IPO to the Moon

Summary

Podcast Summary: What Next: TBD | "IPO to the Moon" (June 12, 2026)

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Episode Overview

In this episode of What Next: TBD, host Lizzie O’Leary speaks with Max Chafkin, Bloomberg Businessweek reporter and co-host of the Everybody’s Business podcast, about the historic and controversial SpaceX IPO. With SpaceX’s public valuation at $1.77 trillion, the conversation unpacks what's driving this astronomical figure, the company’s true business makeup, Elon Musk’s control, the risks for regular investors, and the broader context of an ongoing AI-fueled market frenzy. The episode also touches on the coming IPOs of AI powerhouses like OpenAI and Anthropic, the political connections of these companies, and what the IPO boom signals about the state of tech and power today.

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Key Discussion Points and Insights

1. The SpaceX IPO: Ambitions, Numbers, and Surprises

• SpaceX’s Narrative: Multi-Planetary Species

  • The SpaceX S-1 (prospectus) is loaded with grand language about preventing humanity’s extinction—“we do not want humans to have the same fate as dinosaurs”—and the vision “to extend the light of consciousness to the stars.”
    • [02:13] Max Chafkin: “If we do not make life multi planetary we will be like dinosaurs. I suppose, but I don’t know.”
    • [02:41] Lizzie O’Leary: “Extend the light of our consciousness... understand the true nature of the universe and and extend the light of consciousness to the stars.”

• Business Reality Behind the Hype

  • Much of the S-1, despite the cosmic rhetoric, is about more earthbound ambitions: data centers for AI technology (Grok, SpaceX’s chatbot), and the satellite business.
    • [03:52] Max Chafkin: “It’s not as big as I thought it would be. You look at the raw numbers here.”

• Size Compared to Tech Giants

  • 2025 Revenue: $18 billion
  • 2025 Loss: $4+ billion
  • In contrast, Meta had ~$200B revenues and $60B profit in 2025, underscoring SpaceX’s comparatively small—and unprofitable—scale.
    • [05:35] Max Chafkin: “$18 billion in revenue… Meta had $60 billion in profit... SpaceX lost a little over 4 billion, you know, same year.”

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2. Breaking Down the SpaceX Model

• Three Main Businesses

  • [11:14] Max Chafkin:
    1. Rocket Launches (Falcon 9): The “industry standard,” foundational but mature and not rapidly growing.
    2. Starlink Satellite Internet: Fast-growing, contributes to profits, but profits are inflated by being charged below-market launch costs from the rocket division.
       • [12:35] Max Chafkin: “They’re charging Starlink ... at cost ... $50 million a launch below what they would charge an outside company.”
    3. AI & Data Centers (Grok): The new frontier Musk touts; ambitions to rent data center space and develop an alternative large language model. Current impact on profits is minimal, and “Grok” is not taken seriously by enterprise AI customers.
       • [12:33] Max Chafkin: “A company that appears to be in the process of pivoting to this kind of very hot market, which is strange...”
       • [14:15] Max Chafkin: “You have this kind of interesting but not particularly successful large language model... and this... far out there plan to build data centers in space.”

• Financial Engineering

  • Internal pricing between rockets and Starlink distorts real valuations of both, favoring the higher-growth Starlink division.
    • [12:35] Max Chafkin: “There’s a little bit of kind of financial engineering...”

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3. The Musk Effect: Control and Valuation

• Why the Sky-High Valuation?

  • The SpaceX valuation relies less on financial fundamentals, more on Musk’s cult of personality and investor faith.
    • [15:27] Max Chafkin: “There’s this other factor which is Elon Musk... The stock market has historically decided that that is worth a lot of money.”

• Comparison to Tesla

  • Tesla’s high valuation is similarly based on future AI ambitions vs. current car sales.
    • [16:42] Lizzie O’Leary: “But Tesla has also lost more than 5% in its value over the year because people have started saying wait a minute,...”

• Unprecedented Shareholder Disempowerment

  • Musk will control 85% of voting rights at SpaceX post-IPO, far more than a typical CEO, thanks to a super-share structure and mandatory arbitration provisions for shareholder disputes.
    • [18:36] Lizzie O’Leary: “He’ll have like 80 some percent of the voting rights here, 85%...”
    • [18:43] Max Chafkin: “Shareholders will be in a more disempowered position than maybe they’ve ever been... If you are buying this thing, you are basically saying, I’m going to give Elon Musk my money and he can do whatever he wants forever.”

• Comparison to Other Tech Moguls

  • Similar setups at Meta (Zuckerberg), Google, and likely upcoming at Anthropic & OpenAI.
    • [20:18] Max Chafkin: “A handful of big tech companies have similar kind of lopsided share structures...”

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4. Risks to Everyday Investors

• SpaceX’s Accelerated Entry into Market Indices

  • Musk lobbied successfully to have SpaceX included early in major stock indices (like NASDAQ 100), meaning passive investors (e.g., 401k holders) are forced to buy in, regardless of their individual preferences or risk tolerance.
    • [22:12] Max Chafkin: “They gotta buy SpaceX.”
    • [22:29] Lizzie O’Leary: “Lots of people... are going to own SpaceX maybe without knowing or wanting to.”
    • [23:00] Max Chafkin: “So the kind of thinking has been you don’t want to just put that in the index right away because the index might be overpaying and in fact because the index is sort of forced to buy, it might be pushing the value up sort of artificially.”

• Potential Dangers of Index Inclusion

  • [23:53] Lizzie O’Leary: “That feels... crooked is not quite the right adjective, but it, it makes my eyebrows go up.”
  • [24:03] Max Chafkin: “It feels like we’re in an AI bubble, but things can feel bubbly for years...”

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5. Broader Market and Political Context

• Musk’s Track Record with Overpromising

  • Only about 19% of Musk’s public promises come to fruition as stated, but his confidence still sways markets.
    • [28:13] Lizzie O’Leary: “Elon says things that aren’t true... the New York Times just did this big analysis where they found 19% of the things he promised actually came through...”
    • [28:45] Max Chafkin: “He’s been basically saying for a decade that Teslas could drive themselves... and it’s basically been a year away for 10 or 11 years.”

• AI IPO Race: SpaceX, OpenAI, Anthropic

  • All three are eyeing the current frothy market as the optimal moment to go public, before possible market downturns or increased regulation.
    • [30:05] Lizzie O’Leary: “Anthropic and OpenAI have also moved toward IPOs... does the... momentum around these IPOs tell you anything...?”
    • [30:42] Max Chafkin: “Elon Musk and Sam Altman... basically engaged in a months long court fight... They’re racing, I think, as quickly as possible to get out because no one knows how long this environment is going to last.”

• Political Entanglement

  • Many Trump administration officials have major stakes in SpaceX or XAI. Musk has become the largest Trump donor, and his platforms and companies (notably Twitter/X) now operate as important arms of conservative media and politics, doubly reinforcing their economic prospects under Republican governance.
    • [32:11] Lizzie O’Leary: “Ten Trump administration officials ... held SpaceX or XAI stock worth at least 9.9 million and as much as 43.8 million.”
    • [32:49] Max Chafkin: “Twitter is now essentially a right wing social network... it is now, in certain ways, an arm of the conservative movement.”
    • [33:29] Lizzie O’Leary: “He spent $300 million when he donated to the Trump campaign. Is this what it was for? ... and have the government give his company a $6 billion contract.”
    • [33:51] Max Chafkin: “SpaceX... still getting huge government contracts. The golden Dome... This is this plan to essentially build a missile defense system... SpaceX is a major player there.”

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6. How Will the IPO Play Out—and What’s at Stake?

• Watch the "Pop," Then the Next Year

  • The key metrics: Initial trading pop, followed by whether the stock holds up as insider shares are sold over the next 6-12 months.
    • [35:41] Max Chafkin: “The thing to watch though will be... six months to a year... what happens. I mean, the thing that I worry about is if... the IPO goes badly or things sort of fall apart... what that does to the rest of the stock market...”

• Vulnerability of the AI Bubble

  • No AI giant has proven it can deliver sustainable profits matching their massive investments—raising the specter that a SpaceX or OpenAI stumble could reverberate across the wider market.
    • [36:13] Max Chafkin: “No one has really figured out how to make these AI efforts return on the massive investment... None of them have really been able to show that those things can return yet.”

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Notable Quotes & Memorable Moments

• [02:13] Max Chafkin (on S1 hype): “If we do not make life multi planetary we will be like dinosaurs. I suppose, but I don’t know.”
• [11:14] Max Chafkin (on Starlink-Rocket synergy): “They dominate this market in such a way that during the Biden administration... [the government] started to become worried, like maybe we, the United States are too dependent on this guy.”
• [18:43] Max Chafkin (on Musk’s control): “If you are buying this thing, you are basically saying, I’m going to give Elon Musk my money and he can do whatever he wants forever.”
• [23:53] Lizzie O’Leary (on index manipulation): “That feels... crooked is not quite the right adjective, but it makes my eyebrows go up.”
• [28:13] Lizzie O’Leary (on Musk’s promise record): “The New York Times just did this big analysis where I think they found 19% of the things he promised actually came through...”
• [32:49] Max Chafkin (on political crossover): “Twitter is now essentially a right wing social network... you’re kind of seeing that in those disclosures.”
• [35:41] Max Chafkin (on risk to the market): “The thing that I worry about is if you don’t have that situation and the IPO goes badly... what that does to the rest of the stock market, because there are so many parts... making basically the same bet.”

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Timestamps for Key Segments

• SpaceX S-1 Hype and Ambition: 02:00-06:20
• Breaking Down SpaceX Businesses: 11:14-15:03
• Valuation and The Musk Effect: 15:03-20:18
• Shareholder Power and Index Inclusion: 18:36-24:03
• Musk’s Track Record and AI Bubble: 28:13-30:05
• IPO Frenzy and Political Ties: 30:05-34:32
• IPO Impact and Bubble Risk: 35:24-37:02

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Summary Takeaway

The SpaceX IPO is the largest in history—but amid the rocket-fueled rhetoric of saving humanity, the real story is financial substitution, AI hype, and the unmatched power of Elon Musk. SpaceX is less about interplanetary travel and more about leveraging Musk’s reputation and gaming market mechanics. The episode warns investors—especially those in index funds or retirement accounts—of the latent risks if the AI bubble bursts or if Musk’s unchecked hand leads SpaceX into turbulent territory. As Max Chafkin notes, the coming months will test not just the value of SpaceX, but the faith investors have placed in tech’s biggest personalities to shape (and profit from) the future.

Transcript

[Lizzie O'Leary]

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[Max Chaffkin]

My name is Max Chaffkin. I am a reporter with Bloomberg businessweek. I'm also the co host of the Everybody's Business podcast. And I guess for the purpose of this conversation I have covered Elon Musk for a very long time, for almost 20 years.

[Lizzie O'Leary]

And for this podcast I gave Max some homework.

[Max Chaffkin]

Let me pull up the S1 just so I can so I can read

[Lizzie O'Leary]

the I asked Max to come prepared with one interesting thing from the SpaceX prospectus. That's the paperwork the company filed with the securities and Exchange Commission. We true nerds know it as the S1.

[Max Chaffkin]

So there's a section in S1, page 136 why this matters now we do not want humans to have the same fate as dinosaurs. So I guess like we're going to you should invest in this company because it's SpaceX is helping to make life multi planetary. If we do not make life multi planetary we will be like dinosaurs. I suppose, but I don't know.

[Lizzie O'Leary]

It's funny I go with one that is right near there to make life multi planetary to pick up on this thread, understand the true nature of the universe and and extend the light of consciousness to the stars.

[Max Chaffkin]

This S1 is also full of mentions of human history. You know, Elon Musk is a guy who loves to Talk about his own life and his own kind of life's work. You know, in the grand scope of history, they claim to have identified the largest market in human history, that the technologies that the company makes, which include, you know, an anti woke chatbot and satellite communication for sal sailboats and airplanes as you know, the most consequential technologies in human history. SpaceX and Elon Musk, I mean more than anything they want you to know that they are, you know, important that we are. This is dinosaur level stuff.

[Lizzie O'Leary]

Okay, so on that level, extend the light of our consciousness. Tell us what these documents signal to you about SpaceX's ambition.

[Max Chaffkin]

Well, we've known that Elon Musk, the founder of SpaceX, the CEO and who also runs Tesla and Twitter and a bunch of other things, has these kind of grand ambitions and, and has, you know, for, for as long as he's been a public figure talked in this way. And so, so in some ways like the, the kind of crazy grandiose Elon Musk stuff to me is like the least surprising part of this because like that is how Musk has always marketed himself. And an S1, this registration statement, when you, when you go public, it's, it's a marketing document. And so in addition to all the grandiose language, there are a gazillion beautiful pictures of rockets. There's, it's just like, you know, like pages and pages and pages of rocket porn. But the thing that I find most interesting and most surprising is how much of this is actually just like not about rockets at all, not about Mars, not about multi planetary life. It's about building data centers for grok, which is SpaceX's chatbot, as well as for other AI companies. I mean basically this is a, an interplanetary travel company that appears to be in the process of pivoting to this kind of very hot market, which, which is strange and feels, you know, odd for, for Elon Musk. The other thing that I think is interesting is just it's not as big as I thought it would be. You look at the raw numbers here.

[Lizzie O'Leary]

Yeah, tell me, tell me about that. The scale of this IPO and what the numbers tell you.

[Max Chaffkin]

$18 billion in revenue in 2025, which is a lot of money. But you compare it to, you know, Facebook, Google, the other big technology companies, companies that are going to have roughly the same valuation. It's, it's really small. Meta made, made around, had around $200 billion in revenue in 2025. Meta had $60 billion in profit in 2025, SpaceX lost a little over 4 billion, you know, same year. So this is like a, a modestly sized money losing company with some very, very, you know, monumental ambitions, historic ambitions, maybe the biggest ambitions in human history.

[Lizzie O'Leary]

And that raises some very interesting questions. Namely, is SpaceX actually worth what Wall street seems prepared to pay for it? Or is this a bunch of rockets and some AI stuffed into a trench coat named Elon Musk? Today on the show, it's IPO palooza time. SpaceX is about to blast off with OpenAI and Anthropic soon to follow. I'm Lizzie O' Leary and you're listening to what Next TBD, a show about technology, power and how the future will be determined. Stick around. If your team's communication is messy, customers feel it. Missed messages, dropped threads, slow replies. It's one of the easiest ways to lose momentum. That's why today's episode is brought to you by Quo spelled Q U O the business communication system built so you never miss a call. Your entire team can handle calls and texts from one shared number. So no more missed messages or dropped conversations. Everyone sees the full thread, replies are faster, and customers actually feel feel taken care of. Quo works wherever you are, right from your phone or computer. Keep your existing number, add teammates in minutes, sync your CRM and let the call routing handle itself as you scale. Money is on the line. Always say hello with Quo. Try quo for free plus get 20% off your first six months when you go to quo.com TBD that's quo.com this time of year is so chaotic. I have got a kid at the end of school, I've got a job. I've got elderly parents. It's really hard to stay on top of my money. So Monarch's personal finance app can track your money so that you don't have to. Takes the whole mental load of tracking your finances off your plate. Monarch is the personal finance app that tracks everything accounts, investments, savings goals and spending. Get your first year of Monarch Core for half off, just $50 with promo code TBD. I appreciate Monarch because it's easy to use and I know that my summer financial plans are on the right foot. It's like having a financial advisor in your pocket. The weekly AI recap can catch a spending spike before it becomes a problem. So no more late night shopping binges, thank you. Monarch. Most apps only tell you about what you've already spent. Monarch helps you set goals, map out big purchases, and see if you're actually on track before it's too late to adjust, and you can split the check without a headache. With Monarch's bill split, just scan the receipt, everybody claims what they got, and then settle up. No separate app needed. So if you want to get your first year of Monarch Core Half off, use code tbdonarch.com to get your first year of Monarch Core half off. At just $50, that's 50% off your first [e-mail] with code TBD. Starting your own business is never easy. Starting your own podcast, that seems easy, but actually there are a ton of landmines to step on along the way. Finding producers, selling ads, and connecting to wi fi. Oh, does that sound straightforward? It's not. I'm talking about sitting in coffee houses for hours after buying one scone. I'm talking about sitting in hotel lobbies and pretending your backpack is luggage. It's torture. I spent so much time making my home office look professional, but my connection didn't get the memo. The last thing you want during a major interview is for your guest's voice to turn into a stutter. When your bandwidth can't keep up with your ambition, your home office starts feeling like an amateur operation pretty fast. And for a podcast, the Internet is key, because the Internet is how we talk to almost everyone. And no matter the guest, a laggy connection can ruin an exclusive interview. Great connectivity isn't a bonus, it's the whole game. An AT&T business is here to help. They've got the tools, team and expertise you need for a stable network you can rely on. And when you can rely on the network, you can get back to thinking about the more important stuff, like nabbing that great guest and getting back to work. AT&T business built to work get AT&T [e-mail]. Probably the most important thing to know about the SpaceX IPO is that it is massive. The company is valued at $1.77 trillion and the share price is set at $135 before trading. It's the biggest IPO ever. But you have to understand that SpaceX is isn't a single thing. It's more like a bunch of companies in one.

[Max Chaffkin]

So you have three businesses. One is the original business of SpaceX, which is shooting rockets into space. And you brought up starlink. That business, while not huge, is a very, very, very successful business. SpaceX operates a rocket called the Falcon 9. The Falcon 9 is basically the industry standard for sending satellites to orbit. It's what NASA uses, is what the Defense Department uses. When you look at the number of launches around the world, SpaceX has a huge percentage of them, you know, dominates this market in such a way that during the Biden administration, as Elon Musk was becoming, you know, kind of more right wing and, and tweeting stuff that was kind of out there, started to become worried, like maybe we, the United States are too dependent on this guy. We need to like figure something out. Because if Elon Musk cuts us off from our ROC rockets will have no way to service the space station, we'll have no way to launch spy satellites and so on. So that's a really, really good business. It's not growing very quickly. It's also losing money, according to S1. Although it's really important to say that Starlink, which is the satellite business, the second business, part of the reason it's making money is because it's not paying full price to launch its satellites into space.

[Lizzie O'Leary]

Because who's footing that bill?

[Max Chaffkin]

The company. So they're paying, they're charging Starlink the, basically at cost, or what they say is at cost, which is something like $50 million a launch below what they would charge an outside company. So they're sort of giving up $50 million in profit per launch. And that's essentially going to Starlink's bottom line. So, and that's defensible. Like it's, that's explained in the S1. But it's important to say like that fact makes the rocket business look less successful than it is and it makes Starlink look more successful than it is. And now why would you want to do that? I mean, maybe you do that because like Elon Musk says, this is a vertically integrated company. Of course they're not going to pay for launch services. They develop launch services. But the other reason you do that is because one of those two businesses is a growth business. Starlink is growing, they're adding a lot of subscribers. And the other one is not, it's a kind of mature defense contractor. So, so there's a little bit of kind of financial engineering, you know, in that, in that distinction. And then you have this third business, which is where Elon Musk says the future of the company is, which is AI, which is, you know, again, supposedly very huge. I mean, SpaceX has a, a couple of very large data centers, which it is, it appears it's going to begin renting out to other companies. But this plan to make data centers in space, which is what the company says is kind of like the future and other part of this AI thing is the large language model, like when you look at what powers OpenAI or Anthropic, it's the large language model. It's, it's like ChatGPT or Claude Musk's version, SpaceX's version is called Grok. And Grok, you know, as far as I can tell, is mostly used as a way to make funny tweets and, and is not taken that seriously, you know, by the people who buy, you know, AI, you know, large language model capacity like businesses and so on. So you have this kind of interesting but not particularly successful large language model that of course the company says is, is, is very state of the art and it's not woke and that's going to somehow help help it. And then you have this kind of, you know, pretty far out there plan to build data centers in space and they're calling that, you know, a multi trillion dol. You know, for now it's just, it's just causing massive losses.

[Lizzie O'Leary]

So I think then a natural question is why is this company valued at what it is? Is SpaceX overvalued or are investors just looking at this and saying Elon Musk's name is on it and therefore we don't have to look at the fundamentals of the business because he'll figure something out and we'll make money.

[Max Chaffkin]

I mean it's both of those things. It's like if it's valued as just the business that it is, a very successful rocket company, a fast growing but still kind of early satellite business, and a more or less non existent or small AI thing, it would be worth a lot less than 1.7, $1.8 trillion or wherever it winds up being after the stock begins trading. But there's this other factor which is Elon Musk and, and you can, everyone can, can have different views on how much that should be worth, but the stock market has historically decided that that is worth a lot of money. If you, and we have a really good comparison here with Tesla, which is Musk's publicly traded car company. Tesla is like a small car company. It sells about a sixth or a seventh the number of cars a that Toyota does. And yet it trades its market value is something like four times what Toyota's market value is. And the reason for that is because Tesla has this kind of super speculative but mostly non existent plan to become an AI company.

[Lizzie O'Leary]

But Tesla has also lost more than 5% in its value over the year because people have started saying wait a

[Max Chaffkin]

minute, totally it's and Tesla has been very troubled I mean, Tesla has, was a fast growing car company. It is no longer a fast growing car company. It has issues, I think, that SpaceX doesn't have. But my point is just that there is like some Musk factor to this where it allows investors to look at a speculative business. Humanoid robots and robo taxis for Tesla data centers in space and grok for SpaceX and, and, and you know, kind of like magically apply a multiple and they believe and they are buying into. They, they not only, you know, own Tesla, they're the people who have, you know, been voting, you know, essentially against all kind of normal business common sense to give Elon Musk gigantic pay increases. And they are the ones who are, who this SpaceX IPO has been marketed to. And so if you're betting against these companies, you're betting against that massive shareholder base, which is actually kind of more like a fan base.

[Lizzie O'Leary]

Yeah, it is a fan base. And I want to talk about some of the people who are benefiting here. So let's talk about Elon first, because the share structure in this IPO gives him way more control than you're just sort of like regular Degular CEO would. You made a whole podcast about Elon. What does this kind of super share structure tell you about him?

[Max Chaffkin]

So it's funny because on some level it doesn't matter that much because of that kind of like Elon multiple that I was mentioning, it would make it very hard for shareholders to kind of buck him. And that's come up over and over again at Tesla. Tesla shareholders. If you don't like Elon, your choices are try to try to rein him in and then risk that the Elon fans sell and then you lose money

[Lizzie O'Leary]

or just, and I should clarify this for SpaceX, he'll have like 80 some percent of the voting rights here, 85%

[Max Chaffkin]

I believe, of the voting rights. Not only that, but this company, in certain ways shareholders will be in a more disempowered position than like maybe they've ever been. There is an arbitration provision in the S1, basically requiring shareholders to do mandatory arbitration rather than bringing class action lawsuits. Elon Musk, you know, kind of somewhat famously engaged in this big fight with the state of Delaware over class action lawsuits and their approach to corporate law. Move the company to Texas, where, which takes a much more kind of like management friendly approach to this stuff. So you have, you have a situation where functionally Elon Musk would have a lot of power and then literally there will be like pretty much no way for Shareholders to rein him in. If you are buying this thing, you are basically saying, I'm going to give Elon Musk my money and he can do whatever he wants forever.

[Lizzie O'Leary]

Which is so weird because that's not what a public company is in theory supposed to be. Right. Like, if we were to do total 101 here, the idea is like I buy some shares in Max Chaffkin Incorporated and then I have some say about what Max Chaffkin Incorporated does in the future. But this kind of feels like Elon going to public markets for money, but not any of the buy in that shareholders often wield in a public company.

[Max Chaffkin]

Yeah, I mean, he has, as I said, he has just a huge amount of leverage over shareholders because of this dynamic. And that's what we're seeing. We're seeing him negotiate the best deal that he can get. And that deal happens to just be, you know, an incredibly historically lopsided deal. I should say he's not the only one. I mean, there are a handful of big tech companies that have similar kind of lopsided share structures. You know, Mark Zuckerberg will essentially control Facebook forever. You know, Google is kind of in the same position. Anthropic and OpenAI, I assume, will have similar, you know, shareholder provisions, you know, for. For different reasons. Right. But it's going to, it's going to amount to the same thing where you as an investor are essentially getting the upside if it goes well, but assuming a bunch of risk with very little recourse other than to sell and even selling maybe not as straightforward as it seems. One of the things that Musk has been able to do with this leverage is get a bunch of the big indices. So like the company, the NASDAQ 100 and a handful of others to change their rules to bring SpaceX into these indexes indices quicker than it otherwise would be. So if you are a. Yeah, let's

[Lizzie O'Leary]

explain to listeners why this is so important. Because you might not care at all about Elon Musk, you might not care at all about these companies, but you might have a 401K. And these big institutional investors, your Vanguards, your BlackRock's, Fidelity, et cetera, like your kind of generic fund that tracks the stock market has to, by its rules, mirror these indexes indices. Indexes indices. I never know.

[Max Chaffkin]

They gotta buy SpaceX.

[Lizzie O'Leary]

They gotta buy SpaceX is the short version. Maybe not if it's one that tracks the S&P 500. But that means lots of people, maybe people who are on the verge of retirement are going to own SpaceX maybe without knowing or wanting to.

[Max Chaffkin]

Yeah, and this is already true. We're talking about, you know, Facebook or Nvidia or many of these other, you know, like if you think, oh, you know, I, I wish I had gotten in on Nvidia. Well you did because you probably, if you're a normal retiree, you, you invest in these broad based index funds that's been like the kind of industry standard strategy for decades. And these funds are, the idea is they buy the whole market and probably

[Lizzie O'Leary]

some 55 to 60% of Americans have a retirement account.

[Max Chaffkin]

And in general these indices have had rules that are, they're called seasoning requirements. The idea is you want to have the stock in on the market trading for a while to, to sort of like figure out what it's really worth because you have some very, very smart investment bankers, very good at their jobs, who, their whole job is to get the price up as high as it can possibly be. You have these very sophisticated institutions that benefit from that and then there's a lot of volatility as insiders, managers, CEOs and so on trade. And so the kind of thinking has been you don't want to just put that in the index right away because the index might be overpaying and in fact because the index is sort of forced to buy, it might be pushing the value up sort of artificially. Musk has managed to get most of these indexes, although not the S and P, as you said, to change the rules.

[Lizzie O'Leary]

That feels I'm looking for an adjective. Crooked is not quite the right adjective, but it, it makes my eyebrows go up.

[Max Chaffkin]

The argument for changing the rules is that these AI, mega caps, SpaceX, Anthropic and OpenAI are a much bigger percentage of like the overall economy, the market than previous IPOs. They're going public later and that to exclude them would be to limit investors exposure to an important part of the market. The point of the index is to track the market. So if they're going to track the market, they need these companies. As I said, the counterargument is you're at risk of pumping up the value of these companies and then having the index holders, you know, taking financial responsibility for that, for that thing. It's basically like we're all going to get on this, you know, if you don't, if the index doesn't do it, we're missing out on the potential, you know, awesome ketamine fueled rocket ride to the stars which could, I mean it could end up being very valuable. And we, and you know, anyone who misses out on that would feel very bad and the indexes would feel bad and like this thing looks incredibly overvalued. It feels like we're in an AI bubble, but, but things can feel bubbly for years and years and years before the bubble actually bursts. And so we just like don't know where we are. And, and that creates, you know, a lot of uncertainty and just a lot of risk for, for all of us. Anyone who, you know, is owns stock or you know, has a stake in the market.

[Lizzie O'Leary]

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[Lizzie O'Leary]

But the thing is, Elon says things that aren't true. Whether that's because he wants them to be true, because he's working on them. I mean the New York Times just did this big analysis where I think they found 19% of the things he promised actually came through in the way he promised them. That's one thing when it's just your company. It's a totally different thing when a large chunk of, of the American economy via the stock market is riding on that.

[Max Chaffkin]

Yeah. And not just the people who are invested in these things. I mean the AI bubble, you know, has huge impact like across the economy. It's, it's, you know, it's affecting the construction industry, it's affecting, you know, industrial materials. It's, you know, it's affecting electricity prices. There are just like a million ways in which getting a bunch of investors as excited as they are about these stocks, you know, is having an economic impact at the moment. You know, that economic impact has been largely, I don't want to say positive, but it's led to a lot of economic growth. And this has happened before as you said. Like he's been basically saying for a decade that Teslas could drive themselves anywhere in the country without human oversight and that this product is basically a year away and it's basically been a year away for 10 or 11 years. And, and, and still, you know, Tesla has something like a couple of dozen Robo taxis, you know, unsupervised autonomous vehicles in like two cities or three cities in Texas. You know, Waymo has thousands of these things and the valuation of Waymo is a private company, but it is not worth what Tesla's worth, which is over a trillion dollars.

[Lizzie O'Leary]

Okay, so we have not just SpaceX but Anthropic and OpenAI have also moved toward IPOs. We don't totally know the calendar and clock on that now, but does the, I don't know if we want to call it a rush to IPO, but the momentum around these IPOs tell you anything about how these companies see each other, see SpaceX, or see this moment

[Max Chaffkin]

in the markets, they're clearly looking at each other and wanting to be.

[Lizzie O'Leary]

And all these guys hate each other.

[Max Chaffkin]

They do, yeah. I mean, Elon Musk and Sam Altman, the CEO OpenAI basically engaged in a months long court fight just a few weeks ago. And they are, you know, racing, I think, as quickly as possible to get out because no one knows how long this environment is going to last. The stock market is at, you know, near all time highs. We're in the middle of this historic AI bubble and there's a very good chance that if you like, if you look at prediction markets or just like the historical tendency of the American public to sort of swing from one party to the other, there's a very good chance that we wind up with at least the Democrats controlling at least one house in Congress and having a good in 2026 and having a, you know, a pretty solid chance to retake the presidency in 2028. And so, so there's a reason like this is a great environment if you are a Trump aligned AI executive. This is when you want to sell your company to public markets investors and you want to do it before, before the market shifts on AI and before, you know, the data center regulations come, the hearings which is coming.

[Lizzie O'Leary]

I get emails about them every day.

[Max Chaffkin]

Yeah, you just can imagine that there will be congressional oversight. Whether it's, whether it's like legitimate oversight or political grandstanding. Like one way or another, Musk and probably Sam Altman and maybe even Anthropic to some extent, are gonna become politicized if the Democrats retake power in 2026.

[Lizzie O'Leary]

Well, your colleagues reported that 10 Trump administration officials, ranging from Steve Woodkoff, who's the sort of special envoy negotiator in the Middle East, Small Business Administration head Kelly Loeffler, have financial interests in SpaceX or XAI. In total, I'm quoting now, the federal staffers held SpaceX or XAI stock worth at least 9.9 million and as much as 43.8 million. Now that comes from financial disclosures. So they're backward looking and you only get sort of a range. But that's a lot of Trump administration people who are gonna make a lot of money.

[Max Chaffkin]

If you look back a couple years when people were talking about Musk's takeover of Twitter, there was this sort of sense that Musk kind of like destroyed Twitter, ruined it or something. But, but I think what actually happened is he pivoted it to the right. Twitter is now essentially a right wing social network. It's not surprising that it has connections and you know, in conservative media and conservative politics. And you're kind of seeing that in those disclosures. The kinds of people who were, who backed that buyout were in some cases people were sympathetic to Musk's politics. And it is now in certain ways, you know, an arm of the conservative movement. It's even driving the conservative movement to some extent. When you think about like Musk being the largest Trump donor and so on.

[Lizzie O'Leary]

Well, yeah. Is this what he got, right? He spent $300 million when he donated to the Trump campaign. Is this what it was for to get to do this, to take his company public, make noise about it on his social media company and have the government give his company a $6 billion contract?

[Max Chaffkin]

Well, I think we would probably be, we might be having this conversation even if Musk had not donated and Joe Biden were president. But the path for Musk has certainly been cleared in ways it would not have been under a hypothetical Harris administration. Excuse me, I talked about SpaceX kind of pivoting away from being a government contractor and towards, you know, AI and Rocke. This is a company that's still getting huge government contracts. The golden Dome. I mean, this is this plan that, that Trump has to essentially build a missile defense system, you know, around the United States. SpaceX is a major player there. Over the last couple of weeks it's won two, you know, multi billion dollar contracts.

[Lizzie O'Leary]

There are, Yes, I said 6 billion, but it's the 6.45 billion and then the $4.16 billion one.

[Max Chaffkin]

Those are significant. SpaceX is a major player in the Artemis program. That's the mo. There is basically a close colleague of Musk, Jared Isaacman. This is a guy who financed one of SpaceX's missions and personally flew on a SpaceX rocket. He is the guy running NASA. So yeah, I mean he's this, this company is certainly more valuable and Twitter is, is certainly more valuable than it would have been had Musk not spent the, the money that he spent. But you know, part of what has put SpaceX in such an advantageous position is that even if you are really skeptical of Elon Musk, even if you're really skep of his power, it's very likely that the US Government would still be buying a bunch of rocket launches from this company.

[Lizzie O'Leary]

So when will we know? You know, when Facebook went public, it went and kind of fell off a cliff initially and then recovered. When will you feel like you have a sense of how this IPO is going to shake out?

[Max Chaffkin]

Well, the first kind of thing to watch is what's called the pop, which is like how much does it go up in the first day? I think thing to watch though will be what happens in the basically six months to a year that follows, which is when we're going to see insiders, we're going to see them selling their stock and watching what happens. I mean, the thing that I worry about is if you don't have that situation and the IPO goes badly or things sort of fall apart in, you know, in a couple of months, what that does to the rest of the, of the stock market, because there are so many parts of the stock market and the economy that are making basically the same bet. And you worry if people start to lose confidence in one of these things, what does it do to the rest of them? There are reasons to be worried about OpenAI. I don't know. I mean, no one has really figured out how to make these AI efforts return on the massive investment in terms of money, electricity, environmental resources, manpower. None of them have really been able to show that those things can return yet. And at some point we're going to need to see that. You would hope that these companies are positioned for it. And so far it's not clear that they are.

[Lizzie O'Leary]

Max Chaffkin, co host of Everybody's Business, writer for BusinessWeek and author of a book that I think explains Silicon Valley really, really well. The Contrarian it's all about Peter Thiel. Thank you for coming on.

[Max Chaffkin]

Thanks, Lizzie.

[Lizzie O'Leary]

And that is it for our show today. What Next TBD is produced by Madeline Ducharme and Patrick Fort. Our show was edited by Evan Campbell. Paige Osborne is the senior supervising producer for what Next and what Next tbd. And Mia Lobel is the executive producer of podcasts here at Slate. TBD is part of the larger what Next family and we will be back next week week with another show. I'm Lizzie o'. Leary. Thanks for listening.

[Capital One Announcer]

This episode is brought to you by Capital One. Capital One's tech team isn't just talking about multi agentic AI. They already deployed one. It's called chat concierge and it's simplifying car shopping using self reflection and layered reasoning with live API checks. It doesn't just help buyers find a car they love. It helps schedule a test drive, get pre approved for financing and estimate trade in value. Advanced, intuitive and deployed. That's how they stack. That's technology.

[Max Chaffkin]

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