We're all going to have robots. And then there's going to be satellites in space that maybe we're going to use as a way station to colonize the moon, and it'll all be valued at a thousand times earnings. How do you kind of fit those two sides of the Elon Musk story together?

C (7:08)

Well, it's not two sides, it's a continuum. So what Musk does is he links what he can do now, something he's actually doing, and building, with something over the horizon. First of all, he looks at the horizon and that horizon is always shifting. And for Musk, the trick is to say, look, I've got this thing I'm building. Nobody else can build this. I'm two steps ahead. And if you look to the horizon, that's where it's going to take me. And then over the horizon, there's this kind of magic pot of money. And his genius, and it is real genius, is that, yes, he builds this thing. Now he has to keep moving the horizon because he's got no moats in his electric car business. He's soon going to have a lot of competition in rockets. And when that happens, where's his margin going to come from? Where's his profit going to come From. And so he's, he's no longer. Tesla's no longer an electric car company, it's now a robot company. You know, it's, it's, and it's a taxi operating company. It's going to be something else. And the same thing, same thing with SpaceX.

B (8:14)

It's a good job it's not an electric car company just anymore because like sales of those things are falling off a cliff in Europe. But like, as you say, he's always over the next horizon. But like, how can it make sense to value this company at $1.75 trillion when it pulls in revenues that are probably no more than 20 billion with a B last year? I mean, come on, how is this

C (8:41)

going to happen before we actually get that valuation? I mean, Katie, you asked before about why he was sticking this together with Xai. We have to remember this is all being done for financial convenience with, you know, Elon is, is weaving this, this technology vision around it all, but it's fundamentally being driven by finance. You know, real cold, hard logic here. He needs to raise a ton of money, right? X AI is a money pit. You know, put it this way, in his entire existence he probably raised $25 billion, roughly 10 billion through SpaceX, 15 through Tesla. Well, he's now looking at raising 75 billion in one go. He's looked around, he's seen this AI mania on Wall street, this willingness to fund hundreds of billions of dollars of infrastructure. And he said, this is my big chance. And he's rammed everything together and he's going big. I mean, this is just an incredible roll of the dice. So the valuation, I've got no idea. I'll leave that one to Rob. I'll leave that to you guys. You're the market experts.

B (9:48)

Well, yeah, that might be a stretch, but like Rob, you know, you talk to a lot of investors, I talk to a lot of investors. Do you think they're gonna swallow this at that kind of valuation? Because, you know, as Richard says, Musk is the master at like creating vibes and creating kind of fomo. Right. Fear of missing out. Everyone wants to be in this thing. But do you think the market mood is ready for an IPO with that sort of valuation of this sort of, you know, just behind the rainbow stuff in this moment in time, if he

A (10:20)

could have done it two years ago, he'd be laughing. He'd get it all done. Even a year ago when, you know, the massive spending by all the so called Hyperscalers or Magnificent 7 Tech Companies was Just being swallowed by the market in one big bite. But now the mood, and I think this is what you're getting at, has changed a little bit. I mean, the market is still strong, but it's not quite what it was. And we've seen some of the big tech companies get their valuations marked down. So in a sense, Musk is a day late. Which actually leads us to the dirty tricks part of the podcast, where if he's going to raise the amount of money he wants to raise, he needs to generate a huge amount of retail demand. And it seems like there might be some jiggery pokery in terms of listing rules and IPO rules to help him do that.

B (11:23)

So the main bit of jiggery pokery, I think, is that purely coincidentally, Right, so Musk has got a choice between listing this thing on the New York Stock Exchange or on Nasdaq. And perfectly coincidentally, Nasdaq has been having a think about how companies get included on its really big indices. Now, if you're a company, you list your stocks are tradable. If you get into a big index, then that does almost kind of mechanically pull in a lot of money. Pulls in a lot of money from retail, pulls in a lot of money

A (11:52)

from institutional investors because passive investors buy

B (11:54)

the whole index because they love.

A (11:56)

So you want to be in the index and the index funds as quickly as possible.

B (12:00)

So like right now, if you imagine that this thing listed in May, it wouldn't be eligible for the NASDAQ 100 before December. And because Musk is only talking about listing less than 10% of the company, it wouldn't appear in the index at all because that free float is too small. NASDAQ is talking about changing these rules so that a company could be in the index as quickly as 15 days after it gets listed. And that 10% threshold, well, maybe we could do a bit of loosey goosey with that. This strikes me as quite a bad idea to be like fiddling with rules like this. What do you think?

A (12:38)

I don't know, Richard.

C (12:40)

I think the real question for me out of this is if the numbers we're hearing are right, then less than 5% of this company is going to go out even on a $75 billion IPOS, which is absolutely incredible. And there is going to be one heck of a lockup that goes at some point.

A (13:00)

So just to back up for our listeners slightly, the lockup means there's going to be all these people who work in the SpaceX empire who have been granted stock as part of their pay packages. And at some point they're going to be allowed to turn that stock into cash by selling it into the stock market. That's selling pressure, right? That affects the stock and who's going to be there when that lockup ends and all that stock comes rushing on the market. What they're worried about is who's going to be there to pick up.

C (13:29)

Exactly.

A (13:29)

Shares.

C (13:30)

And so as you say, the quicker it gets into the indices, but even if it's not in the indices, there's a lot of pressure on a lot of institutions here to say how do I stand aside from this deal? If it's an Enoch stock that comes on the market with a nearly 2 trillion dollar valuation, am I really going to stand aside from the rest of the market and say no thanks? What happens if it doubles? I mean, who knows?

A (13:58)

There's something self reinforcing about it in other words.

B (14:01)

But you mentioned something interesting there Richard, which is that this is an Elon stock. So as we were saying, Tesla car sales have been falling, particularly in Europe. Tesla stock has been falling quite hard. It's down by about 30% since November. Is Tesla's stock falling precisely because investors feel like they only have room for so much Elon in their lives and they have to get rid of some Tesla exposure so it can take on some SpaceX in a few weeks time?

C (14:26)

I don't think so. I mean Tesla's a volatile Stock is still $1.2 trillion or whatever it is of stock market value. I don't know the current number. I mean this is an incredibly over inflated stock based on current earnings or even many in a kind of realistic medium term projection on earnings. It's all based on big new markets that you know, may develop. And so I, I honestly think I see SpaceX as part two. It is. I've got, you know. You like that? I've got another one for you. And it's a different story but it's just as big and just as exciting and I, I think there'll be, I think there'll be as much interest.

A (15:09)

Richard, do you think there is a world in which the SpaceX story really does live up to the hype? I mean can you imagine a world where the commercial space business grows like crazy and there's data centers in space brought up by these rockets and those data centers support a lower cost artificial intelligence network and et cetera? Is all of this within the realm of being conceivable or are we in total fairyland here?

C (15:40)

This is the really interesting thing Here, all of this is very doable within the laws of physics. Some of it, quite a lot of it, Elon has already proven. And so the satellite business, for instance, is getting to a point where it is a cash generative business, as you mentioned is growing like crazy. Musk is about to launch much bigger, more powerful satellites that will have the power to directly connect to more handsets at higher bandwidth. Now, whether this ever replaces your cell service, I doubt fully. But there is a massive global market, communications market, and if you, you know, if you look at the projections for that out over 10 or 15 years, this could be a huge, huge communications business. Second point, data centers in space. Sounds like science fiction. Musk. Isn't anyone doing this. Everybody in the tech industry wants to do this. Google has its first test going up next year potentially. And so this is physics that's been proven. If you can get your data center up closer to the sun, in a sun synchronous orbit so that your solar panels are always exposed to the sun, you get a massive improvement benefit in terms of energy consumption. You're in the freezing cold of space where you can radiate heat out through massive radiator panels. So it all comes down to the cost. Can you actually afford to put these things up there in orbit? And Musk is the leader in launch costs and he's working hard on that. So you tell me, Rob, you tell me.

A (17:24)

I do love the idea of an investment pitch that starts with nothing here violates the laws of physics.

B (17:33)

Yeah, exactly. There's so much going on with this potential listing. Right. But I just want to kind of, you know, imagine a situation sort of six months from now. This thing is a stock on the stock exchange that you can buy or sell at will. Do we think it's going to behave like a normal stock that responds to the P and L of the company and its earnings projections, or is it going to be like another Tesla, which is basically. That stock is basically a fan token for Elon Musk in a lot of ways. It doesn't really respond to the normal metrics. It is hard to justify the valuation of this company and of this stock based on what it actually earns. Is this just going to be another massive stock that just doesn't behave like all the others. Like you've got a row of stocks, they're all the equivalent of like men in suits and then you've got one that's dressed like a clown.

C (18:26)

Can I offer a California view to this just for a moment?

A (18:28)

Yes.

B (18:29)

Yeah.

C (18:30)

Leave aside the Actual valuation for a moment. For years, Wall Street's been criticized for not backing long term bets. The US has underinvested. We've had massive underinvestment over the years. So what we're looking at here at the moment in this AI cycle, maybe it's massive over investment, but it's massive investment. Elon is a long term bet if you want to play on the future of the big new market. And Rob, I mean this point about it not being beyond the laws of physics, that is literally how Musk operates. He's looking at what he can build and he's going out there to build it. And he's proven he can do a lot of this stuff. Well, we do if you want a long term bet. This is a long term bet.

A (19:15)

I think we do have examples of fanboy companies that have made good. The one I think of is Amazon. Both Richard and I were covering Amazon when people were saying it doesn't make any money, it sells at a jillion times earnings. I was as guilty as any journalist of saying this. Is there a real company there? You know, can this possibly be worth what the market says it's worth? Well, lo and behold, that grew into a business that justified those earlier valuations. It happened. The laws of physics allow it. And under the right circumstances, the laws of finance allow it to happen too. I'm not saying it's likely, but I'm saying there's precedent.

B (19:58)

Yeah, and the vibes. The vibes are strong. I kind of don't get how he does it, you know, as a public orator. Moss doesn't do it for me, but he knows how to press the right people's right buttons and get them to buy the damn stock.

A (20:10)

Andy has the stuff that he's built behind him, which makes it a lot easier to believe the tapestry that he weaves.

B (20:18)

Well, listeners, whether you like it or not, it's gonna be all SpaceX all the time around the point he decides to list this thing, which we're thinking is like May, ish, Juneish, something like that. Our previous reporting has indicated he wants to list by June to coincide with his birthday and the alignment of Jupiter and Venus, which is not a thing female CEOs can say out loud before they list their stock. I will just point out. But on that, we are going to have to come back in just one second with long shorts.

A (20:58)

Bull or bear Trade or tariff, Future or fad. There's more than one side to every story. With the flip side podcast from Barclays Investment bank, you'll hear two research analysts having a provocative debate on hot topics in business and markets. Listen to the flip side on your favorite platform.

B (21:18)

Okey doke. It is time for Long Short. That part of the show where we go long a thing we love or short a thing we hate. Why don't you go first, Rob? What have you got?

A (21:28)

I am long the magnolia tree. As you may know about me, I'm a bit of a sufferer of, you know, seasonal affective disorder. I get the winter blues. And for those of us with this problem, actually, the early spring is like the hardest time because you're like, have been through the whole winter already and your batteries are depleted. But when the magnolia trees come into bloom and I smell that rich, sweet odor, I feel like, man, I made it, you know, spring is here. It's going to be all right again this year.

B (22:01)

So survived another winter.

A (22:03)

Thank you universe for the magnolia tree.

B (22:06)

Yeah, my neighbor who doesn't look after his garden at all like it's a total wreck, he won't mind me saying this. He has the most beautiful magnolia tree and it annoys the hell out of me because I keep killing them. But his is gorgeous. I am Long Papal news. I was not expecting the Pope to be so central to the news cycle in 2026, but I'm here for it. POTUS versus Pontifex. It's. It's strong.

A (22:32)

I love this bit of the newsleth cycle too.

B (22:35)

It's so good. Richard, tell us something you love or something you hate.

C (22:41)

Well, I'm. I'm very long Southern California these days. I moved out of San Francisco. San Francisco in the middle of a tech craze is not where you want to be.

A (22:51)

No, indeed.

C (22:51)

It is just. It is just a lunatic place. The good news is all the kind of doom loop stories, including ones we ran in the ft, those are all history now. It's just money washing out of every doorway. And I'm watching that from a distance. I'm down here in San Diego. Everything is laid back, the sun is out. Believe me, you don't want to be in San Francisco for a craze, but California is still a good place to be.

B (23:18)

That's highly annoying. But it is nice in London at the moment, I will give you that. So, you know, come visit. Yeah. Rob, you have been. Rob. Richard, thank you so much for being fantastic and coming on today. We know you have better things to do with your time, frankly. And thanks for sending us all of your wisdom from California listeners. We are going to be back in your ears on Thursday, God willing. So listen up then. Unhedged is produced by Jake Harper and edited by Bryant Urstadt. Our executive producer is Jacob Goldstein. We had additional help from Topher Forehead. Cheryl Brumley is the FT's global head of Audio. Special thanks to Laura Clark, Alistair Mackey, Greta Cohn and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free, and a 30 day free trial is available to everyone else. Just go to ft.com unhedgedoffer I'm Katie Martin. Thanks for listening.

A (24:17)

Sam.