I Read the 308-Page SpaceX S-1 So You Don’t Have To

Aman Virgie: Well, oh my God. First of all, it's a 308 page document. I've read it so you don't have to. I'm going to go through all the highlights, some of the fun financials and surprises and some nuggets in the S1. It's exciting. What else does Elon say? We do not want humans to have the same fate as the dinosaurs. Flowery language, colorful language from a visionary investor.

Co-host: How many mergers has Elon been involved in in the last like six months? And the next six months I feel like we're just like merging everything together.

Aman Virgie: Foreign.

Co-host: Folks, welcome back to another episode of our very bad, horrible, no good podcast, Trading Places with my partner in crime, Aman Virgie. The holy trinity of AI. SpaceX, Anthropic and OpenAI are in the news again. I guess it seems like, like all three of them are going to try and pull off, uh, IPOs this year. Mon, a trio of trillion dollar IPOs is. Have you ever seen so much money, uh, in the public market all at once?

Aman Virgie: Uh, I don't think so. If I look at all the money raised last year in US IPOs, and I'm talking everything like not just tech, but biotech and all the other IPOs, it was something on the order of 77 billion last year. It looks like SpaceX is now on. They're going to get to between 40 and 80, but the anticipation is 75 billion all by them. And it seems like there's a lot of news for anthropic and for OpenAI this week that was very favorable for their IP. I don't know that either one will be as big as SpaceX, but I think we're talking a year that could be three times the amount raised in IPO proceeds. And that's just those top three companies. Forget about all the other companies that

Co-host: this year could be 150 billion just across those three companies, maybe another 50 billion for the rest of the market. What do you think that's possible?

Aman Virgie: I guess we'll see how SpaceX goes. They're planning on pricing June 12, but depending on how that goes, I think that estimate sounds reasonable to me.

Co-host: The big news is that SpaceX S1 is out and those numbers are eye popping. Aman, we're going to cover that later today in valuation corner, but anything you want to tease out of that, uh, initial S1 that grabbed your attention?

Aman Virgie: Well, oh my God. First of all, it's a 308 page document. I haven't slept because I am fresh off of Reading that this week, it is longer than the Catcher in the Rye. It's a fascinating read. It's. I'll just tease a couple of the highlights. We learned a bunch of things from Elon's comp plan to what their new partnership looks like with anthropic. It's a $15 billion a year business that they now have with Anthropic. That came out in the, in the S1 they revealed their new board of directors. Or we, we kind of knew who the board was before, but now it's official so we know who is, who is on the board. The other thing I'll talk a bit about is some breadcrumbs and some clues in the S1 as to what I think is a potential merger with Tesla, maybe by the end of the year. And there's some hints and some breadcrumbs. If you look through the corporate governance.

Co-host: And how many mergers has, uh, Elon been involved in in the last like six months? And in the next six months I feel like we're just like merging everything together.

Aman Virgie: Well, Xai X.com um, right. And then. Which includes, uh, the, the remnants of Twitter. Cursor is not officially a merger, but is an option to buy, which I think is another one. So he's remade the company. In the past three months, Cursor actually

Co-host: announced that they hit a $3 billion annual run rate and projected they might even get to 6 billion by the end of the year. So that's turning out to be a pretty good deal I think, for SpaceX maybe if we were optimistic about what SpaceX, uh, revenue might be. This has got to be the bull case of all bull cases here. But here's a list of the different product lines and segments. Starlink, maybe 16 billion. The launch business, another 2 billion. The XAI business. That, that one got, uh, a nice story, I guess, because previously had been losing a lot of money, but you know, maybe 5 billion there. Anthropic compute business. Uh, that announcement happened and supposedly $15 billion a year for three years. I don't know if we'll see all of that in this year, but, uh, that was a good shot in the arm for SpaceX.

Aman Virgie: Yeah.

Co-host: Then maybe if they expand and do another, maybe not quite that large a deal, but, you know, try and find another compute the Kersha deal. So in the most optimistic scenario, we're talking, I don't know, 30, 35 billion in revenue, maybe a 50 billion plus run rate by the end of the year. Yeah, obviously a lot of things have to go right for this to all to happen. I think in the S1 they were suggesting they could get on $100 billion run rate in a few more years by 2030. Yeah. But uh, I don't know man. What do you think, uh, are we in the land of fundamentals or is that completely off the table now? We're basically pre projecting, you know I think in the S1 they were talking about the $28 trillion market for SpaceX. Sure. Does that include people, uh, on planet Earth or we even discover a new race on Mars that we're going to sell to. Maybe the Martians are part of that, that market.

Aman Virgie: Tam. Ah now yeah, I think the TAM to get to 28 trillion, I think you have to believe that all enterprise applications fall into the market for SpaceX. All, all of us GDP is like 35 trillion. So, so there you go. It is the biggest TAM ever recorded in an S1. It's also maybe the first S1 I've ever seen that has projections out five years. Like I've been doing this a long time. I can't think of another company, maybe one of our viewers can correct me. I can't think of another company that put projections in their, in their S1. So um, that's usually. No, no, you don't do that for legal reasons and, and bankers are supposed to do projections and, and do it off to the side. But they went out and they said they're aiming at 100 billion in 2030. I think the 2030 number is actually conservative. I think getting to 30 billion this year, you know, probably getting to 50 billion by next year maybe just because of the cadence of the businesses. But this is a five year, it's a five year hold or more. And if you think you get to 20, 30, 100 billion or more, it's basically a Mag 7 company at that point. So that's, that's the premise behind the valuation, I think. But you have to believe that Fiverr case.

Co-host: All right, well we'll talk more about this evaluation quarter, but I would expect we're going to see a $2 trillion IPO. Question is whether it holds that value through lockup or not.

Aman Virgie: So you think it closes day one at north of two?

Co-host: I think it's a nice shiny number. I think people will be optimistic on the first day. I just don't know what happens a week or two later. We'll have to see where things settle out.

Aman Virgie: Yeah, I think two is a pretty good bet. I think two, two to two, four is where they're hoping they'll price around 175. Maybe, maybe up the range. I think a 30% pot day one. I think that's a good, pretty good bet.

Co-host: I think they really did themselves a favor by getting the Kershaw deal done and the Anthropic deal done. Um, I mean Crusher deal doesn't, you know, actually close maybe until next, next month, but still, you know, the discussion about Kircher coming in was a good story. This Anthropic deal is crazy. I mean that almost like doubles the revenue of the company in a single partnership. Uh, the only thing is there's only, there's a 90 day out for this deal, right?

Aman Virgie: Yes, I just like and terminate but you know, there's no reason to think that they will. That's just, it's a, it's a three year deal and needs the, they need the compute. They um, they are, they are constrained. They had a fantastic quarter or the process of reporting or projecting a fantastic quarter, but they're still compute constrained. They could generate even more revenue if they have to compute. So uh, Colossus has what they need and you know, Anthropic is uh, is now paying 1.25 billion a month and that's starting this month. So I think that's real. You know, that's a win, win for both sides. 10,000 years will give you such a crick in the neck. Hang on a second. Whoa.

Co-host: Wow. Well, I'm on. Uh, moving on to our next story. Anthropic has had a pretty good quarter. Uh, I guess they're closing this new round in 900 billion valuation. They are announcing some revenue numbers and some growth that look pretty good. Seems like that price might actually even be cheap. Let's take a listen from uh, 20 BC.

Aman Virgie: We have anthropic in talks for $30 billion at above a $900 billion price, nearly tripling from 380 in February. Greenot, Sequoia, Altimeter, Dragonair. Yesterday we had Andre Karpathy announcing that he was joining Anthropic. So boys, over to you. How did we read this news? Well, I divide up the two. I mean the financing. Yes, you know, we talked about it last week. There's nothing more to say. They can pick their price, they can pick their investors, they can tell the amount and they can tell Evan the jump. And Evan will say how high, sir. So it's all happening. They're going to raise 30 billion. We discussed. Obviously the question is, you know how those folks pencil out the return.

Co-host: So aman. While, uh, OpenAI and SpaceX, we're fighting it in court. Anthropic just keeps having good news story after good news story. They're having 130% revenue surge, almost $11 billion Q2. It looks like that's a doubling of revenue from quarter to quarter.

Aman Virgie: Quarter to quarter, yeah.

Co-host: Yeah, Sounds like they're going to be profitable. And then former OpenAI co founder Andrej Karpathy decides to join them. The winners keep winning, man.

Aman Virgie: Yeah, it's an amazing quarter. They're declaring 10.9 billion in revenue in Q2. It's a projection. So they leaked this to the Wall Street Journal, which just tells us that they're now planning on their own IPO roadshow. They did make money, which is great for all the people who are worried about ROI on spend, on AI spend. Is there an ROI like Anthropic is proving they're profitable? I don't think they'll be profitable for the whole year. I think that profitability is going to bounce around. But it just suggests that they're putting up revenue numbers faster than they can spend right now. And, uh, as you said, they basically doubled from Q1 to Q2, so they. I would expect that to continue through the summer now that they are solving some of their compute problems with SpaceX.

Co-host: I feel like it's just a really different story for anthropic than either SpaceX or OpenAI. SpaceX. OpenAI are trying to sell the top line. And as much of that story as they can put push, Anthropic is kind of almost the opposite. They're not really trying to sell very hard. They could probably be raising at a higher valuation than where they're pulling in, but they just sort of like quietly announce the numbers, raise capital in a week and they're done, they're back to business.

Aman Virgie: Well, at 900 billion at that valuation, let's assume that their ARR is 44. Now, let's assume it's going to be 50 by, you know, the middle of the summer or by the end of Q2. So we are talking then about 18x ARR. And this is for a company that's profitable and growing at 100% quarter over quarter. I don't even know what the year over year number is going to be. It's going to be 10x or something like that. And so you could argue that, uh, that's not an unreasonable valuation at 900 billion, which I guess begs the question, why aren't they raising at a higher valuation? Why aren't they going public, why raise 50 now and get, uh, the deal done? Are they leaving money on the table? I guess that's a question to you, Dave.

Co-host: Uh, I think they are leaving money on the table, but I think that's the whole point. I think they, unlike, you know, open air, SpaceX, right, they're. No, they don't have to sell very hard. The numbers are just absolutely astonishing. This is a graph of anthropic revenue over the last two and a half years. Have you ever seen anything like this? Like, it's just absolutely crazy at, you know, $30 billion in ARR and accelerating.

Aman Virgie: Uh, yeah, never, never before. I've. I've only seen the hockey stick chart. My daughter's lemonade stand went from $1 to $3. So she, she's. The scale's a bit different. I've never seen anything like this in private or public markets. No, not at this scale.

Co-host: I guess it's not surprising that you see everybody, like, jumping ship to go join, uh, Anthropic if, if they can make the cut. The story about Andre Karpathy, who's, you know, admittedly one of the leading lights in OpenAI in the past, he was actually Tesla. Before that. The fact that he is joining Anthropic, I don't know, it just seems like win after win after win. Yes.

Aman Virgie: And I think there's value to your point about if you can do a round at 50 and just get it done from top investors like, uh, Dragonair, and get the deal done with cash and you're not pushing the valuation, you don't have to sell that hard to get the deal done in a week. That's a real sign of, I think, strength. And then you go back to business. Like, contrast that with OpenAI, which did their last round with Amazon, and they pushed to get their valuation at 852, but their deal was much more complicated. Right. With Amazon, you're going to give us 15 million now and 35 billion later. 35 billion is going to be contingent on us going public and us spending a bunch of spend, uh, on your cloud services and then it's only contingent upon us hitting certain goals. Nvidia, you're going to give us, you know, 30 billion now. SoftBank, you'll give us money later, but you have to finance it. So we'll give you three months. Like, that was a complicated deal. And I think these guys are just like, let's raise the money, let's not push the valuation, let's get back to work. There's A real lesson in there for founders, I think, on simplifying the process, getting great investors and not dragged into contingencies and all these other very, very complicated arrangements that involve financing.

Co-host: There was a report that one institutional Investor reportedly offered $5 billion in investment, and they couldn't even get a meeting with the cfo.

Aman Virgie: Wow.

Co-host: Oh, uh, that is just astonishing. Well, I guess the third, uh, piece of our holy trinity here is OpenAI. And I guess they have had a pretty good week. Uh, you know, winning the lawsuit was certainly one big, uh, milestone for the company. Even though Musk said that he's going to appeal, that seems to have cleared the way for an IPO. And almost immediately thereafter, um, OpenAI released their, uh, filing on Friday, right?

Aman Virgie: Well, they didn't release their filing. They didn't flip the, the filing to public, but they did sort of leak that they, um, they are now definitely going to try to go public as quick as they can. Sarah Fryer, their cfo, has been a little bit reticent about committing to a timeline, but I think she's going to get dragged kicking and screaming now into, you know, getting the company ready to go just on the lawsuit. It was a win. An important distinction, though. The jury was out for two hours. We talked about this in our last pod. We said that I think the likely way this goes is that OpenAI is going to prevail, but on a bit of a technicality around either statute of limitations or standing. And indeed, it was a statute of limitations that the jury decided, hey, Elon should have served this lawsuit a couple years ago, and he's passed the sol. That's a finding, a fact, and the judge made the decision and kicked the case out. That's hard to appeal. I don't doubt that Elon will try to appeal, but it's seemingly unlikely he'll win a finding of fact on appeal. And I think what that means is OpenAI now can go for their IPO. They obviously want to go out as fast as possible before the appeal gets filed and any other clouds appear over their governance. And so I think this now suggests that they will come hell or high water. They're going to try to be out by September or October and really try to beat Anthropic to the punch. I think that is their. That is their mission right now. So I would not be surprised if we saw OpenAI, even though they're not the strongest story relative to Anthropic, I think I wouldn't be surprised if we saw them in the market in as early as September.

Co-host: Well, they certainly seem to have a decent quarter. Nearly uh, 6 billion in revenue in Q1 Codex boosting some of their revenue. Annualized revenue now hitting 25 billion. That's certainly not a terrible story. I mean, I guess there's probably a lot of potential capex spend there and potential losses that they have to figure out. But at least the top line seems to be doing pretty well. Only by comparison to Anthropic are they not doing so great.

Aman Virgie: And there's also the $852 billion value. So 6 billion of revenue in a quarter. Let's say their ARR is 25. Let's say they get to, you know, 30 or 40 over the summer. But they're losing money. Their management team is in a little bit of flux. A lot came out in the trial about Sam Altman and his credibility and you know, management style. Is that a trillion dollar ipo? I don't know. If I had to bet on one, I'd say anthropic at 900 billion is probably a better bet than OpenAI at 852. So it's just a matter of valuation. But I think for them at this point they just want to go and get this, get the deal done and raise the money. And if they end up, you know, pushing on the valuation or having a volatile ipo, they would rather take that than wait, have Anthropic beat them, be able to raise all the money, suck the capital out of the market and then take their chances at the end of next year or delay, uh, any, any longer than it is necessary. So I think for them now it's all hands on deck to go.

Co-host: Well, I think that prediction Marxists tend to agree with you. Aman. It looks like after the trial date the numbers have flipped on who goes out first. It now looks like OpenAI is more likely to go public. And if we look over at Polymarket, ah, seems like that could happen as soon as September. The markets are saying 51% chance before the end of September. I would say certainly it looks like it's likely to happen before the end of the year.

Aman Virgie: Right, right. One of the remedies that Elon was asking for was um, a complete governance change. Right. He was asking to undo all the nonprofit transition to a B corp and a nonprofit that the company had done I guess over the last two years with Microsoft. And so if that governance ended up changing, that would compromise the ipo. But now that that's off the table, I guess that's the cue. Now that OpenAI needed. Yo, Rugman. Haven't seen you in a few millennia. Give me some tassel.

Co-host: Yeah.

Aman Virgie: Yo, yo. Say, you're a lot smaller than my last master. Either that or I'm getting bigger. Look at me from the side. Do I look different to you?

Co-host: That's our holy trinity of AI. But there's still other companies in the news. Nvidia, uh, had a pretty good quarter, I guess. They had an $82 billion quarter and then also announced an $80 billion share buyback. So I guess most of that money that came in the door going right back out to buy their own shares. Nvidia stock, I think, continues to get cheaper and cheaper. Aman.

Aman Virgie: Yeah, absolutely. You, uh, said pretty good quarter. I think it was a great quarter. They were, they, they blew away their numbers. They reported, uh, 85% year over year growth on $80 billion of, of, um, of revenue. 81 billion revenue, growing 85% year over year. Their net income is $58 billion. They annihilated the, the earnings estimates. The other thing that I think was maybe a little underreported was their Hyperscaler revenue grew 115% year over year. So that is what they are selling to the big three, like the Google cloud and Amazon and, um, Azure. Those three companies reported bank of quarters too. They're not growing 115% year over year. So that means Nvidia is taking share of hyperscalers, which is, you know, you got Cerebras and you have, uh, others like Core Reef that are in the space. There's been this concern in the market about Nvidia just losing share of this market that they dominate, but that's not happening. So, uh, all in all, I think it's a fantastic quarter. Their stock price actually traded down by about 1% after earnings. A lot of questions as to, hey, how come the stock price didn't reflect well, this chart shows all the major tech companies and who's reported. And you can see the green lines show how the stock did since earnings. The blue bars are showing how they did in the quarter to date. So if you look at Nvidia, they did trade down after earnings, but they'd run up before earnings by quite a bit over 20% quarter to date. So I think a lot of this was already priced in the one thing I'll just say then about the big tech, if you look at the overall tech story, the, uh, market's rising and has been every one of the top Companies in the Mag 7 and a few of these other Chip companies beat earnings. Not only did they beat earnings, most of them blew them away. The revenue growth across the MAG 7 and the, let's call it the AI trade, the, the semiconductors and the chip companies, they're all double digits. Nvidia at 85% is the high point. You got everyone else in the um, in the Mid teens or twenties, intel at 7% year over year growth and then the consensus earnings now that we're seeing, I think, I think the consensus earnings are going to get shifted dramatically after Nvidia's quarter. But they're somewhere in the 14 to 18x. If you believe the penny ratio for the 27 earnings consensus, they're around 18 times earnings for 2027. I think they're more like 14 times when you actually bake in what they just did and how they guided. And so I think the whole, the, the companies in the space now you're seeing Nvidia 1415 times earnings. You're seeing Alphabet at 1415 times fully taxed earnings. You've got Amazon, Microsoft around, you know, 16 to 21 times. This is not a bubble, this is not what bubbles are made of. These are not, these are profitable companies buying back shares, kicking off cash flow, trading at mid teens to high teens, low 20s multiples. All things looks like a, like a sensational quarter for all these companies, Nvidia included. And I think a lot of upside between now and the uh, and the end of the year for this sector.

Co-host: I think you showed uh, a comparison of different like PE multiples here, but certainly looks like with the exception perhaps of Tesla, that Most of the Mag 7 are in this sort of 20 to 30x territory. Nvidia kind of right there in the, the middle. Do you think that tech is cheap again with the exception of Tesla perhaps? I, I would say, you know, that's the one outlier here.

Aman Virgie: Yeah, I think they are. So the overall S and p is around 20 to 21. That's historically expensive. But with interest rates where they are in the, in the low to mid fours for like a long bond that seems, I wouldn't say cheap, but that seems reasonable. I think big tech is probably cheap. I think now that they've reported earnings in Q1 and we're seeing growth in their EPS, I think they have these companies in the mid to high teens on, you know, next year's earnings as a uh, I do think that's a buying opportunity and I think when we see OpenAI and anthropic and some of these, these are their big customers. If those guys go public and have more capital to spend, I think that cycle keeps accelerating. So I would say that I'm bullish for big Tech between now and the, at least the end of the year and we'll talk about 2027 when that, when that comes around. But I think for right now this is a trend that's going to keep moving in the right direction.

Co-host: Okay, our next story is about a firm that's actually in our portfolio. Uh, Mercury Financial is raising a new round I guess, or has raised 200 million at a $5.2 billion valuation. That's up about 50% over its last round. Uh, this round was led by tcv, Sequoia, Andreessen, Horowitz and cotu. Pretty, pretty strong investor group and the company continues to do well. I guess they've been profitable for the last four years now doing over 650 million in revenue. And aman, uh, I guess we're bullish on this. We bought in, uh, what do you think?

Aman Virgie: Yes, we are conflicted but uh, our bull case of the company was I guess about a year and a half ago. They are now raising at a $5.2 billion valuation. They did their series C at three and a half billion dollars beginning in 2025 and we had invested the um, really in 2023. And our bull case was they're a bank but not really a bank. They do the front end for a lot of startups and leave the complicated part of banking, treasury management and asset liability matching. They leave all that to other regulated banks primarily now Choice Financial, but they are generating 600 million plus in revenue mostly from startups when SVB went down bankrupt with re reorganization and then First Republic went down more than half the startups in our portfolio and in fact in the, in the YC portfolio went to Mercury. And so we could see the revenue trends materialize. And that's resulted in a uh, like a really big spike in the revenue. As of the September 2025 they said they were at 650 million in ARR. That was essentially doubled from a year ago. They should be a lot north of that now. So I think probably closer to a billion in revenue, four or five times revenue multiple, which for a fintech company is pretty good. Basically said they're very profitable and they're probably generating 20% plus profit margins now. So you can think of this as a 25x PE type ratio financial services company. And their lead investors in this round looks to be um, Sequoia again. And uh, I think that's a really positive sign. They've been backed by sequoia in a 16. So I think this is another great company and maybe even on that IPO roadmap, once you clear out the big three and we'll see how they go and have the markets clear, I think they could be IPO candidate.

Co-host: Yeah, I would say it seems like they've got all the right numbers to go public, probably at 27. But, uh, CEO Ahmad Akund has been a, uh, very successful entrepreneur. Had a previous exit acquisition back in 2016 with a company called Hazap. I think they seem like they're on track. I mean, no crazy stories here. This is a company that's profitable and growing and seems like it's going to hit all the numbers necessary to go public.

Aman Virgie: We actually use them as our, um. I was going to say banking partner, but I guess they're not really a bank. I keep calling them a bank because I just think of them as a banking partner. But they're a financial front end. They do, you know, we do wire transfers, they manage our fund, we do capital calls through them. They're really good for a financial partner like that. They're really easy to work with, highly automated, work really well with startups and funds. Just an outstanding product, and that's showing up in their financials and traction. Rule number one, I can't kill anybody. Yeah. So don't ask. Rule number two, I can't make m anybody fall in love with anybody else.

Co-host: All right, moving on to our next story. It seems like the US government is getting into the venture business. The US has announced they're going to provide $2 billion in funding incentives for nine companies in the quantum, uh, business. But they're also going to be taking equity stakes. And, uh, I don't know. I'm not sure about whether the US should be in the, uh, investing business, but it seems like we're jumping in with both feet.

Aman Virgie: Well, we're doing funding incentives, Dave, Aren't those just grants?

Co-host: I think if you're taking equity, you're not giving away money for free. You're definitely getting something in exchange.

Aman Virgie: Okay.

Co-host: You know, $2 million may not seem like a big number compared to all the other numbers we were just talking about, but still the government deciding to award $2 billion of grants to nine different companies and take some equity.

Aman Virgie: Yes.

Co-host: I feel like there's another country in the world that does something like this whose initials are China. Do we see any problems with the government getting involved in capitalism and pitching winners and losers?

Aman Virgie: I was going to guess Canada is giving, uh, I think Canada actually gives grants, but to your point, they don't take equity. So it's like when a grant is in exchange for equity, that's not really a grant, is it? That's like just taking straight up equity. I guess the bottom line is, are they taking these equity stakes in companies they've picked a sector to invest in? That does sound like industrial policy, not something I'd be supportive of. The other danger is when you take equity, you know how equity holders are. Some of them are like silent and they're passive. And um, they don't like, mess with hiring decisions. They don't mess with, hey, are you investing to, you know, create American jobs and politically favored districts? The concern would be if they're taking more of an active role, deciding what the companies do, who they work with, how they, you know, how they do employment contracts, um, when they start getting into the management. I think that's really where industrial policy kicks in. I haven't read through these agreements, but there's a huge incentive obviously when the government starts taking equity, like you have to start following their political dictates. And that's not a good idea. That actually seems like against what a Republican would, uh, would want. And I know that Trump doesn't always act like a Republican now, but that seems like the opposite of the free market capitalist spirit that that party is, has embodied since at least the 1980s.

Co-host: I guess Quantum has really taken a backseat to AI over the last couple of years. Years. But you know, it wasn't too long ago that people thought about quantum computing as the next wave of technology innovation that was going to be right around the corner and kind of critical to, uh, a whole bunch of things, I guess, you know, all kinds of new innovation, drug development, cracking cryptography, you know, as a potential, you know, area of risk. So I guess I'm not surprised that the government decided this was critical. But again, I agree with you. Taking equity in exchange for maybe making those grants might introduce some behaviors that we would have thought should be the private market, not the public sector.

Aman Virgie: I also wonder how they chose these nine companies. The market should be picking winners and losers. I understand if it's important technology and there's um, some foundational research that then gets shared, that seems like that's how the Internet developed. Think of the federal interstate highway system. But when you're laying track and roads for everyone to use and letting the market pick winners and losers, that's one thing. But when you're picking equity Stakes in companies like imagine the uh, highway, highway interstate system. And then having the government own like a car company, right, or own stakes and trucking, uh, companies. And then obviously there's an incentive to favor those companies, make sure they do well, and to disfavor others. I think that's where this becomes, uh, too intrusive for my taste.

Co-host: Our last story today is going to be exclusively about the secondary market. A friend of the pod, Emily Zhang, who does research over at PitchBook, has broken some news about NASDAQ Private Markets suing HIVE over a venture secondary patent. And I, I guess this is kind of about the plumbing and the financial rails for the secondary market amount. Is that, Is that accurate?

Aman Virgie: Yeah, I think it's an IP case at bottom. They've, um, they defended as hive, but I don't think they're the only ones that are potentially using technology that NASDAQ Private Markets claims is happen to protected. Forge would be another one. They didn't go after Forge, but I'm sure there's a conversation happening with Forge about, you know, a settlement or how to use the technology. Possibly equity Zen or others as well. Zeno. It's interesting to see how this will play out. It just as a secondary market participant, it would be great in my mind if this technology is widely used to make markets more efficient, to, uh, enable clearing and settlement of trades. How the revenues get split up is, you know, is one thing, but NASDAQ Private Markets is actually suing. Uh, they're looking for an injunction to, to preclude Hive and others from using the technology, which would really shut down a lot of the secondary market. So that wouldn't be great for secondary marketplaces in general. It's, um, something to watch. I don't really haven't followed the merits of the case yet, and a lot of that hasn't been revealed yet. But my hope is that it'll be settled and that everyone will be able to use the technology for the betterment of the whole marketplace. I hope it's not something that gets consolidated into a couple of players.

Co-host: All right, well, that's our news for this week. Uh, I guess, mom, we're going to dive into the SpaceX S1 a little bit more deeper valuation corner analysis coming up soon.

Aman Virgie: Uh, no, I never actually wish to

Co-host: get out of the cave.

Aman Virgie: You did that on your own.

Co-host: Well, I feel sheepish.

Aman Virgie: All right, you bad boy. But no more freebies.

Co-host: Fair deal.

Aman Virgie: All right.

Co-host: Welcome back to another valuation corner on Trading Places. Man, we got a lot to cover this week.

Aman Virgie: The SpaceX S1 absolutely got public this week, Dave. SpaceX and their new S1 308 pages. Did you read it? Did you go through, did you go through it word by word?

Co-host: Uh, no, I decided to have some light reading this week. I decided to pick up War and Peace instead.

Aman Virgie: Yes, don't worry, I've read it and that's why I haven't slept. But, um, I've read it so you don't have to. I'm going to go through all the highlights, some of the fun financials. We'll go through some corporate governance stuff, some surprises and some nuggets in the S1. It's exciting. And we'll talk about the lockup period and how to trade the stock after the ipo. You ready to jump in?

Co-host: Terrific. Let's do it.

Aman Virgie: All right, so let's start with the. The S1 is the document you have to file. It's basically prospectus that you've got to file with the sec. It's now public on their website. I'll tell you what you already know is that SpaceX is a space exploration company. It also turns out that it's an AI company. Do you know how many times the words artificial intelligence or AI appear in this document?

Co-host: A lot.

Aman Virgie: I did a count, Dave. It's 1,114 times. They mention AI or artificial intelligence to make AI. AI for generative AI. Third AI flying AI. AI with AI with AI power of AI generative AI AI platform AI. The first 14 pages are pictures of rockets. So that's kind of cool. It is a 200,000 word document. Get like a cup of coffee and uh, or maybe a glass of wine and do some bedtime reading. But I'll go through some of the highlights that are just little surprises and nuggets along the way. First of all, the accounting is a little bit weird. They use something called common ownership accounting rules. I had to brush up on this. But you Remember they were SpaceX at the end of last year, right? Which was basically your space launch business. And then Starlink and that's it. So I was expecting to hear about what the business looked like in 2025. Then you get XAI in Q1 of 2026, which is the remnants of Twitter and Rock and the XAI platform. Then they have a cursor deal that they announced in Q2, which is a merger or will be a merger by the end of the year. And I was like thinking, this is going to be a real simple, clean business that we're going to have to pro forma, uh, into 2026. Well, it turns out there's a thing called common, common ownership, where if you, if one person controls one company and another company and they merge subsequent to the end of the year, you can put all that into one set of financials. So the accounting is a little bit weird. We still need to add cursor to the deal, right? That is not a completed deal. But, um, we can pro forma that in. That's going to be something that the bankers have to do. That's how they're going to earn their hundreds of millions of fees. They did something I've never seen a company do before. They put projections in their S1. You can be a US investment banker and do 100 deals and you will never see anyone put projection in their S1. In fact, you're told by the lawyers you can't, you're told not to. I've done this before. I was told, do not put projections into the S1. You will get sued. Give your projections to the bankers. Let the bankers talk to the investors. But you, the cfo, do not talk about projected revenues. Elon has broken all these, all these rules, and I guess his cfo, Brett Johnson.

Co-host: First rule of fight club, do not

Aman Virgie: talk about fight club unless you're Elon Musk, in which case, I guess, I guess getting stewed is not really going to, you know, dissuade you. So I'll talk about all those things. Let me talk about the financials first. Then we'll get into projections and how all the, all these other deals affect everything. So you can see on the page, the three segments, uh, the three key metrics they have. Revenue is 18.7 billion. I'm going to go, you know, right to left because that's how they present in the financials. I hate that. But that's, uh, how they do it. They did 14.5 billion in 2024, 18, 7 last year, growing top line at 33%. They went from being profitable to being unprofitable. That's the impact of XAI, because the SpaceX business is profitable. They went from 5.6 billion in capex to 21 billion in capex. So a huge increase in their capex. And so they're now deeply free cash flow negative. Again, that was the XAI story. Um, how do they finance that? Well, they have a bridge loan of $20 billion at a cheap rate to pay off their XAI debt. Uh, you could argue that SpaceX, a profitable company, took on an unprofitable company at XAI restructured their debt and bailed them out. Not a very charitable way to look at the XAI acquisition, but it is what it is. Um, a couple of highlights. I'm just going to read some of these things for our, you know, our viewers who might be in cars or whatever. This is just funny language. Here they go into the opportunity. For decades, a reality where humanity travels between the planets and the stars has felt tantalizingly close. But still locked in the pages and screens of science fiction. We are capable of better understanding the universe, exploring the universe, and ultimately making life multi planetary across the universe. This isn't typical legal language in a legal document. This is, uh, some visionary stuff. What else does Elon say? We do not want humans to have the same fate as the dinosaurs. That's right. On page three of this, right below. Segment adjusted ebitda. Flowery language, colorful language from a visionary investor. Our market opportunity. The tam. You know what the TAM is? Total addressable market. It begins with space enabled solutions on the left. $370 billion. They then go through every single other kind of business they have. They get to enterprise applications and the TAM, the total addressable market, $28.5 trillion, which is basically US GDP or 80% of it. It's the biggest TAM in the history of S1. Steve, are you excited yet? Are you feeling like, uh, are you feeling like, are you feeling the excitement? Or do you feel like maybe Elon was on some. On something? Ayahuasca induced fervor to create the vision for, uh, space.

Co-host: I think we are firmly in land of narrative and memes and uh, storytelling. There's nothing here related to evaluation, fundamentals or cash flows that is connected to reality. This is all distortion reality field.

Aman Virgie: This is all distortion reality feel in an S1, no less in a legal document. Well, we're going to go through the numbers. So that's the first 30 pages. The hallucinogen induced vision is fun to read, but ultimately, as an investor, it's like, what am I buying? Right? So let's get to the numbers. Now they spell out a number of business segments. Connectivity, Starlink, 11.4 billion in revenue, growing 50% year over year. They blew through their subscriber numbers. They're actually doubling subscribers year over year. 105% year over year. 10 million subscribers at the end of Q1. Um, their monthly average revenue per user has fallen dramatically. It was 99 bucks per user back in 2023. It's now 66. So a lot of promotional Deals, different price tiers, moving to consumers, downward pressure on the ARPU. But still they could be, they're at 10 million subscribers, they could be at a couple hundred million in a uh, five or ten year time frame.

Co-host: So still seems like a big growth business for them. I mean whether the subscriber average dollars comes down or not, like this is a business that's clearly making money and growing.

Aman Virgie: Definitely, definitely profitable. The price point at 99amonth is great for a business as they get to consumers or really other countries not in the US paying 99 bucks a month for a broadband, high speed broadband connection might seem like a lot, but you know, you go to $50 price points or sub that and they open up a massive market where there are potentially hundreds of millions of people who want this product and it's the best in the space. Speaking of space, this is their launch business which we invested in when we invested in SpaceX. This was what they were. It's a 4 billion in revenue. Business grew 25% year over year. Most of that is the Falcon 9 to 165 launches last year. Now remember they retired the Falcon 1 this year and they're just introducing the Falcon Heavy and Starship. It's not even this year, it's going to be next year. So I would expect this revenue number is going to go way up because they're in a little bit of an off year. As far as the transition of product. It's like for historians it's like the Ford Motor Co. In 1927 they moved from the Model T to the Model A. That shift was so big it put the economy into recession. But, but then 1920s. So after 27 they exploded in revenue and obviously were just a transitional thing. I think that's where SpaceX business is now.

Co-host: This feels understated to me as well. It seems like we're still kind of in R and D for the next generation of launch vehicles. And once you get all that stuff worked out, and Elon has a pretty good history of getting that stuff worked out, feels like there's another leg up in this revenue opportunity and um, even more launches. And this is directly connected to Starlink, if not other businesses that might come after this as well. If you believe in data centers in space, then here's all the launch vehicles for those data centers in space in the future.

Aman Virgie: That's right. That's exactly, um, the premise behind this business.

Co-host: Those two business seem like very rational, seem very connected, seem like those know I don't have a lot of questions about them other than the valuations.

Aman Virgie: Yeah, exactly. Well we'll get to, we'll get to the valuation when you start talking about projections. But so far growing profitable businesses. The AI segment's a little bit different. They did grow 23% year over year last year. This is xai and x dot com. A lot of ad revenue in there. That's what Twitter is.

Co-host: The top line grew but the Capex spend and losses grew a lot too.

Aman Virgie: Yeah. Yes, that's um, that's all their losses came from this segment. But now what they've also done is they've introduced a few other what, what this business segment includes is xai, x.com, grok, which is their AI LLM and then a lot of hardware. Colossus is their supercomputer which has 2 gigawatts of power. They leased out 300 megawatts, so like 1 sixth of their capacity leased out to anthropic. It's a $15 billion revenue deal, 1.25 billion a month. They also said their long term goal is 100 gigawatts by 2030, which is crazy. And then they have Cursor coming into the financials at the middle of this year. So there's a lot of potential in this business segment. The technology, the fact they have 2 gigawatts now in Colossus is amazing. Just, just to translate this into some math I guess for our financially oriented users. What is a gigawatt? Anthropic operates on about 1 gigawatt or maybe 1.3 right now and they're generating 44 billion in revenue and on their way to a bigger number. So a gigawatt is equivalent to 40 to 50 billion of revenue. What does it take to generate a gigawatt? Well, a nuclear reactor would do it. The Hoover Dam is 2 gigawatts. So that would do it. When you have that kind of power like Colossus does, what do you, what do you do with it? Well the entire US power grid is like 1,350 gigawatts. So you could power you know, half a million to a million households in uh, in the US with the gigawatt or if you uh, if you're like me, what I would do with a gigawatt?

Co-host: I would just take a DeLorean.

Aman Virgie: I would take my 1985 DeLorean back to 1955. That's what, that's what I would do. But obviously Elon is going to do something different. So he's going to power Anthropic and he's going to power some other, you know, whales and Cursor and generate revenue off of that segment. So that feels like that could be a major new business line for the company.

Co-host: This feels a little bit different than what Xai was previously doing where they were trying to sell sort of AI capacity for compute. Now they're sort of like doing AI data center provisioning it seems like, but then they're also, you know, further up the stack with buying cursors. So it's almost like Elon's trying to fill in that entire stack of like provisioning data centers, running data centers and then building and running applications on top of them.

Aman Virgie: Yes, I think that's correct. And he had bet ahead on Compute and he'd bet on Grok. But Grok has kind of underperformed expectations. So the COMPUTE now has to go to other providers and he's leasing it out and making money on it. So he's, he's able to, cleverly, he's figured out, I guess, how to get ahead of the compute game, whereas Anthropic was behind on Compute. And it turns out to be, um, a, you know, a happy marriage or at least they're dating. They're not married, they're dating right now. Let's talk about 2030 projections. I want to hear your take on this. So let's go through. They do this in their S1, which again is a no, no, and we'll get them sued, but they don't care about that. So the benefit of uh, when you go for a $2 trillion, a $1.75 trillion valuation, you're not talking about $18.7 billion in revenue. That's 100 times earnings. You're talking about what do the next three years have to hold. And what they're projecting is connectivity at 50 to 60 billion in revenue. So that's a 35% CAGR. I figure that's 100 million subs at a $49 ARPU. There's a lot of, you know, variations in how to get to that number. Data centers in space, if you believe that's going to happen in three to five years, will be part of that business. And then the other thing that we haven't talked about and uh, they do a little bit of this in the S1 is Starshield, which is working with the US government to create a robust communications, national security infrastructure, encryption proof, just the United States with its trillion dollar defense budget. And let's add in Europe and Australia and Canada and all of our non NATO allies. SpaceX could be selling to a lot of those guys and they have locked up contracts, but they've classified it's on the order of 2 to 3 billion dollars in declared revenue so far. This could be a huge multiplier on that. So there's a lot of growth coming from connectivity. That's going to be the core of their business. That's number one. Number two is space, which you just talked about, which I think has got a ton of upside. I don't know believe it's only going to be 15 to 20 billion. They're projecting 15, 20 billion. I think it's much more likely they blow that number away. What would it take to get 20 billion? 225 to 275 Falcon 9 launches. Falcon heavy, you know, 120, 160 launches of the Falcon Heavy starship is going to change the game, I think, for launches as well. I'll talk about why in a second. I'd be stunned if they only get to 15 to 20 billion in space launch revenue by 2030. This was the case that we used to underwrite the business and then AI they're projecting 25 to 30 billion, which I guess is, you know, I don't understand how it's that low. I think if you're talking about a

Co-host: tam, if I was just gonna say the same thing, that feel, that number feels like it could be a lot bigger. Like, you know, we're kind of shitting all over all this stuff in a couple places. But that one's the one that I feel like he's underselling because he got Christian. This is actually kind of really amazing because I actually was skeptical that Elon would be able to catch, you know, OpenAI or Anthropic, you know, with Grok. You know, all the founders of XAI left the building as soon as the acquisition by SpaceX happened.

Aman Virgie: Right.

Co-host: But like, I think now he's returning to his roots in, you know, hardware and engineering. And yeah, I don't think he ends up competing as much with uh, Anthropic or other players as really provisioning for them. That seems like a business that Elon can really dig in and run with, that goes back to building stuff, building physical things and um, exceeding expectations in building physical things. I actually feel like Capex and spend aside this business could get to 25, 30 billion a lot faster. You're already at 15 billion a year just with Anthropic.

Aman Virgie: Yes. And then add cursor. Cursor you said, Right. Three Going to six at the end of the year is what they've projected. So you're already at 20 and set aside, you know, X Grok if Grant's a total failure or maybe he doesn't come up with the competitor, uh, to OpenAI or Codex. He can just provision the big players in the space and in the next three years I think hit these numbers. So I would concur. I think you've identified the big opportunity.

Co-host: Here's something for you. Let's suppose that we haven't really talked about the Chinese open source AI models, but there's a lot of news about them being pretty good at, uh, a lot less expensive prices than Anthropic and OpenAI. But you probably still need dev tools to build on those platforms.

Aman Virgie: Yes.

Co-host: So what if the open source models really take off?

Aman Virgie: Yes.

Co-host: Um, and you're provisioning data centers and providing devtools for those environments and now you don't depend on Anthropic or even OpenAI for that. Uh, business growing. You could depend on the rest of the market growing.

Aman Virgie: Yes. I guess that's why Elon was in China last week. Maybe came back with some relationships and so he's already selling Teslas to, you know, the Chinese.

Co-host: Elon's no stranger to China.

Aman Virgie: No, they revere him.

Co-host: Last big question here. One other thing is missing from this business unit list. Aman Robotics and uh, Tesla. Yes, I could see them getting to 100 billion in revenue a lot faster if they just merged with Tesla, which is already a hundred billion dollar business.

Aman Virgie: Yes, I'm going to put a pin in that one. I'm going to circle back.

Co-host: Blow your role, Dave.

Aman Virgie: Yes. I'm going to give the lawyers and the governance folks on this call a thrill. I'm going to go through a couple of breadcrumbs, um, and some clues in this little where is Waldo 308 page document which suggests that that's exactly what Elon is planning. But you're going to have to give me five minutes to get there because I want to go through, I want to go back to the boring space business for a second. And why I think 15, 20 billion on space is laughably. I think that is laughably small. Um, but let me tell you why. So, uh, what is the space business? It is basically launches of the Falcon 9 and the Falcon Heavy now and then Starship in the next year or so. What drives the adoption of the space technology business? The cost of putting something into outer space. The cost per kilogram of payload is a critical variable. Here back in 1970 when Saturn V was all the rage and we were watching all in the Family and Mary Tyler Moore, and you were probably watching Happy Days, knowing you, um, cost per kilogram was $5,400. Okay, all right, fast forward to the space shuttle era. In the 1980s and 90s and all the way up to 2011, the cost skyrocketed to between 50 and $60,000 per kilogram. Um, that's what happens when the government takes over an industry. Costs just go up. And then, uh, after 1986, I think it was, when the, um, space shuttle Challenger blew up, Reagan signed an executive order and essentially pushed the US Back to expendable rockets, trying to reduce dependency on certain types of, of shuttles. And they went to these expendable rockets and the cost dropped, but it was still 18,500 per kilogram, so still way higher than the Saturn 5 missions. Even adjusting for inflation, the Falcon 9 changed all that. Okay, so when, uh, when the Queen's Gambit was the biggest show on TV and um, the Falcon 9 in 1920 launched, they reduced it to $2,700 per kilogram. And in 2027, when, um, the starship becomes the major, the major element of the fleet, and my daughter and I'll be watching the new Harry Potter TV series, the cost per kilogram is under $100. So they have completely step changed now the cost of delivering payload in outer space. And when these cost curves break like that, typically the market expands. Like think when the iPhone became ubiquitous, it was because the cost, the price point, fell below thresholds that people could buy and they found new uses for it. This is Jevons Paradox. Jevons is a 1850s, 1860s economist from England, and he talked about coal and how making coal more efficient, you think that would actually make you use less coal. But actually what happened was demand went up so much, it overrode the efficiency and exploded the market. This happens in technology all the time. So I feel like there's going to be a massive step change in the cost curve for technology. And that could actually explode the space business. Okay, let's talk now about the board of directors. Here's some more information about the S1 who's on the board. Nobody really knew all these answers up until this week. We kind of knew most of them, but they declared publicly there were nine board members. And this is how it works. So Elon's on the board. I think we knew that. Um, we definitely knew that. Gwynne Shotwell, President and coo, of the company. She's on the board. And Tony Gracias from Valor Equity is on the board. They are what is known as non independent directors because they own, they're either in management or own a certain share of the company. One other, the bottom non independent director is Kimball Musk, brother at Elon Musk. So by familial, uh, just by being part of the family, he's not independent. Who are the independents? Um, independent by the way, doesn't mean what you think it means, Dave. It isn't.

Co-host: People aren't that independent.

Aman Virgie: Well, there's a specific legal test for whether you are independent or not. So it doesn't mean that, you know, it doesn't mean that they're entirely, uh, it's supposed to mean that they're exercising influence against the management team and have shareholder obligations. And that depends on whether you're on the management team and how much of the company you own. Um, you're legally independent and when you're independent you can serve on the comp committee and the governance committee and the audit committee, which is really important for where we're going. So Luke Nozick over at, uh, gigafund, uh, former former PayPal.

Co-host: Luke is one of our old colleagues from PayPal and Founders Fund.

Aman Virgie: We know him, know him very well. Early investor. He's on the board. He's on the conference governance committees. Randy Glein over at dfj. Steve Jobson of Future Ventures are on the board.

Co-host: Uh, Steve is one of the most brilliant VCs on the planet and was an extremely early investor in Elon and SpaceX.

Aman Virgie: Yes, definitely part of Team Elon very early on. Great investor. Right? He's been, he's a Silicon Valley legend. Don Harrison's a Google, uh, exec. He's on the board. He's independent. I want you to focus on the newest board member, Dave. Ira Ehrenprize. He is great. And another Silicon Valley legend and he just joined in uh, February. He's going to be on the comp and the governance committee. So that's the new board. Let's just wrap up with some of these other nuggets that they can talk about and what the board is approving because this is also relevant. So we talked about the anthropic deal being a big deal, very um, profitable business given the sun cost of Colossus. Aira and the new board have put together a Musk compensation plan. Get this, if the company only becomes like a Mag 7 company and hits uh, these projections, Musk gets basically nothing. Okay. However, if they get to a $7.5 trillion market cap and put a permanent colony on Mars, Musk's plan is $583 billion in compensation. And there's a second tranche of this where if they get to only 6.6 trillion but have a certain number of orbital data centers in space that deliver 100 terawatts of compute a year, well, he only gets 154 billion. That's still, still a pretty good payday. So it could be that Musk is set up to be a trillionaire here, but in order for that to happen, it would have to be the biggest market cap company in the world and have a permanent colony on space. So there's this incentive plan. If you're wondering about how he's getting compensated, there it is. That was approved by the new comp committee with Ira leading it. Okay. And then on ownership, uh, here's what we found out in the S1, I think. No surprise, Elon Musk owns 4.41.2% of the company. Little bit of a surprise, Antonio. Gracias. And Valor own 7.3% of the company. So they, they'll be the uh, the biggest equity winners. Musk owns 85% of the voting shares which are uh, kind of a class A and Class B, similar to, you know to Meta, similar to Google, similar to Snapchat. Very unusual, but it has been done before, these dual classes voting shares. So as the company goes public, Elon will be the person making all the decisions, like it or not. Let's talk about the lockup period. If you are a day trader or you own shares in SpaceX, or an options trader, you should pay attention to this part. So um, how does the lockup period work? It's 180 day standard lockup. Okay, first of all, there are some exceptions. Musk, Shotwell, Antonio, Gracias. And then Valor Equity Partners are on a 366 day lockup, so they cannot sell in the first year of the company. That's over half the market cap of the company. If you are in a select group of significant investors, Fidelity, Founders Fund, Sequoia, uh, and Andreessen, I think those are the, I think those are the only ones that qualify. You get to sell some of your shares early, you get a staggered lockup, so you'll be able to sell some of your shares early. And then there's a whole liquidity ladder. The way the ladder works is there's a 20% immediate sale after Q2 earnings. There's another 10% potential sale if the stock goes up 30% above its IPO price for five out of ten trading days. So let's say they price at 1.75 billion. They pop up the 2.2 to 2.4 trillion, and the stock price holds. There'll be a 10%, uh, additional release, and then there's five blocks of 7% that stagger through the end of the year and then another 28% chunk after Q3. So let me just visualize this for you. Here's how it works. So let's assume they price on June 12th. Q2 earnings will be somewhere in the end of July, maybe early August. I don't know. Tesla normally reports around July 25th. If it were me, I would probably push it out for a new company. I would go to August 14th or whatever day 44 is. I would take as much time as I can to report earnings. Elon and Brett may jump the gun a bit and go around the same time as Tesla. But let's assume they do Q2 earnings at July 25th. And after that, there will be a 20% release of shares. There might be an additional 10% if the stock price goes up. So now you're at 30% of the company, trading round about September 23rd, another 7%. There's going to be, uh, there are a couple of holidays here. So the, the way it's calculated is a certain number of trading days, but you have to exclude Juneteenth and July 3rd, which is our Independence Day. We're July 4th, but it'll be on a Friday. Um, so those get excluded another 7% around October 21st. Labor Day is the holiday. November 11th, there'll be another 7% for our Europeans. You might be telling me, wait a second. November 11th must be holiday. It's Armistice Day. It's Veterans Day. You're right, it is Veterans Day. It turns out Veterans Day is not a, uh, equity holiday in the US It's a bank holiday. Bonds don't trade, but the equity markets do. So delta count is a trading around November 11, there'll be another big slug. And so by then, by November 11, 80% of the shares will be out of lockup at that point. And then there'll be a few other periods. Thanksgiving and then up until December 23rd, and then the remainder will vest on day 180. So if you're an options trader, write this down, because these are the dates when additional liquidity is made available. On the flip side, there's some buying that's going to happen. So the company aims to be included in the index in the NASDAQ 100. Um, FTSE and Russell indices have global benchmarks that are equity based. And then there's a bunch of index funds run by CRSP around about July 25, 15 trading days after it goes public. These will be eligible for all these indexes. And so there'll be forced buying coming in between July 25th and September 23rd. And that's, you can see how the lockup period is now designed to match. I think some of the forced buying coming in towards the end of the year, probably December. The S&P 500 is going to become, they may get included in the S&P 500 as early as December.

Co-host: That would be a big win for the company if that happens. Right as the rest of that lockup is expiring.

Aman Virgie: Exactly. I think that's by intention. And The S&P 500 has a lot of rules that would preclude the company. Like you have to be profitable, you have to be listed for a year. They're in the process of waving all rules, Elon.

Co-host: Don't need those stinking rules.

Aman Virgie: No, not when you can change them all. So what does that mean for the company? So The S&P 500 index is a float adjusted fund. That means that if you have higher float or lower float, it changes how much you're supposed to include in the index. But I just did some math and I'm going to credit Alexander Mertz who was a, uh, really fun read. Tesla boomer mama. If the uh, public float is 5% of the company, which is where it'll start, that's about 100 billion in market cap. It's very low float. That means these passive funds, the S and P funds, have to buy 19 billion. So 19 billion is a lot right in the 75 minute IPO. 19 billion is a big chunk. If they increase the float to 10% which I think is more likely, the index fund comes in for 39 billion. If they increase the float to 40 or 50%, I don't expect that to happen, but have the numbers in here. This is a multi hundred billion dollar equity buyer who comes into the market. So the lockup release is really designed I think to stagger the sales and then bring in these index funds to pick up, which I think is really, really, really smart. Okay, you ready for the Tesla SpaceX I promised you?

Co-host: Dave,

Aman Virgie: if you are the most successful entrepreneur in the world, what do you care about if you want to take one big company and make it your own? I would submit that you care about control and compensation. All the most important titans in US history got both of those right. You get one right, but you lose control of the company. Like Edison, you're probably not in the, um, best entrepreneur of all time list. Elon is very carefully thought through control and compensation. He owns 85% of SpaceX, he owns about 20% of Tesla, uh, voting power. Assume these two companies go public at equal market caps, guess how much of the company Elon Musk will own?

Co-host: Uh, more than half. Yeah.

Aman Virgie: 51%. Not 49.

Co-host: What a great number. What a great number.

Aman Virgie: Is that a coincidence or is that by design? I think he, I think it's a

Co-host: coinky dink, not a coincidence.

Aman Virgie: You think it's a coincidence? Yeah, I think if you assume he cares about control, he's got the math exactly right. So that's one Easter egg that maybe there's a Tesla merger in the future. Here's another. Here's another Easter egg. So we talked about, Ira, Aaron Price, he's now the, um, chairman of the compensation committee on the board which controls Elon's comp. Tesla is a public company. They have a board of directors, they also have a compensation committee. There is one director who is in common between the Tesla, uh, board and the SpaceX board. Besides Elon Musk, this person is also the chairman of the compensation committee at Tesla. Can you guess, Dave, who is the comp committee chairman at Tesla right now? I'll give you three guesses, but you probably only need one.

Co-host: Ira. Don't know.

Aman Virgie: It's. Is that a coincidence or is that maybe by design? So there you have it. There's the S1. Um, fabulous read, you know, a lot of, uh, a lot of interesting information in there about the company. And uh, some Easter eggs for you beyond the, beyond the financials and the vision. I think some Easter eggs for you on whether this is going to be a potential merger with Tesla down the road, I think it's probably a pretty, uh, good bet that there's going to be, uh, an attempt to convince shareholders that the combined SpaceX Tesla entity is the Elon Musk Corporation that he wants to get people into by the end of the year or early next.

Co-host: Well, that was a very meaty valuation, Cornerman, and exciting. I guess we'll have to see what happens in the next months or so, but. Certainly seems like we're in a whole new world.

Aman Virgie: Absolutely.

Co-host: I can show you wonders. A hundred thousand things, Things to see, to be.