December 10, 2025 • 42 mins
Bloomberg’s Ed Ludlow discusses how SpaceX is targeting an IPO next year, with the goal of raising far beyond $30 billion, the most in history. Plus, Meta makes a pivot on open-source models, and Nvidia pushes back on reports that DeepSeek smuggled thousands of banned Blackwell chips into China.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hide in New York
and Edva Low in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up a Bloomberg exclusive SpaceX
targeting and IPO next year. The goal to raise far
beyond thirty billion dollars.
Speaker 3 (00:31):
The most in history.
Speaker 2 (00:32):
The valuation around one point five trillion. Why data centers
in space plus open then closed meta making a pivot
on open source models. We had the Bloomberg deep dive
and reports that deep Seak smuggled thousands of banned Blackwell
chips into China. Nvidio pushes back, let's get to our
(00:52):
top story in the private markets and soon to be
public markets. Bloomberg reporting the SpaceX is very much underway
targeting in IPO in mid twenty twenty six. They want
to raise far north of thirty billion dollars. In terms
of dollar raised, that would be the biggest IPO in history.
The valuation we're hearing one point five trillion. There's a
lot in play here, but my understanding this is very real.
(01:15):
It had an impact in public market. Some of the
names out there in the space sector, particularly EchoStar that
is in talks on licensing spectrum deals with SpaceX really
moving over the course of two sessions in reaction to this.
I use that as an illustrative example. This is the
IPO that all corners of the technology market and the
(01:37):
private market have been waiting for. Let's bring in Bloomberg
Space editor Eric Johnson. Eric broke this story with me
yesterday afternoon, and we'll go back to the basics of
what we're reporting, Eric, because there's a lot of data
in there, but the main headline, I suppose, beyond the valuation,
is SpaceX wants to raise north for thirty billion dollars.
You and I are getting a sense on why they
(01:58):
need that capital.
Speaker 4 (02:01):
That'd great to be here, and congratulations on your scoop
and great reporting.
Speaker 5 (02:05):
Yes they are.
Speaker 4 (02:06):
What we're hearing is thirty billion dollar rays, which you know,
if you look at the history of SpaceX, you know
Musk is known for his grandiose visions. They're building Starship,
a colossal rocket which he expects to put humans on
the Moon and eventually one day go to Mars, so
the money could.
Speaker 6 (02:22):
Be used for that.
Speaker 4 (02:23):
He also has talked about, as you mentioned, the idea
of putting data centers in space, harnessing solar power and
having you know, huge amount of computing resources in space.
They would need to buy chips to do so, so
the money could be used for that, you know. Of course,
the other side of SpaceX is starlink, you know, the
satellite internet business, which has grown substantially over the past
(02:44):
few years. So there's a huge portfolio that SpaceX is
bringing as they transform space travel.
Speaker 7 (02:51):
Eric.
Speaker 2 (02:52):
We're showing the other parts of what we reported, which
is through our reporting confirmation of this tender or secondary
that's going on. In other words, SpaceX allowing employees to
sell shares. But to do that you need to set
a price and that gives evaluation. We've now done that reporting,
run us through the numbers that we need to know
(03:13):
about this tender, and for me, the important bit here
is that this kind of settles valuation ahead.
Speaker 3 (03:20):
Of that IPO.
Speaker 4 (03:21):
Absolutely, this level sets the market valuation as they as
they as a precursor to the IPO. But essentially SpaceX
runs you know, bi annual tender offers secondary offerings where
they allow existing you know, shareholders, employees and others insiders
to essentially generate liquidity from their from their piece of SpaceX,
and so as part of that they set a valuation
(03:44):
of eight hundred billion dollars, which is a record, beating
open AI's latest tally from October a five hundred billion,
so making it once again the most valuable space startup
in the world. So this is walking up to that IPO,
and of course, as you mentioned, the IPO would be
one point five trillion roughly valuation in.
Speaker 3 (04:03):
The private markets.
Speaker 2 (04:04):
The share price right now is about four hundred and
twenty four hundred and twenty one dollars a share. There
is so much that left to discuss. I think that
a lot of people will say, how expected was this.
We've done reporting over a number of years actually on
the Space team that originally the focus was on spinning
(04:25):
off starlink right because you and I also reported some
of the financials for SpaceX in this current year and
next year. Starlink right now is really the cash cow
for this company.
Speaker 5 (04:36):
That's right.
Speaker 4 (04:37):
They bring in the majority of revenue they're expected to
do so last year. As I said, they've now they've
got thousands of satellites and lower Earth orbit.
Speaker 3 (04:43):
It's a booming business. Millions of customers.
Speaker 4 (04:45):
I've flown on many flights around the country that the
airlines are starting to use starlink. You're starting to you know,
the customer reviews are favorable. So I think investors are
seeing that growth. You know, people as they've watched this company,
they're seeing Musk make these promises and then and then
is you know, iteratively incrementally delivering on them. So there's
a lot to be seen as far as you know,
(05:06):
can he continue the growth of starlink and also direct
to sell That's another, you know, nascent business area that
Musk has promised to link regular consumer cell phones with
this network of satellites and low Earth orbit. There's just
a lot of growth, a lot of promises, but a
lot of challenges. Right the company has to meet these expectations,
(05:26):
live up to them to earn that valuation and to
excite people.
Speaker 2 (05:31):
Bloomberg's Eric Johnson, who leads the team on space coverage,
thank you very much. I point out SpaceX hasn't commented
on this as it stands. Elon Musk has not posted
on X about it. That's just the Bloomberg reporting. Let's
bring it.
Speaker 3 (05:44):
Phil Haslitt for more.
Speaker 2 (05:45):
He's the chief strategy off sobe at Equisizen, one of
the largest platforms for pre i PO shares. There's a
lot that you and I have to cover on a
potential SpaceX IPO, which we've reported is for the entirety
of the business, right, not just starlink, but actually important
to start with, you would note that SpaceX is the
(06:06):
private company that uses of your platform are most interested in.
In quantifying that for us, just transparently explain what equity
zen relationship to SpaceX's private market shares is.
Speaker 5 (06:22):
Sure, thanks for having me ed. Yeah, you hit the
nail on the head.
Speaker 8 (06:25):
SpaceX is the most popularly requested private company on equity Zen.
It's been that way for probably our entire existence as
a business over the last thirteen years. And that really
just means that there is retail exuberance about investing in SpaceX.
You know, the company is twenty three years old, it's
older than a lot of my employees. It has garnered interests,
(06:47):
it's had success, it's out in the public. People have
done incredibly well with Tesla as public market investors, and
so there's a lot of enthusiasm to invest in the
company while it's private. And what seems to be now
an opportunity to invest in it. Well, it's public and
maybe even less than a year, which is pretty surprising.
Speaker 2 (07:03):
There is, of course a lot that we don't know
what percentage of the company is SpaceX going to offer,
what is the structure of the IPO going to be.
But in reporting this story, Phil, one of the things
I reflect on is that existing SpaceX shareholders.
Speaker 3 (07:19):
Aren't that diverse.
Speaker 2 (07:21):
You have founders fund fidelity Google through Google Ventures and
through Corp dev one three seven Ventures, and then like
others in the world of venture capital and strategics. But
my point is that quite a lot of the company
is owned by quite a small group. And then there's
the Elon Musk factor as well. How does that translate
in an IPO environment for anyone that wanted to get
(07:42):
into the company.
Speaker 8 (07:44):
Well, there's a couple of other things to think about,
which is that a twenty three year old company has
had a lot of employees come, stay, leave, right, and
so you have a wide slot of shareholders, kind of
like a long tale of ownership. And so sure there's
some concentration in some of their biggest investors and in
the founder shares, but this thing is pretty widely held.
I'd go so far as to say that an IPO
(08:05):
might also be a solve for the fact that the
company is a private entity and can only have two
thousand shareholders that is a requirement before they have to
start filing financials. That may actually be a bit of
a driver here as well. But as far as what
the IPO is going to look like, this is uncharted
waters right, Saudi Ramco, Ali Baba, those would actually be
(08:25):
smaller than these IPOs, right, And we don't know or
than this IPO, and we don't know if it's going
to be primarily secondary liquidity to existing, if it's going
to be new capital. Though I would posit it's probably
going to be new capital based on a lot of
your reporting as well, because there's going to need to
be investment from SpaceX into new computing and processing power.
Speaker 2 (08:45):
So to a big portion of the Bloomberg Tech audience
that work in the world of technology tenders and the
secondary market is something they'll be familiar with. Loads of
people will not be familiar with that, And so what
usually happens with a big IPO is in late stage growth,
prior Marie rounds, where the company raises money issues new equity.
You get these kind of anchor investors that come in
(09:06):
ahead of an IPO might be a year in advance.
In this case, what we're reporting is the tender is confirmed,
eight hundred billion dollar valuation, four hundred and twenty one.
Speaker 3 (09:14):
Dollar share price.
Speaker 2 (09:16):
Could you explain that dynamic ahead of a big IPO,
how there isn't any new primary round not raising new money, which,
as you know Elon Musk has been at pains to
point out on.
Speaker 8 (09:26):
X sure in as simplest form, if you're a business
that's profitable and you don't need new capital to continue growing,
why dilute yourself by taking in new investment injection? You know,
through a primary a secondary liquidity offering is a way
to reward employees or perhaps early investors by getting them
(09:46):
liquidity for their shares without diluting ownership overall for everybody else.
And this is something that SpaceX has elected to do
over the past few years, I believe, kind of semi
annually in a way to provide liquidity not dilute themselve
we also set a new kind of external price for
their shares, but still maintaining an immense amount of control
and the only thing I would call out here, Ed
(10:07):
is that obviously two billion dollars of liquidity is a
big number, but it's actually only probably two to five
percent of the valuation of this company. And so I
hesitate to kind of identify that eight hundred billion is
the new market price for SpaceX, more so that it
is the market price that SpaceX has decided is out there.
Speaker 2 (10:26):
Yes, yeah, the tender was capped at two billion dollars.
That's what I reported. We just have thirty seconds valuation
at IPO one point five trillion dollars.
Speaker 3 (10:35):
What do you make of that?
Speaker 5 (10:37):
That I think would put it in uncharted waters?
Speaker 8 (10:39):
Right, You've got three public companies that are worth north
of three trillion dollars.
Speaker 5 (10:43):
Where's the upside from one point five? I'm not sure.
Speaker 8 (10:45):
At the same time, the bull in me, says Palenteer,
how a robust retail investor audience, it trades it north
of one hundred times revenue. So the art of the
possible is somewhere in between those numbers. I do know
that this would probably be literally the most exciting IPO
we've ever seen.
Speaker 2 (11:01):
Phil Haslich, chief strategy officer at Equiszen, thank you very much.
Coming up Meta making moves toward a new AI model
from open to close.
Speaker 3 (11:12):
That's next. This is Bloomberg Tech.
Speaker 2 (11:26):
Metas Mark Zuckerberg is shifting the company's focus toward a
new artificial intelligence model that can make it some money.
One new model is expected to launch next spring, potentially
as a closed model that Meta can sell access to.
This would mark Meta's biggest move yet away from open
source models. The reporting comes from Bloomberg Tech's Riley Griffin.
(11:47):
There's a case study. The case study is Avocado. So
let's start there. This is all what we're hearing from sources.
But my under saying it is originally Avocado might have
been an open source model. It's now not going to
be based on our reporting. Take it from there and
then we'll get into the bigger picture.
Speaker 9 (12:02):
Yeah. Essentially Meta is working on this Avocado model that
is the code name internally, and they have not officially
decided whether it will be open or closed, but closed
is the way they are leaning out the moment. And
this is a really important distinction because it points to
a monetization strategy, and as you know, Meta is under
(12:22):
pressure to show that it can return on its multi
hundred billion dollar investment in AI, and this is one
path towards that.
Speaker 2 (12:31):
There's detail in the reporting about how Alexander Wang, who's
basically you know, the lieutenant leading the AI lab effort,
is pro closed model. In July, Mark Zarkobak kind of
told us why open source in this environment isn't that great?
As the models get bigger, there are fewer people that
can access them. It's a resource and constraint issue. But
(12:53):
what else are you putting in the story here? Because
you know Meta was the sort of flag waiver for
open source.
Speaker 3 (12:59):
Yeah, I mean.
Speaker 9 (13:00):
Things we heard from in and around the company. For one,
employees after July were told that they should not be
talking publicly about open source as Meta reset its strategy. Remember,
Mark Zuckerberg brought in all of these expensive researchers and
had to reset after a very disappointing release of Lama
for that was their open source model earlier this year.
Speaker 3 (13:22):
And so this is a.
Speaker 9 (13:23):
Resetting of the strategy under Alex's leadership, with close involvement
from Mark Zuckerberg who.
Speaker 3 (13:28):
Sits quite close to Alex.
Speaker 9 (13:30):
And the pressure is leading to tensions too, but that
steer to employees internally to not be speaking publicly about
open source should be a big tell.
Speaker 2 (13:40):
The report is a muster read Bluemog's Riley Griffin with
the reporting alongside Kurt Wagnan. Thank you very much. President
Trump decided to let him videos. So it's h two
hundred AI chips to China, after concluding the move carried
a lowest security risk because the company's Chinese arts rival,
Huawei already offers some AI systems with parapol performance. That's
(14:01):
according to a Bloomberg source Bloomberg Tech report. Maggie Eastland
joins us. Maggie, you and I broke this story together yesterday.
As we understand it right, the President was presented with
a range of options from exporting no technology at all
to the latest technology, and they landed somewhere in the middle.
Take it from there. And what else we reported and
what we know about the Huawei Cloud Matrix three eighty
(14:23):
four system.
Speaker 10 (14:26):
Yes, one key detail we've reported is that this Cloud
Matrix three eighty four system, which can link together hundreds
of chips, was a key rationale underpinning the White House's
logic to allow these advanced chips, which are better on
a per chip basis than what Chinese companies.
Speaker 3 (14:43):
Are capable of.
Speaker 10 (14:44):
However, as was made clear in our reporting, the White
House is looking at this more at a system level,
and their understanding was that Huawei's systems are actually advancing
quite quickly, so that was the rationale here. And though
this is a paradigm shift from previous administrations during which
Huawei's advancements were an impetus to actually crack down and
(15:06):
further restrict those Chinese companies, now that same evidence is
being used as a reason to loosen controls and kick
off this new strategy of selling in video chips to China.
Speaker 2 (15:19):
The main focus, as I understand it, is that age
two hundred is eighteen months behind Blackwell generation to generation,
and that's the comfort level this administration has. In Vidia's
down one point three percent in the session right now.
The other big report out there is from the Information
which reported that deep Seek smuggled in thousands of Blackwell
(15:39):
chips into China, getting them from countries of origin where
they were allowed dismantling the servers. Nvidia has come out
with a statement, Maggie, pushing back on that report. Let's
start with that in Vidia's statement.
Speaker 11 (15:52):
Please, yes, So Nvidia has said that these smuggling claims
are a bit far fetched in its own words, and
while it investigates every tip it receives, it hasn't seen
evidence of this.
Speaker 2 (16:05):
Now.
Speaker 10 (16:05):
One interesting thing from the report. Jensen Wong has said
before that these Blackwell racks are just a bit too
heavy to be feasible to smuggle, but this report from
the Information did say that the smuggling for a deepseek
took place in these sort of eight chip segments that
could potentially fit in the suitcase.
Speaker 2 (16:23):
Bloomberg's Maggie east Land, who's out in DC, covers the
intersection of tech and politics with the reporting.
Speaker 3 (16:29):
Thank you very much.
Speaker 2 (16:30):
Another story, Amazon pledged to invest thirty five billion dollars
in India over the next five years, boosting its spending
in the key growth market to expand in businesses from
quick commerce to cloud computing. The e commerce giant says
it will invest in areas such as AI and logistics infrastructure,
and that the planned outlay through twenty thirty will help
create an additional one million jobs in India.
Speaker 3 (17:00):
Oracle reporting earnings.
Speaker 2 (17:01):
After the bell, this is the story they expect on
the street. The backlog to grow, remaining performance obligations basically
deals signed but revenue not booked to continue pushing north
for five hundred billion dollars. But Oracle's got a very
big debt pile and the one metric we're looking at
negative free cash flow expected to be almost six billion
dollars in the quarter. Let's preview, let's discuss City Panagrahi
(17:25):
Managing director, senior analyst and Mazuho covering SAS but also
covering Oracle.
Speaker 3 (17:30):
This is the equation.
Speaker 2 (17:32):
We want to see growth in the cloud division OCI
in particular. But in the background there's that stat Oracle
swinging to negative free cash flow for the first time
since nineteen ninety two. Remind us what your price target
and call is on the stock, and then how you
feel about that stat.
Speaker 6 (17:51):
That's great, thanks for having me here.
Speaker 7 (17:53):
Look, I think what you said right at this point,
investors are concerned about.
Speaker 5 (17:58):
Free cast flow more.
Speaker 7 (18:00):
You know, they have to build massive CAPEX build out
for AI capacity data center build out, and also they
need to do the funding for that.
Speaker 6 (18:10):
So what matters at.
Speaker 7 (18:12):
This today in the earnings call, is Oracle during some
kind of clarity on that. Look, I think what investors
missing is that Oracle has multiple options. They don't have
to raise data or CAPEX. They can also go for
alternative financing like vendor financing or capital leasing. Then you
won't see that in a capex. But at this point
(18:33):
Oracle is not able to tell you how much you
the capex as how much they have to raise because
they are going to evaluate this as they are building
out data center. Each data center, they are going to
look at their own cost of capital and compare that
to the leasing. So that's what I think the one
of the concerns we hope to hear from management on
(18:56):
that how they are going to fund the capex they're
going to build their data center.
Speaker 2 (19:02):
Right, I've been trying to learn as much as I
can about how this world works. CT Remaining performance obligation
RPO is a term that gets bandied around all the time,
but basically it's a backlog right of business five hundred
billion as it stands as Bloomberg's reported it, quite a
lot of that is open AI. Now in the future,
(19:23):
if something happens and a deal falls through, often in
the contracts there's some kind of penalty for cancelation or severance.
But the question still out there, how do we know
that open AI in particular is good for it that
they'll be able to actually front up on the projects
that they're committed to.
Speaker 5 (19:42):
Yeah.
Speaker 7 (19:43):
I mean that's a fair point, as you say, But
if you look at right now, they're only handful of
EI companies like clear or four, Open Ai Andthropy, Mata
and Xai. So Oracle got most of them except Anthropic,
so yes, and open Ai is a trail blazer in that,
(20:03):
so they have that as a customer. That's I think
most important at this point. To your point, can open
Ai pay or that contract will fall apart. Look, this
is a non cancellable contract, what Oracle says.
Speaker 5 (20:17):
So with that and there will be demand.
Speaker 7 (20:19):
If we think about AI at this point, the rate
it's growing, probably probably will need that demand at this point.
But I think if you look at the concern Oracle
lost more than three hundred billion dollar market gap, you know,
and or open a contract is only three hundred billion
I think if I remember, it's three hundred twenty two
billion market dollar market cap loss. So even investors are
(20:43):
more skeptical beyond even open Ai at this point, which
we don't think like core business is still doing well
the way we are looking at You asked about the
price target. I think if you're an investor, you need
to believe on this long term AI story. Growth is
accelerating twenty one dollars EPs they guided for fiscal thirty
(21:03):
and if you discount it back, even applying twenty five times,
we get to this four hundred dollars price target.
Speaker 3 (21:09):
Sidi, we just have less than a minute here.
Speaker 2 (21:12):
Do you like this co CEO structure and the leadership
of Oracle?
Speaker 3 (21:17):
Yes.
Speaker 7 (21:17):
I think the way right now Oshi is very important
for Oracle. So that's where they're separate, separating OSCI.
Speaker 6 (21:24):
This Clay is.
Speaker 7 (21:26):
He's going to SUPERVISEE. He's going to look at that
business and rest of the application and rest of the business.
Mike Cecilia is going to do it. I think this
model works. Larry's still there, he's the chairman, he's leading
the group, leading the company there.
Speaker 6 (21:42):
So we like it. I think we'll see how it goes.
Speaker 2 (21:47):
Oracle down three tens percent with treading water. That is
the big earnings print after the bell CT Panagrahi of
MISSOI great to have you on the show.
Speaker 3 (22:01):
Welcome back to Bloomberg Tech.
Speaker 2 (22:02):
Probably the story of the week maybe has been the
saga around Warner Brothers Discovery two competing bids, one from
Netflix cash and stock at twenty seven dollars seventy five
cents a share, which is just for the streaming and studios,
and one from Paramount Skydarks thirty dollars per share for
the whole Enchilada. This is what those stocks have traded
(22:23):
like on week. We're not quite in the sort of
discussion territory around arbitrage, in other words, looking at the
gap between where the stock's trading and the price of
the deals offered, because it's a live situation with multiple bids.
But we are looking at the structure of the deals. Now.
Netflix is looking to become debt Flix again.
Speaker 3 (22:44):
Do you see what we did there?
Speaker 2 (22:45):
After cutting back on debt during the pandemic, it's back
to borrowing heavily to finance its planned acquisition. For most
of Warner Brothers Discovery, the caveat that they'd spin off
the legacy network and cable lines. The difference is that
now Netflix has a stronger balance. Hot of the press
just hit the wire. Bloomburst Cross Asset reporter Emily Graffeo
has the deep dive. Debt is becoming so important generally
(23:08):
across technology, but in this case with Netflix, it is
a change of corporate policy in what is a potentially
very big deal.
Speaker 3 (23:16):
What are you reporting? It really is ed.
Speaker 12 (23:18):
So what we found is that this term Debtflix was
introduced a couple years ago by some detractors when the
company was rated high yields. They really built their business
around borrowing heavily in the junk bond market, and some
people didn't like how much cash the company was burning.
But they've really turned that credit profile around now. So
(23:38):
now the company's rated investment grade. That allows Netflix to
tap into a deeper market more investors here, and they
have to raise a lot of debt to finance this
acquisition of Warner Brothers. Bloomberg Intelligence estimates that right now
they have about fifteen billions dollars of debt that's going
to about seventy five billion given the current terms here.
(24:01):
But what we're hearing from a lot of different credit
analysts is that Netflix has the balance sheet to fund this.
So it's a turnaround story here. They are Debtflix. It's
a fun term. I wish I could take credit for
coming up with it, but I did not. But again,
here it's it's investment grade debt, and it's debt that
most analysts are confident Netflix can actually still keep that
(24:23):
investment grade rating and it can actually even potentially raise
more debt if need be, to top that hostile takeover
bid because that balance sheet is so strong.
Speaker 3 (24:34):
Ed Bloomo's Emi Crofeo.
Speaker 2 (24:37):
It's a must read on the Bloomberg terminal Netflix to
Debtflix check it out. All right, let's bring in Laura
Martin for more on this deal. There is a lot
more to discuss. Laura's senior entertainment analysts at Needam and Co.
It's one of these situations where there's the Wall Street
view on this deal, the structure of the deal, and
(24:58):
then there's the what is this for Hollywood? And the
reason I'm so excited to have you on the program
is I think we could probably talk about both. But
this is the first opportunity I've had to talk to
you about two competing bids. I set the stage for
it on Netflix's offer cash and stock and paramounts offer.
What is your position at this time and what is
your research into the competing bids?
Speaker 13 (25:21):
So, I mean, I think the kudos have to go
to Zaslov for creating this auction for an asset that's
worth twelve dollars. We're now at thirty dollars a share,
and now we've hear over the tape this morning that
both Paramount and Netflix have said they could go higher.
So so far we have a three hundred percent like
premium over what the assets were trading at before the
(25:44):
auction rumors. So, first of all, kudos to David Zaslov
and the Warner Brothers team for selling an asset deer.
In terms of who wins, you know, we are much
more sanguine about Paramounts or Peace Guy is its ticker
regulatory ability to get it through the Trump administration, right.
(26:04):
You know, we think that there are real issues with
Netflix being successful, not only with Hollywood talent who see
this as anti competitive. I sit in Hollywood is anti competitive,
especially because Netflix has said repeatedly it does not believe
in the theatrical box office release window, and so all
of Hollywood is scared to death that if suddenly Netflix
(26:27):
owned Warner Brothers that within five years they would stop
releasing films in the theatrical box office, which is why
we've seen pressure on the exhibitors also, So I think
Hollywood is really negative or let me say it this way,
much more negative about Netflix taking over Warner Brothers than
Peace guy, So I would say that.
Speaker 3 (26:46):
And on the side, let me jump in real quick.
Speaker 2 (26:49):
On the money side, we will get to Hollywood, particularly technology,
because you know, Netflix's competency is the algorithm to an extent,
and the library and the content. But I just want
to go back and back to basics and what you said,
twelve dollars with Warner Brothers Discovery. You're not the first
person to make this point, Laura, but just explain the
basics to our audience.
Speaker 3 (27:09):
Please.
Speaker 2 (27:10):
People do feel that the value of what iver entity
ends up getting may not be at twenty seven dollars
seventy five cents for the studio streaming or thirty for
the whole enchilada, as I keep saying.
Speaker 13 (27:24):
Right, So, I mean, I'm comparing the trading price for
WBD Warner Brothers for like a year. Essentially it was
falling and it hit about a twelve dollars price before
the first rumor of a Pea Skuy bid started the
stock moving up. And then I can't remember the Larry
Ellison first bid or the David Ellison first bid, but
(27:47):
now we're up at thirty dollars a share for the
whole thing, and that includes twenty seven from Netflix for studios,
plus the ideas there'd be a two dollars three dollars
stub left trading for the network's division, which would add
up to thirty dollars also. But in theory, so anyway,
I'm saying we're like at thirty dollars for the comparable
(28:07):
asset that was trading at twelve dollars before the auction began.
Speaker 2 (28:11):
For this asset, I think there's a lot of value
in that answer, because the next question is of course
about antitrust and what the combined entities would look like.
In either case, you said you believe or you're more
sanguine about Paramount Skuidance combined Warner Brothers Discovery.
Speaker 3 (28:29):
Why okay?
Speaker 13 (28:31):
So in streaming, in the streaming industry, Netflix has over
three hundred million global subscribers and HBO Max has one
hundred and fifty, so together there's some duplication there, but
let's just call it four hundred and fifty subscribers, which
is like forty percent of the streaming market. Whereas Paramount
(28:52):
or Peace Guides now called has seventy five million subscribers
that you would add to the HBO which is one
hundred and fifty So now you're two hundred and twenty
five million subscribers, much smaller market share of streaming than
if you combine Netflix, which is the industry leader, with
Warner Brothers HBO Maxset streaming asset. So I would say
(29:15):
that's one reason, and then the Hollywood Studios. As you know,
Netflix is one of the largest global creators of content,
and you would combine it with Warner Brothers, which is
one of the largest global creators of content. They have
different windows, meaning distribution windows, meaning Netflix primarily creates for
television direct to streaming the television screen, and Warner Brothers
(29:39):
primarily creates content for both TV but also the film business.
It's a big film a distributor. So I think the
idea is putting these two huge content creators together would
dampen competition for talent and lower prices for talent and
also raise prices for consumer. That is not a concern
with Peace Guide Bar Warner.
Speaker 2 (30:01):
Brothers, Laura, we have less than a minute, Netflix would argue,
and I am simplifying that. You know it would simplify
it for the consumer. You know, having HBO Max Netflix,
people have multiple subscriptions. But it sounds like you don't
think that that argument will make traction.
Speaker 6 (30:17):
Oh no, it would simplify it for the consumer.
Speaker 13 (30:19):
But if they collapse, the thinking is they would collapse
Netflix and HBO Max.
Speaker 6 (30:26):
Great, But what happens to the price.
Speaker 13 (30:28):
The consumer is going to get a much higher price
if you add those two things together. So it's simpler,
But really a monopoly policy is based on simplicity versus complexity.
It's based on the price to the consumer and consumer welfare,
and price is part.
Speaker 6 (30:42):
Of consumer welfare.
Speaker 13 (30:43):
Actually, simplicity is not and in the laws as a
driving factor, but prices and price would go up for
consumers if they combine those two assets.
Speaker 2 (30:53):
I think, Laura Martin o'needham, it's great to have you
back on bloombog Tech. I suspect we'll be talking about
steal for quite a long time to come.
Speaker 3 (31:01):
Thank you.
Speaker 2 (31:02):
Sticking with entertainment M and A, Disney co chairman Dana Wolman.
Dana Wolman sat down last month with Bloomberg's Emily Chang
for an episode of the Circuit to discuss broadly the
m and A landscape and what she thinks of the
competition coming out of a potential merger.
Speaker 3 (31:17):
Listen to this.
Speaker 14 (31:19):
I don't worry about a stronger competitor coming out of it,
because we already went through an incredible transformation in twenty
nineteen as Disney integrated the entertainment assets of Fox. We
already went through you know, a big em and a
event to expand our library, to increase the amount of
(31:42):
IP that we ultimately could take over the top directly
to the consumer.
Speaker 3 (31:47):
So I'm not worried right now. I also think.
Speaker 14 (31:52):
Whichever whoever ends up in you know, in this situation
acquiring WBD or any asset that's available, these are situations
that require a lot of time, time for regulatory approval,
time for integration, time to figure out, you know, how
to combine apps, a lot of the things that we've
(32:15):
already been through now.
Speaker 2 (32:18):
Disney co Chairman Dana Wolman long with bloom eg Zemini
Chang again, recorded last month. You can catch the full
episode at the Circuit tomorrow at eight pm Eastern on
Bloomberg Originals or ten pm Eastern on Bloomberg Television.
Speaker 3 (32:30):
All Right, coming up.
Speaker 2 (32:30):
Elon Musk, SpaceX aims to blast into the record books
with possibly, possibly, maybe we're ready for lift off the
biggest IPO of all time.
Speaker 3 (32:42):
That conversation. Next, this is Bloomberg chat range.
Speaker 2 (32:48):
In good call out healthy systems aren't the booster as
it started to pitch over.
Speaker 5 (32:52):
Over the show.
Speaker 3 (33:01):
Okay, back to our top stories.
Speaker 2 (33:02):
SpaceX shooting for the stars yet again, this time in
the financial context. Sources tell us the Elon Musk led
space company well underway with plans for an IPO that
would seek to raise far above thirty billion dollars, with
the targeted valuation around one point five trillion dollars that
would make this by money raised the biggest IPO ever.
(33:24):
A representative for SpaceX didn't respond to my many requests
for comment. Joining us to discuss is Will Whitehorn, chairman
of Seraphim space. Will was also former chairman of Virgin Galactic.
Somebody's works side by side with Richard Branson in the
domain of commercial space. We have a lot to get
(33:44):
to Seraphim. You know, an investor in all kinds of
different space assets, and it's the space asset that I
think is central to this.
Speaker 3 (33:53):
SpaceX IPO story.
Speaker 2 (33:55):
My reporting is that they want to raise the capitol
for the SpaceX AI cluster, the SpaceX AI stack space
Space Data Center.
Speaker 3 (34:05):
Your reaction to that.
Speaker 15 (34:06):
Will well, I think that's probably right, and I think
that this is a seismic event for the entire space industry.
Speaker 6 (34:14):
We're not going to see the like of this.
Speaker 15 (34:17):
I think it's going to cause huge changes to the
companies that are suppliers to SpaceX, to the whole massive
kind of environment that they've created, particularly in the United
States and in the UK. Some companies as a company
in the UK called Filtronic, for example, which has become
a major supplier to SpaceX. Many of the companies in
(34:39):
the Seraphin portfolio they launch on SpaceX rockets. Starlink has
obviously when you link Starlink to AI to data centers,
you are seeing an entire ecosystem of businesses growing up.
And many other constellations will benefit from this sort of
InOrbit servicing, more data analytics coming out through the space industry.
(35:03):
Space and AI will become interlinked in a way they've
never been before. I mean, space really is going through
a lot of change. As it goes through this industrial revolution.
Speaker 2 (35:15):
Will we're going to question report on react to wherever
the valuation of this company settles. My reporting again is
that the target based on what they want to raise,
the amount of the percentage of the company they offer one
point five trillion dollars. But macro, this is an industry,
(35:35):
private commercial space that's growing. What is seraphim seeing What
are the numbers that you're tracking on how an industry
is basically growing out of SpaceX's wake.
Speaker 6 (35:45):
Well, I'll give you an example.
Speaker 15 (35:47):
We've got one of the biggest companies in airportload's called
i Sie, which has a very special kind of apperture radar.
Speaker 6 (35:54):
The demand for it has gone through the roof.
Speaker 15 (35:56):
I sized business plan has ended up being two years
ahead of play and they're in profit already. And they
are They've just in the process of a very big fundraise.
Other companies like Maucai three sixty, Satellite View, All Space,
all of these companies, app orfolio are all doing very
well and getting ahead of their business plans very rapidly
(36:19):
because the demand for data from space is going through
the roof for both climate change, defense, natural security, communications,
I mean, everything is relying more and more on space.
Speaker 6 (36:31):
And of course as people get scared about.
Speaker 15 (36:34):
The underground and undersea cables that supply the Internet. The
demand for Internet data from space is starting to rise
as well in the fintech sector.
Speaker 6 (36:44):
So everything is happening all at once.
Speaker 15 (36:46):
The insurance companies want space data because they realize it's
more accurate than ground based data for agricultural assets, buildings,
infrastructure projects.
Speaker 6 (36:56):
So you've got insurance demand, agricultural demand, climate change demand.
Speaker 15 (37:00):
And now defense demand rocketing ahead since Ukraine and the
Middle East happened over the last three years. And indeed,
you know, I got an OBE today from Prince William
which is one of the first in the space industry
to show that even royalty are catching up in the
Actually one of the first things he asked me, that's
what I thought was going on in the space industry
(37:20):
at the moment.
Speaker 2 (37:21):
From the UK okay well for our audience around the
world outside of the UK. Obviousely, I originate from the
United Kingdom, an OBE officer of the Most Excellent Order
of the British Empire.
Speaker 3 (37:32):
So congratulations to you.
Speaker 2 (37:33):
Awarded to you this morning by Prince William, and I
understand that you then ran to be here on the
show and that actually Prince William may be tuning in
and a fan of the show anyway, appreciate.
Speaker 6 (37:45):
That that's true, and that's very true.
Speaker 2 (37:48):
I believe in transparency on this program. One thing that
we should have done to start is what is Sarah
FIM's exposure to SpaceX?
Speaker 3 (37:56):
Have you any skin in the game.
Speaker 15 (37:59):
No, we don't have a steak in SpaceX. Only a
couple of British investment trusts do have steaks, both of
them Scottish based Seraphim. When we started, it was too
late to get into SpaceX at that time, which is
a shame.
Speaker 6 (38:13):
But we have a lot of.
Speaker 15 (38:16):
Exposure to companies that I think are going to really
benefit from this huge ecosystem of new investment as SpaceX
will create. And I'm looking personally at other companies that
will benefit. And in fact, I bought a steak in
one today, which I think will be a beneficiar. This
will have, as I said, a seismic effect on an
industry already undergoing an industrial revolution.
Speaker 6 (38:38):
It is going to be, you know, one for me
as an old hand.
Speaker 15 (38:41):
I mean I'm sixty five now and you know I
was around in the days when the Netflix, the Netscape,
moment happened in nineteen ninety five, which kicked off that
range of Internet investment.
Speaker 6 (38:54):
That we still see today.
Speaker 15 (38:56):
And I think that this is the space equivalent happening
right now.
Speaker 2 (39:02):
Will do you want to tell us what the company
is that you invested in this morning?
Speaker 15 (39:07):
Mask Seraphim doesn't have mistake in It is a company
called Filter Chemic.
Speaker 2 (39:12):
Okay, let me ask this. Then, let me ask this.
You are sixty five years old. Thank you for sharing
that with our audience. Elon Musk is fifty four. He's
committed to Tesla for ten years. We just have thirty seconds.
But is it realistic that this man leads to public
companies at that scale for the long term?
Speaker 15 (39:34):
Well, this is going to be a big question around
the ido of the sleep of SpaceX. Is he going
to spend more time on SpaceX with this size of
fundraise or is he going to carry on in his
Tesla environment as well. Both companies will be quoted, both
will be some of the biggest companies in the world,
and you're quite right, this is going to be an
issue that investors will look at very very closely.
Speaker 2 (39:57):
Will WHITEH Seraphim, space chairman ordered and ob this morning
by Prince William then running over to the camera for us,
thank you very much. The Adobe sets report Q four earnings
this afternoon after the bell is The company looks to
(40:17):
convince investors it is on the right track in the
AI era. Bloomberg Intelligence says Adobe could see it's and
your recurring revenue target in the low double digits for
twenty twenty six. Let's get out to Bloomberg's Matt Day
and Seattle with the preview. Matt, what do we need
to know?
Speaker 16 (40:31):
That's right, Sir Jeffreys, Brint Phil said, and I know
the other day, low expectations and low investor interest. There's
a lot of worries about whether Adobe, which has navigated
the transition from package software to subscription software, whether we're
going to be able to do the same in the
AI era and survive all beating newfound competitors they've got
in the space.
Speaker 3 (40:48):
That sets the scene, it sets the tone as well.
Speaker 2 (40:51):
I mean, you know, I did a big interview with
the Adobe CEO in the summer, and there's clearly a frustration
this is a stock that's down twenty two percent this year,
that they're not getting credit for the work they think
they've done in AI. Part of it is how they
sell it. Is there a bigger Adobe AI story that
someone's buying.
Speaker 5 (41:11):
You know, there might be.
Speaker 16 (41:12):
They've tried to convince investor with a couple of metrics,
you know, one sort of AI first revenue that's tracking
about two hundred and fifty million dollars. They've got another
one AI influenced revenue about five billion dollars. But you know,
as the stock price to date shows, investors aren't buying
that all the way. You know, particularly in a world
where open ai is getting a whole lot of interest
with Sora, Google's got new video generation models. If you're
(41:32):
a creative professional doing something that's Adobe's wheelhouse and there's
a whole lot of AI in the monitors.
Speaker 2 (41:36):
Right now, I'm grateful you mentioned that open ai in particular.
The debate the Adobe's had, and maybe the shift is
they try to pitch themselves as we have our own
models with our own safeguards and data, and that's best
for customers. Now they seem to be saying we're open
to using other models and other data inputs as well.
(41:56):
Have they kind of settled on their approach.
Speaker 16 (42:00):
It's a little bit both as you said, they definitely
built their own models. They say their copyright compliant. But
just this morning they've li've out with a partnership with
chat gpt macer opening. I had to put Adobe products,
a limited version of them inside of chat GPT, so
they clearly realized they can't own the space entirely. Have
kind of got to be everywhere that the users want
to be.
Speaker 2 (42:17):
Yeah, Bloomg's Matt Day with the Adobe preview.
Speaker 3 (42:20):
Thank you very much.
Speaker 2 (42:21):
That's a good way to end a show that does
do it for this edition of Bloomberg Tech. But I
would remind you it's not just Adobe out with earnings
after the Bell Oracles, the big one probably that we're
looking for. We expect a big backlog of business with
a big debt parle that we're worried about. Those are
the two names we're watching. In the show, it was
all about SpaceX and an IPO we think is coming
(42:41):
in the middle of the next year. Recap that on
the podcast. You know where to find it on the
Bloomberg platforms and online Ihearts, Spotify and on Apple. From
San Francisco, have a great afternoon. This is Bloomberg Tech.
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hide in New York
and Edva Low in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up a Bloomberg exclusive SpaceX
targeting and IPO next year. The goal to raise far
beyond thirty billion dollars.
Speaker 3 (00:31):
The most in history.
Speaker 2 (00:32):
The valuation around one point five trillion. Why data centers
in space plus open then closed meta making a pivot
on open source models. We had the Bloomberg deep dive
and reports that deep Seak smuggled thousands of banned Blackwell
chips into China. Nvidio pushes back, let's get to our
(00:52):
top story in the private markets and soon to be
public markets. Bloomberg reporting the SpaceX is very much underway
targeting in IPO in mid twenty twenty six. They want
to raise far north of thirty billion dollars. In terms
of dollar raised, that would be the biggest IPO in history.
The valuation we're hearing one point five trillion. There's a
lot in play here, but my understanding this is very real.
(01:15):
It had an impact in public market. Some of the
names out there in the space sector, particularly EchoStar that
is in talks on licensing spectrum deals with SpaceX really
moving over the course of two sessions in reaction to this.
I use that as an illustrative example. This is the
IPO that all corners of the technology market and the
(01:37):
private market have been waiting for. Let's bring in Bloomberg
Space editor Eric Johnson. Eric broke this story with me
yesterday afternoon, and we'll go back to the basics of
what we're reporting, Eric, because there's a lot of data
in there, but the main headline, I suppose, beyond the valuation,
is SpaceX wants to raise north for thirty billion dollars.
You and I are getting a sense on why they
(01:58):
need that capital.
Speaker 4 (02:01):
That'd great to be here, and congratulations on your scoop
and great reporting.
Speaker 5 (02:05):
Yes they are.
Speaker 4 (02:06):
What we're hearing is thirty billion dollar rays, which you know,
if you look at the history of SpaceX, you know
Musk is known for his grandiose visions. They're building Starship,
a colossal rocket which he expects to put humans on
the Moon and eventually one day go to Mars, so
the money could.
Speaker 6 (02:22):
Be used for that.
Speaker 4 (02:23):
He also has talked about, as you mentioned, the idea
of putting data centers in space, harnessing solar power and
having you know, huge amount of computing resources in space.
They would need to buy chips to do so, so
the money could be used for that, you know. Of course,
the other side of SpaceX is starlink, you know, the
satellite internet business, which has grown substantially over the past
(02:44):
few years. So there's a huge portfolio that SpaceX is
bringing as they transform space travel.
Speaker 7 (02:51):
Eric.
Speaker 2 (02:52):
We're showing the other parts of what we reported, which
is through our reporting confirmation of this tender or secondary
that's going on. In other words, SpaceX allowing employees to
sell shares. But to do that you need to set
a price and that gives evaluation. We've now done that reporting,
run us through the numbers that we need to know
(03:13):
about this tender, and for me, the important bit here
is that this kind of settles valuation ahead.
Speaker 3 (03:20):
Of that IPO.
Speaker 4 (03:21):
Absolutely, this level sets the market valuation as they as
they as a precursor to the IPO. But essentially SpaceX
runs you know, bi annual tender offers secondary offerings where
they allow existing you know, shareholders, employees and others insiders
to essentially generate liquidity from their from their piece of SpaceX,
and so as part of that they set a valuation
(03:44):
of eight hundred billion dollars, which is a record, beating
open AI's latest tally from October a five hundred billion,
so making it once again the most valuable space startup
in the world. So this is walking up to that IPO,
and of course, as you mentioned, the IPO would be
one point five trillion roughly valuation in.
Speaker 3 (04:03):
The private markets.
Speaker 2 (04:04):
The share price right now is about four hundred and
twenty four hundred and twenty one dollars a share. There
is so much that left to discuss. I think that
a lot of people will say, how expected was this.
We've done reporting over a number of years actually on
the Space team that originally the focus was on spinning
(04:25):
off starlink right because you and I also reported some
of the financials for SpaceX in this current year and
next year. Starlink right now is really the cash cow
for this company.
Speaker 5 (04:36):
That's right.
Speaker 4 (04:37):
They bring in the majority of revenue they're expected to
do so last year. As I said, they've now they've
got thousands of satellites and lower Earth orbit.
Speaker 3 (04:43):
It's a booming business. Millions of customers.
Speaker 4 (04:45):
I've flown on many flights around the country that the
airlines are starting to use starlink. You're starting to you know,
the customer reviews are favorable. So I think investors are
seeing that growth. You know, people as they've watched this company,
they're seeing Musk make these promises and then and then
is you know, iteratively incrementally delivering on them. So there's
a lot to be seen as far as you know,
(05:06):
can he continue the growth of starlink and also direct
to sell That's another, you know, nascent business area that
Musk has promised to link regular consumer cell phones with
this network of satellites and low Earth orbit. There's just
a lot of growth, a lot of promises, but a
lot of challenges. Right the company has to meet these expectations,
(05:26):
live up to them to earn that valuation and to
excite people.
Speaker 2 (05:31):
Bloomberg's Eric Johnson, who leads the team on space coverage,
thank you very much. I point out SpaceX hasn't commented
on this as it stands. Elon Musk has not posted
on X about it. That's just the Bloomberg reporting. Let's
bring it.
Speaker 3 (05:44):
Phil Haslitt for more.
Speaker 2 (05:45):
He's the chief strategy off sobe at Equisizen, one of
the largest platforms for pre i PO shares. There's a
lot that you and I have to cover on a
potential SpaceX IPO, which we've reported is for the entirety
of the business, right, not just starlink, but actually important
to start with, you would note that SpaceX is the
(06:06):
private company that uses of your platform are most interested in.
In quantifying that for us, just transparently explain what equity
zen relationship to SpaceX's private market shares is.
Speaker 5 (06:22):
Sure, thanks for having me ed. Yeah, you hit the
nail on the head.
Speaker 8 (06:25):
SpaceX is the most popularly requested private company on equity Zen.
It's been that way for probably our entire existence as
a business over the last thirteen years. And that really
just means that there is retail exuberance about investing in SpaceX.
You know, the company is twenty three years old, it's
older than a lot of my employees. It has garnered interests,
(06:47):
it's had success, it's out in the public. People have
done incredibly well with Tesla as public market investors, and
so there's a lot of enthusiasm to invest in the
company while it's private. And what seems to be now
an opportunity to invest in it. Well, it's public and
maybe even less than a year, which is pretty surprising.
Speaker 2 (07:03):
There is, of course a lot that we don't know
what percentage of the company is SpaceX going to offer,
what is the structure of the IPO going to be.
But in reporting this story, Phil, one of the things
I reflect on is that existing SpaceX shareholders.
Speaker 3 (07:19):
Aren't that diverse.
Speaker 2 (07:21):
You have founders fund fidelity Google through Google Ventures and
through Corp dev one three seven Ventures, and then like
others in the world of venture capital and strategics. But
my point is that quite a lot of the company
is owned by quite a small group. And then there's
the Elon Musk factor as well. How does that translate
in an IPO environment for anyone that wanted to get
(07:42):
into the company.
Speaker 8 (07:44):
Well, there's a couple of other things to think about,
which is that a twenty three year old company has
had a lot of employees come, stay, leave, right, and
so you have a wide slot of shareholders, kind of
like a long tale of ownership. And so sure there's
some concentration in some of their biggest investors and in
the founder shares, but this thing is pretty widely held.
I'd go so far as to say that an IPO
(08:05):
might also be a solve for the fact that the
company is a private entity and can only have two
thousand shareholders that is a requirement before they have to
start filing financials. That may actually be a bit of
a driver here as well. But as far as what
the IPO is going to look like, this is uncharted
waters right, Saudi Ramco, Ali Baba, those would actually be
(08:25):
smaller than these IPOs, right, And we don't know or
than this IPO, and we don't know if it's going
to be primarily secondary liquidity to existing, if it's going
to be new capital. Though I would posit it's probably
going to be new capital based on a lot of
your reporting as well, because there's going to need to
be investment from SpaceX into new computing and processing power.
Speaker 2 (08:45):
So to a big portion of the Bloomberg Tech audience
that work in the world of technology tenders and the
secondary market is something they'll be familiar with. Loads of
people will not be familiar with that, And so what
usually happens with a big IPO is in late stage growth,
prior Marie rounds, where the company raises money issues new equity.
You get these kind of anchor investors that come in
(09:06):
ahead of an IPO might be a year in advance.
In this case, what we're reporting is the tender is confirmed,
eight hundred billion dollar valuation, four hundred and twenty one.
Speaker 3 (09:14):
Dollar share price.
Speaker 2 (09:16):
Could you explain that dynamic ahead of a big IPO,
how there isn't any new primary round not raising new money, which,
as you know Elon Musk has been at pains to
point out on.
Speaker 8 (09:26):
X sure in as simplest form, if you're a business
that's profitable and you don't need new capital to continue growing,
why dilute yourself by taking in new investment injection? You know,
through a primary a secondary liquidity offering is a way
to reward employees or perhaps early investors by getting them
(09:46):
liquidity for their shares without diluting ownership overall for everybody else.
And this is something that SpaceX has elected to do
over the past few years, I believe, kind of semi
annually in a way to provide liquidity not dilute themselve
we also set a new kind of external price for
their shares, but still maintaining an immense amount of control
and the only thing I would call out here, Ed
(10:07):
is that obviously two billion dollars of liquidity is a
big number, but it's actually only probably two to five
percent of the valuation of this company. And so I
hesitate to kind of identify that eight hundred billion is
the new market price for SpaceX, more so that it
is the market price that SpaceX has decided is out there.
Speaker 2 (10:26):
Yes, yeah, the tender was capped at two billion dollars.
That's what I reported. We just have thirty seconds valuation
at IPO one point five trillion dollars.
Speaker 3 (10:35):
What do you make of that?
Speaker 5 (10:37):
That I think would put it in uncharted waters?
Speaker 8 (10:39):
Right, You've got three public companies that are worth north
of three trillion dollars.
Speaker 5 (10:43):
Where's the upside from one point five? I'm not sure.
Speaker 8 (10:45):
At the same time, the bull in me, says Palenteer,
how a robust retail investor audience, it trades it north
of one hundred times revenue. So the art of the
possible is somewhere in between those numbers. I do know
that this would probably be literally the most exciting IPO
we've ever seen.
Speaker 2 (11:01):
Phil Haslich, chief strategy officer at Equiszen, thank you very much.
Coming up Meta making moves toward a new AI model
from open to close.
Speaker 3 (11:12):
That's next. This is Bloomberg Tech.
Speaker 2 (11:26):
Metas Mark Zuckerberg is shifting the company's focus toward a
new artificial intelligence model that can make it some money.
One new model is expected to launch next spring, potentially
as a closed model that Meta can sell access to.
This would mark Meta's biggest move yet away from open
source models. The reporting comes from Bloomberg Tech's Riley Griffin.
(11:47):
There's a case study. The case study is Avocado. So
let's start there. This is all what we're hearing from sources.
But my under saying it is originally Avocado might have
been an open source model. It's now not going to
be based on our reporting. Take it from there and
then we'll get into the bigger picture.
Speaker 9 (12:02):
Yeah. Essentially Meta is working on this Avocado model that
is the code name internally, and they have not officially
decided whether it will be open or closed, but closed
is the way they are leaning out the moment. And
this is a really important distinction because it points to
a monetization strategy, and as you know, Meta is under
(12:22):
pressure to show that it can return on its multi
hundred billion dollar investment in AI, and this is one
path towards that.
Speaker 2 (12:31):
There's detail in the reporting about how Alexander Wang, who's
basically you know, the lieutenant leading the AI lab effort,
is pro closed model. In July, Mark Zarkobak kind of
told us why open source in this environment isn't that great?
As the models get bigger, there are fewer people that
can access them. It's a resource and constraint issue. But
(12:53):
what else are you putting in the story here? Because
you know Meta was the sort of flag waiver for
open source.
Speaker 3 (12:59):
Yeah, I mean.
Speaker 9 (13:00):
Things we heard from in and around the company. For one,
employees after July were told that they should not be
talking publicly about open source as Meta reset its strategy. Remember,
Mark Zuckerberg brought in all of these expensive researchers and
had to reset after a very disappointing release of Lama
for that was their open source model earlier this year.
Speaker 3 (13:22):
And so this is a.
Speaker 9 (13:23):
Resetting of the strategy under Alex's leadership, with close involvement
from Mark Zuckerberg who.
Speaker 3 (13:28):
Sits quite close to Alex.
Speaker 9 (13:30):
And the pressure is leading to tensions too, but that
steer to employees internally to not be speaking publicly about
open source should be a big tell.
Speaker 2 (13:40):
The report is a muster read Bluemog's Riley Griffin with
the reporting alongside Kurt Wagnan. Thank you very much. President
Trump decided to let him videos. So it's h two
hundred AI chips to China, after concluding the move carried
a lowest security risk because the company's Chinese arts rival,
Huawei already offers some AI systems with parapol performance. That's
(14:01):
according to a Bloomberg source Bloomberg Tech report. Maggie Eastland
joins us. Maggie, you and I broke this story together yesterday.
As we understand it right, the President was presented with
a range of options from exporting no technology at all
to the latest technology, and they landed somewhere in the middle.
Take it from there. And what else we reported and
what we know about the Huawei Cloud Matrix three eighty
(14:23):
four system.
Speaker 10 (14:26):
Yes, one key detail we've reported is that this Cloud
Matrix three eighty four system, which can link together hundreds
of chips, was a key rationale underpinning the White House's
logic to allow these advanced chips, which are better on
a per chip basis than what Chinese companies.
Speaker 3 (14:43):
Are capable of.
Speaker 10 (14:44):
However, as was made clear in our reporting, the White
House is looking at this more at a system level,
and their understanding was that Huawei's systems are actually advancing
quite quickly, so that was the rationale here. And though
this is a paradigm shift from previous administrations during which
Huawei's advancements were an impetus to actually crack down and
(15:06):
further restrict those Chinese companies, now that same evidence is
being used as a reason to loosen controls and kick
off this new strategy of selling in video chips to China.
Speaker 2 (15:19):
The main focus, as I understand it, is that age
two hundred is eighteen months behind Blackwell generation to generation,
and that's the comfort level this administration has. In Vidia's
down one point three percent in the session right now.
The other big report out there is from the Information
which reported that deep Seek smuggled in thousands of Blackwell
(15:39):
chips into China, getting them from countries of origin where
they were allowed dismantling the servers. Nvidia has come out
with a statement, Maggie, pushing back on that report. Let's
start with that in Vidia's statement.
Speaker 11 (15:52):
Please, yes, So Nvidia has said that these smuggling claims
are a bit far fetched in its own words, and
while it investigates every tip it receives, it hasn't seen
evidence of this.
Speaker 2 (16:05):
Now.
Speaker 10 (16:05):
One interesting thing from the report. Jensen Wong has said
before that these Blackwell racks are just a bit too
heavy to be feasible to smuggle, but this report from
the Information did say that the smuggling for a deepseek
took place in these sort of eight chip segments that
could potentially fit in the suitcase.
Speaker 2 (16:23):
Bloomberg's Maggie east Land, who's out in DC, covers the
intersection of tech and politics with the reporting.
Speaker 3 (16:29):
Thank you very much.
Speaker 2 (16:30):
Another story, Amazon pledged to invest thirty five billion dollars
in India over the next five years, boosting its spending
in the key growth market to expand in businesses from
quick commerce to cloud computing. The e commerce giant says
it will invest in areas such as AI and logistics infrastructure,
and that the planned outlay through twenty thirty will help
create an additional one million jobs in India.
Speaker 3 (17:00):
Oracle reporting earnings.
Speaker 2 (17:01):
After the bell, this is the story they expect on
the street. The backlog to grow, remaining performance obligations basically
deals signed but revenue not booked to continue pushing north
for five hundred billion dollars. But Oracle's got a very
big debt pile and the one metric we're looking at
negative free cash flow expected to be almost six billion
dollars in the quarter. Let's preview, let's discuss City Panagrahi
(17:25):
Managing director, senior analyst and Mazuho covering SAS but also
covering Oracle.
Speaker 3 (17:30):
This is the equation.
Speaker 2 (17:32):
We want to see growth in the cloud division OCI
in particular. But in the background there's that stat Oracle
swinging to negative free cash flow for the first time
since nineteen ninety two. Remind us what your price target
and call is on the stock, and then how you
feel about that stat.
Speaker 6 (17:51):
That's great, thanks for having me here.
Speaker 7 (17:53):
Look, I think what you said right at this point,
investors are concerned about.
Speaker 5 (17:58):
Free cast flow more.
Speaker 7 (18:00):
You know, they have to build massive CAPEX build out
for AI capacity data center build out, and also they
need to do the funding for that.
Speaker 6 (18:10):
So what matters at.
Speaker 7 (18:12):
This today in the earnings call, is Oracle during some
kind of clarity on that. Look, I think what investors
missing is that Oracle has multiple options. They don't have
to raise data or CAPEX. They can also go for
alternative financing like vendor financing or capital leasing. Then you
won't see that in a capex. But at this point
(18:33):
Oracle is not able to tell you how much you
the capex as how much they have to raise because
they are going to evaluate this as they are building
out data center. Each data center, they are going to
look at their own cost of capital and compare that
to the leasing. So that's what I think the one
of the concerns we hope to hear from management on
(18:56):
that how they are going to fund the capex they're
going to build their data center.
Speaker 2 (19:02):
Right, I've been trying to learn as much as I
can about how this world works. CT Remaining performance obligation
RPO is a term that gets bandied around all the time,
but basically it's a backlog right of business five hundred
billion as it stands as Bloomberg's reported it, quite a
lot of that is open AI. Now in the future,
(19:23):
if something happens and a deal falls through, often in
the contracts there's some kind of penalty for cancelation or severance.
But the question still out there, how do we know
that open AI in particular is good for it that
they'll be able to actually front up on the projects
that they're committed to.
Speaker 5 (19:42):
Yeah.
Speaker 7 (19:43):
I mean that's a fair point, as you say, But
if you look at right now, they're only handful of
EI companies like clear or four, Open Ai Andthropy, Mata
and Xai. So Oracle got most of them except Anthropic,
so yes, and open Ai is a trail blazer in that,
(20:03):
so they have that as a customer. That's I think
most important at this point. To your point, can open
Ai pay or that contract will fall apart. Look, this
is a non cancellable contract, what Oracle says.
Speaker 5 (20:17):
So with that and there will be demand.
Speaker 7 (20:19):
If we think about AI at this point, the rate
it's growing, probably probably will need that demand at this point.
But I think if you look at the concern Oracle
lost more than three hundred billion dollar market gap, you know,
and or open a contract is only three hundred billion
I think if I remember, it's three hundred twenty two
billion market dollar market cap loss. So even investors are
(20:43):
more skeptical beyond even open Ai at this point, which
we don't think like core business is still doing well
the way we are looking at You asked about the
price target. I think if you're an investor, you need
to believe on this long term AI story. Growth is
accelerating twenty one dollars EPs they guided for fiscal thirty
(21:03):
and if you discount it back, even applying twenty five times,
we get to this four hundred dollars price target.
Speaker 3 (21:09):
Sidi, we just have less than a minute here.
Speaker 2 (21:12):
Do you like this co CEO structure and the leadership
of Oracle?
Speaker 3 (21:17):
Yes.
Speaker 7 (21:17):
I think the way right now Oshi is very important
for Oracle. So that's where they're separate, separating OSCI.
Speaker 6 (21:24):
This Clay is.
Speaker 7 (21:26):
He's going to SUPERVISEE. He's going to look at that
business and rest of the application and rest of the business.
Mike Cecilia is going to do it. I think this
model works. Larry's still there, he's the chairman, he's leading
the group, leading the company there.
Speaker 6 (21:42):
So we like it. I think we'll see how it goes.
Speaker 2 (21:47):
Oracle down three tens percent with treading water. That is
the big earnings print after the bell CT Panagrahi of
MISSOI great to have you on the show.
Speaker 3 (22:01):
Welcome back to Bloomberg Tech.
Speaker 2 (22:02):
Probably the story of the week maybe has been the
saga around Warner Brothers Discovery two competing bids, one from
Netflix cash and stock at twenty seven dollars seventy five
cents a share, which is just for the streaming and studios,
and one from Paramount Skydarks thirty dollars per share for
the whole Enchilada. This is what those stocks have traded
(22:23):
like on week. We're not quite in the sort of
discussion territory around arbitrage, in other words, looking at the
gap between where the stock's trading and the price of
the deals offered, because it's a live situation with multiple bids.
But we are looking at the structure of the deals. Now.
Netflix is looking to become debt Flix again.
Speaker 3 (22:44):
Do you see what we did there?
Speaker 2 (22:45):
After cutting back on debt during the pandemic, it's back
to borrowing heavily to finance its planned acquisition. For most
of Warner Brothers Discovery, the caveat that they'd spin off
the legacy network and cable lines. The difference is that
now Netflix has a stronger balance. Hot of the press
just hit the wire. Bloomburst Cross Asset reporter Emily Graffeo
has the deep dive. Debt is becoming so important generally
(23:08):
across technology, but in this case with Netflix, it is
a change of corporate policy in what is a potentially
very big deal.
Speaker 3 (23:16):
What are you reporting? It really is ed.
Speaker 12 (23:18):
So what we found is that this term Debtflix was
introduced a couple years ago by some detractors when the
company was rated high yields. They really built their business
around borrowing heavily in the junk bond market, and some
people didn't like how much cash the company was burning.
But they've really turned that credit profile around now. So
(23:38):
now the company's rated investment grade. That allows Netflix to
tap into a deeper market more investors here, and they
have to raise a lot of debt to finance this
acquisition of Warner Brothers. Bloomberg Intelligence estimates that right now
they have about fifteen billions dollars of debt that's going
to about seventy five billion given the current terms here.
(24:01):
But what we're hearing from a lot of different credit
analysts is that Netflix has the balance sheet to fund this.
So it's a turnaround story here. They are Debtflix. It's
a fun term. I wish I could take credit for
coming up with it, but I did not. But again,
here it's it's investment grade debt, and it's debt that
most analysts are confident Netflix can actually still keep that
(24:23):
investment grade rating and it can actually even potentially raise
more debt if need be, to top that hostile takeover
bid because that balance sheet is so strong.
Speaker 3 (24:34):
Ed Bloomo's Emi Crofeo.
Speaker 2 (24:37):
It's a must read on the Bloomberg terminal Netflix to
Debtflix check it out. All right, let's bring in Laura
Martin for more on this deal. There is a lot
more to discuss. Laura's senior entertainment analysts at Needam and Co.
It's one of these situations where there's the Wall Street
view on this deal, the structure of the deal, and
(24:58):
then there's the what is this for Hollywood? And the
reason I'm so excited to have you on the program
is I think we could probably talk about both. But
this is the first opportunity I've had to talk to
you about two competing bids. I set the stage for
it on Netflix's offer cash and stock and paramounts offer.
What is your position at this time and what is
your research into the competing bids?
Speaker 13 (25:21):
So, I mean, I think the kudos have to go
to Zaslov for creating this auction for an asset that's
worth twelve dollars. We're now at thirty dollars a share,
and now we've hear over the tape this morning that
both Paramount and Netflix have said they could go higher.
So so far we have a three hundred percent like
premium over what the assets were trading at before the
(25:44):
auction rumors. So, first of all, kudos to David Zaslov
and the Warner Brothers team for selling an asset deer.
In terms of who wins, you know, we are much
more sanguine about Paramounts or Peace Guy is its ticker
regulatory ability to get it through the Trump administration, right.
(26:04):
You know, we think that there are real issues with
Netflix being successful, not only with Hollywood talent who see
this as anti competitive. I sit in Hollywood is anti competitive,
especially because Netflix has said repeatedly it does not believe
in the theatrical box office release window, and so all
of Hollywood is scared to death that if suddenly Netflix
(26:27):
owned Warner Brothers that within five years they would stop
releasing films in the theatrical box office, which is why
we've seen pressure on the exhibitors also, So I think
Hollywood is really negative or let me say it this way,
much more negative about Netflix taking over Warner Brothers than
Peace guy, So I would say that.
Speaker 3 (26:46):
And on the side, let me jump in real quick.
Speaker 2 (26:49):
On the money side, we will get to Hollywood, particularly technology,
because you know, Netflix's competency is the algorithm to an extent,
and the library and the content. But I just want
to go back and back to basics and what you said,
twelve dollars with Warner Brothers Discovery. You're not the first
person to make this point, Laura, but just explain the
basics to our audience.
Speaker 3 (27:09):
Please.
Speaker 2 (27:10):
People do feel that the value of what iver entity
ends up getting may not be at twenty seven dollars
seventy five cents for the studio streaming or thirty for
the whole enchilada, as I keep saying.
Speaker 13 (27:24):
Right, So, I mean, I'm comparing the trading price for
WBD Warner Brothers for like a year. Essentially it was
falling and it hit about a twelve dollars price before
the first rumor of a Pea Skuy bid started the
stock moving up. And then I can't remember the Larry
Ellison first bid or the David Ellison first bid, but
(27:47):
now we're up at thirty dollars a share for the
whole thing, and that includes twenty seven from Netflix for studios,
plus the ideas there'd be a two dollars three dollars
stub left trading for the network's division, which would add
up to thirty dollars also. But in theory, so anyway,
I'm saying we're like at thirty dollars for the comparable
(28:07):
asset that was trading at twelve dollars before the auction began.
Speaker 2 (28:11):
For this asset, I think there's a lot of value
in that answer, because the next question is of course
about antitrust and what the combined entities would look like.
In either case, you said you believe or you're more
sanguine about Paramount Skuidance combined Warner Brothers Discovery.
Speaker 3 (28:29):
Why okay?
Speaker 13 (28:31):
So in streaming, in the streaming industry, Netflix has over
three hundred million global subscribers and HBO Max has one
hundred and fifty, so together there's some duplication there, but
let's just call it four hundred and fifty subscribers, which
is like forty percent of the streaming market. Whereas Paramount
(28:52):
or Peace Guides now called has seventy five million subscribers
that you would add to the HBO which is one
hundred and fifty So now you're two hundred and twenty
five million subscribers, much smaller market share of streaming than
if you combine Netflix, which is the industry leader, with
Warner Brothers HBO Maxset streaming asset. So I would say
(29:15):
that's one reason, and then the Hollywood Studios. As you know,
Netflix is one of the largest global creators of content,
and you would combine it with Warner Brothers, which is
one of the largest global creators of content. They have
different windows, meaning distribution windows, meaning Netflix primarily creates for
television direct to streaming the television screen, and Warner Brothers
(29:39):
primarily creates content for both TV but also the film business.
It's a big film a distributor. So I think the
idea is putting these two huge content creators together would
dampen competition for talent and lower prices for talent and
also raise prices for consumer. That is not a concern
with Peace Guide Bar Warner.
Speaker 2 (30:01):
Brothers, Laura, we have less than a minute, Netflix would argue,
and I am simplifying that. You know it would simplify
it for the consumer. You know, having HBO Max Netflix,
people have multiple subscriptions. But it sounds like you don't
think that that argument will make traction.
Speaker 6 (30:17):
Oh no, it would simplify it for the consumer.
Speaker 13 (30:19):
But if they collapse, the thinking is they would collapse
Netflix and HBO Max.
Speaker 6 (30:26):
Great, But what happens to the price.
Speaker 13 (30:28):
The consumer is going to get a much higher price
if you add those two things together. So it's simpler,
But really a monopoly policy is based on simplicity versus complexity.
It's based on the price to the consumer and consumer welfare,
and price is part.
Speaker 6 (30:42):
Of consumer welfare.
Speaker 13 (30:43):
Actually, simplicity is not and in the laws as a
driving factor, but prices and price would go up for
consumers if they combine those two assets.
Speaker 2 (30:53):
I think, Laura Martin o'needham, it's great to have you
back on bloombog Tech. I suspect we'll be talking about
steal for quite a long time to come.
Speaker 3 (31:01):
Thank you.
Speaker 2 (31:02):
Sticking with entertainment M and A, Disney co chairman Dana Wolman.
Dana Wolman sat down last month with Bloomberg's Emily Chang
for an episode of the Circuit to discuss broadly the
m and A landscape and what she thinks of the
competition coming out of a potential merger.
Speaker 3 (31:17):
Listen to this.
Speaker 14 (31:19):
I don't worry about a stronger competitor coming out of it,
because we already went through an incredible transformation in twenty
nineteen as Disney integrated the entertainment assets of Fox. We
already went through you know, a big em and a
event to expand our library, to increase the amount of
(31:42):
IP that we ultimately could take over the top directly
to the consumer.
Speaker 3 (31:47):
So I'm not worried right now. I also think.
Speaker 14 (31:52):
Whichever whoever ends up in you know, in this situation
acquiring WBD or any asset that's available, these are situations
that require a lot of time, time for regulatory approval,
time for integration, time to figure out, you know, how
to combine apps, a lot of the things that we've
(32:15):
already been through now.
Speaker 2 (32:18):
Disney co Chairman Dana Wolman long with bloom eg Zemini
Chang again, recorded last month. You can catch the full
episode at the Circuit tomorrow at eight pm Eastern on
Bloomberg Originals or ten pm Eastern on Bloomberg Television.
Speaker 3 (32:30):
All Right, coming up.
Speaker 2 (32:30):
Elon Musk, SpaceX aims to blast into the record books
with possibly, possibly, maybe we're ready for lift off the
biggest IPO of all time.
Speaker 3 (32:42):
That conversation. Next, this is Bloomberg chat range.
Speaker 2 (32:48):
In good call out healthy systems aren't the booster as
it started to pitch over.
Speaker 5 (32:52):
Over the show.
Speaker 3 (33:01):
Okay, back to our top stories.
Speaker 2 (33:02):
SpaceX shooting for the stars yet again, this time in
the financial context. Sources tell us the Elon Musk led
space company well underway with plans for an IPO that
would seek to raise far above thirty billion dollars, with
the targeted valuation around one point five trillion dollars that
would make this by money raised the biggest IPO ever.
(33:24):
A representative for SpaceX didn't respond to my many requests
for comment. Joining us to discuss is Will Whitehorn, chairman
of Seraphim space. Will was also former chairman of Virgin Galactic.
Somebody's works side by side with Richard Branson in the
domain of commercial space. We have a lot to get
(33:44):
to Seraphim. You know, an investor in all kinds of
different space assets, and it's the space asset that I
think is central to this.
Speaker 3 (33:53):
SpaceX IPO story.
Speaker 2 (33:55):
My reporting is that they want to raise the capitol
for the SpaceX AI cluster, the SpaceX AI stack space
Space Data Center.
Speaker 3 (34:05):
Your reaction to that.
Speaker 15 (34:06):
Will well, I think that's probably right, and I think
that this is a seismic event for the entire space industry.
Speaker 6 (34:14):
We're not going to see the like of this.
Speaker 15 (34:17):
I think it's going to cause huge changes to the
companies that are suppliers to SpaceX, to the whole massive
kind of environment that they've created, particularly in the United
States and in the UK. Some companies as a company
in the UK called Filtronic, for example, which has become
a major supplier to SpaceX. Many of the companies in
(34:39):
the Seraphin portfolio they launch on SpaceX rockets. Starlink has
obviously when you link Starlink to AI to data centers,
you are seeing an entire ecosystem of businesses growing up.
And many other constellations will benefit from this sort of
InOrbit servicing, more data analytics coming out through the space industry.
(35:03):
Space and AI will become interlinked in a way they've
never been before. I mean, space really is going through
a lot of change. As it goes through this industrial revolution.
Speaker 2 (35:15):
Will we're going to question report on react to wherever
the valuation of this company settles. My reporting again is
that the target based on what they want to raise,
the amount of the percentage of the company they offer one
point five trillion dollars. But macro, this is an industry,
(35:35):
private commercial space that's growing. What is seraphim seeing What
are the numbers that you're tracking on how an industry
is basically growing out of SpaceX's wake.
Speaker 6 (35:45):
Well, I'll give you an example.
Speaker 15 (35:47):
We've got one of the biggest companies in airportload's called
i Sie, which has a very special kind of apperture radar.
Speaker 6 (35:54):
The demand for it has gone through the roof.
Speaker 15 (35:56):
I sized business plan has ended up being two years
ahead of play and they're in profit already. And they
are They've just in the process of a very big fundraise.
Other companies like Maucai three sixty, Satellite View, All Space,
all of these companies, app orfolio are all doing very
well and getting ahead of their business plans very rapidly
(36:19):
because the demand for data from space is going through
the roof for both climate change, defense, natural security, communications,
I mean, everything is relying more and more on space.
Speaker 6 (36:31):
And of course as people get scared about.
Speaker 15 (36:34):
The underground and undersea cables that supply the Internet. The
demand for Internet data from space is starting to rise
as well in the fintech sector.
Speaker 6 (36:44):
So everything is happening all at once.
Speaker 15 (36:46):
The insurance companies want space data because they realize it's
more accurate than ground based data for agricultural assets, buildings,
infrastructure projects.
Speaker 6 (36:56):
So you've got insurance demand, agricultural demand, climate change demand.
Speaker 15 (37:00):
And now defense demand rocketing ahead since Ukraine and the
Middle East happened over the last three years. And indeed,
you know, I got an OBE today from Prince William
which is one of the first in the space industry
to show that even royalty are catching up in the
Actually one of the first things he asked me, that's
what I thought was going on in the space industry
(37:20):
at the moment.
Speaker 2 (37:21):
From the UK okay well for our audience around the
world outside of the UK. Obviousely, I originate from the
United Kingdom, an OBE officer of the Most Excellent Order
of the British Empire.
Speaker 3 (37:32):
So congratulations to you.
Speaker 2 (37:33):
Awarded to you this morning by Prince William, and I
understand that you then ran to be here on the
show and that actually Prince William may be tuning in
and a fan of the show anyway, appreciate.
Speaker 6 (37:45):
That that's true, and that's very true.
Speaker 2 (37:48):
I believe in transparency on this program. One thing that
we should have done to start is what is Sarah
FIM's exposure to SpaceX?
Speaker 3 (37:56):
Have you any skin in the game.
Speaker 15 (37:59):
No, we don't have a steak in SpaceX. Only a
couple of British investment trusts do have steaks, both of
them Scottish based Seraphim. When we started, it was too
late to get into SpaceX at that time, which is
a shame.
Speaker 6 (38:13):
But we have a lot of.
Speaker 15 (38:16):
Exposure to companies that I think are going to really
benefit from this huge ecosystem of new investment as SpaceX
will create. And I'm looking personally at other companies that
will benefit. And in fact, I bought a steak in
one today, which I think will be a beneficiar. This
will have, as I said, a seismic effect on an
industry already undergoing an industrial revolution.
Speaker 6 (38:38):
It is going to be, you know, one for me
as an old hand.
Speaker 15 (38:41):
I mean I'm sixty five now and you know I
was around in the days when the Netflix, the Netscape,
moment happened in nineteen ninety five, which kicked off that
range of Internet investment.
Speaker 6 (38:54):
That we still see today.
Speaker 15 (38:56):
And I think that this is the space equivalent happening
right now.
Speaker 2 (39:02):
Will do you want to tell us what the company
is that you invested in this morning?
Speaker 15 (39:07):
Mask Seraphim doesn't have mistake in It is a company
called Filter Chemic.
Speaker 2 (39:12):
Okay, let me ask this. Then, let me ask this.
You are sixty five years old. Thank you for sharing
that with our audience. Elon Musk is fifty four. He's
committed to Tesla for ten years. We just have thirty seconds.
But is it realistic that this man leads to public
companies at that scale for the long term?
Speaker 15 (39:34):
Well, this is going to be a big question around
the ido of the sleep of SpaceX. Is he going
to spend more time on SpaceX with this size of
fundraise or is he going to carry on in his
Tesla environment as well. Both companies will be quoted, both
will be some of the biggest companies in the world,
and you're quite right, this is going to be an
issue that investors will look at very very closely.
Speaker 2 (39:57):
Will WHITEH Seraphim, space chairman ordered and ob this morning
by Prince William then running over to the camera for us,
thank you very much. The Adobe sets report Q four earnings
this afternoon after the bell is The company looks to
(40:17):
convince investors it is on the right track in the
AI era. Bloomberg Intelligence says Adobe could see it's and
your recurring revenue target in the low double digits for
twenty twenty six. Let's get out to Bloomberg's Matt Day
and Seattle with the preview. Matt, what do we need
to know?
Speaker 16 (40:31):
That's right, Sir Jeffreys, Brint Phil said, and I know
the other day, low expectations and low investor interest. There's
a lot of worries about whether Adobe, which has navigated
the transition from package software to subscription software, whether we're
going to be able to do the same in the
AI era and survive all beating newfound competitors they've got
in the space.
Speaker 3 (40:48):
That sets the scene, it sets the tone as well.
Speaker 2 (40:51):
I mean, you know, I did a big interview with
the Adobe CEO in the summer, and there's clearly a frustration
this is a stock that's down twenty two percent this year,
that they're not getting credit for the work they think
they've done in AI. Part of it is how they
sell it. Is there a bigger Adobe AI story that
someone's buying.
Speaker 5 (41:11):
You know, there might be.
Speaker 16 (41:12):
They've tried to convince investor with a couple of metrics,
you know, one sort of AI first revenue that's tracking
about two hundred and fifty million dollars. They've got another
one AI influenced revenue about five billion dollars. But you know,
as the stock price to date shows, investors aren't buying
that all the way. You know, particularly in a world
where open ai is getting a whole lot of interest
with Sora, Google's got new video generation models. If you're
(41:32):
a creative professional doing something that's Adobe's wheelhouse and there's
a whole lot of AI in the monitors.
Speaker 2 (41:36):
Right now, I'm grateful you mentioned that open ai in particular.
The debate the Adobe's had, and maybe the shift is
they try to pitch themselves as we have our own
models with our own safeguards and data, and that's best
for customers. Now they seem to be saying we're open
to using other models and other data inputs as well.
(41:56):
Have they kind of settled on their approach.
Speaker 16 (42:00):
It's a little bit both as you said, they definitely
built their own models. They say their copyright compliant. But
just this morning they've li've out with a partnership with
chat gpt macer opening. I had to put Adobe products,
a limited version of them inside of chat GPT, so
they clearly realized they can't own the space entirely. Have
kind of got to be everywhere that the users want
to be.
Speaker 2 (42:17):
Yeah, Bloomg's Matt Day with the Adobe preview.
Speaker 3 (42:20):
Thank you very much.
Speaker 2 (42:21):
That's a good way to end a show that does
do it for this edition of Bloomberg Tech. But I
would remind you it's not just Adobe out with earnings
after the Bell Oracles, the big one probably that we're
looking for. We expect a big backlog of business with
a big debt parle that we're worried about. Those are
the two names we're watching. In the show, it was
all about SpaceX and an IPO we think is coming
(42:41):
in the middle of the next year. Recap that on
the podcast. You know where to find it on the
Bloomberg platforms and online Ihearts, Spotify and on Apple. From
San Francisco, have a great afternoon. This is Bloomberg Tech.
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