SpaceX Makes History With Biggest Wall Street Debut Ever

22:21Ed Ludlow:mean the main issue in the risk factors right you just i'm just recounting is that it also spells out as clear as day that the entire success of the plan is is dependent on elon musk leading it right you know that it says if he were to go away that would be it and that in the last you know max Max and I have sort of been... That's a big risk. It's so weird. I'm like thinking back, was it even 2024 that we wrote it or was 2025? 2024, I believe. Everyone's just trying to make sense of like, okay, what was it that Elon Musk was trying to achieve by aligning himself in that political bucket? Even outside of the president.

23:03Ed Ludlow:You know, people ask me all the time at the moment, I mean, literally this week, is there anything about SpaceX going public in the President Trump's term? Don't know the answer. I think I asked you, like, would we be having a SpaceX IPO if President Trump... Not at$2 trillion. I mean, I think so much of the run up in the AI market has to do with the White House's, for better or worse, the White House's policy on AI, which has essentially been, let them cook. Let's rip out all the regulations. Let's get data centers going as quickly as we can and so on. And so much of that is kind of baked in to the SpaceX pitch.

23:48I also think, as I said, the S1 says that US federal contracts are about 20 % of SpaceX's revenue. That's down. It's falling. But that's still a significant amount of money. And as I said, they are getting more contracts. As much as this is kind of a sideline for SpaceX at this point, because the future is Starlink, the future is data centers in space and Grok and all that stuff. The present very much is government contracts. And they have done well during this period. I think we're talking about Elon Musk being a trillionaire. You know, I'm not sure that he's a trillionaire if he doesn't have that political adventure that he had, you know, in 2024 and 2025.

24:32Ed Ludlow:The one thing I would observe, right, is that we keep forgetting about what is SpaceX on the hook for? SpaceX and Starship are a massive part of America's ambition to get back to the moon. In fact, they are literally now on the hook to make Starship work in a certain time frame where they're required to demo that this year. And that's so fascinating because that isn't codified in the prospectus. It's not even discussed. How are they doing with respect to Starship? Well, they've just done the 12th test flight and the 12th sort of mission, I suppose, where it carried no payload of any significance.

25:09Ed Ludlow:It was a dummy, but it was with a brand new architecture. Basically, top to tail, they re-engineered it. And I think what Gwynne Shotwell, the president and COO, has been saying this morning is that in the coming weeks, they'll do 13 and 14. The whole point of it is the economics work because it's reusable. So it's very big, can carry a lot of stuff into space. But they've never actually successfully landed both parts, the booster and the spacecraft back on Earth. And that, if it's going to carry human beings, is a test that they should get to soon. And they haven't taken anything to orbit yet.

25:37I mean, and that's going to be an important milestone. I mean, it's important to say, Ed's right. Like the Artemis mission is kind of in a bind if Starship doesn't come through. but all of SpaceX is in a bind if Starship doesn't come through. Can I say one thing real quick?

25:54Ed Ludlow:I'm just recounting what's happened. But in the 12th test flight, they deployed dummy Starlink satellites. It's like a PEZ for fans of the PEZ candy. You have that in America, right? Yeah, obviously. Duh, duh. It's been around for a while, Ed. So the Starship spacecraft. For my time, even. I'm sorry. You can go to the PEZ museum in Connecticut while you're here. Okay, dear America, I'm sorry. There is probably an Elon Pez. I don't know that for a fact. There was definitely a serious point to this. Basically, how the Starlink satellites deploy out of Starship. There's a slot. They come out the side, kind of like, and they get pushed down and down and down like a Pez.

26:30Ed Ludlow:But they did demo the ability to do it, but the payload wasn't real. They were dummies. So I'm just stating that for the record. Does Elon have to be worried? I mean, Jeff Bezos has become rather chummy with the administration. And do we have to ever worry about Blue Origin and his rockets being able to do some of what Elon has? But they're also an integral part of the Artemis missions moving forward. Absolutely worried, although Blue Origin had a huge setback recently. And that is why. Because Blue Origin and SpaceX are competing for this lunar lander part of the mission. And, you know, of course, Blue Origin say they're going to rebuild and everything.

27:10But everyone I've talked to in this world says that it's a huge setback. We're speaking with Max Shafkin, Bloomberg Businessweek columnist, the host of the Everybody's Business podcast here at Bloomberg. He's author of The Contrarian. Max, Carol mentioned Jeff Bezos. We're going to talk about Blue Origin a little later in the program. Before we do that, you've spent a lot of years covering Tesla and the way that Elon Musk has led Tesla as a public company and his relationship with investors. How should investors right now look at that over the last decade or so as an idea for how he'll run this company and maybe even divide his time?

27:45It's kind of different when they're both public. I think that I'm not sure how helpful the early years of Tesla are to understanding this. I think SpaceX really looks very similar to the Tesla of the last couple of years. Exactly. The post-AI pivot, where you have this very good business that is kind of being pushed to the side for reasons that either have to do with Musk's vision of the future. You're talking about the auto's business. Yeah, in the case of Tesla, it's the auto's business, which is this very, very successful, good business. It's the thing that everyone talks about. Elon Musk popularized electric cars in the United States.

28:26But for two years or so, it's been de-emphasized. You look at it, sales have not been growing. I mean, it is in certain ways a challenged business. And then you have this kind of futuristic robots, self-driving cars, piece of the business. Same thing with SpaceX. But the one thing I'll say is I think the legacy part of SpaceX is actually a better business than the EV business. I mean, the EV business, as dominant as it was, never reached any kind of like monopoly status. Whereas SpaceX's launch business, you know, kind of is that. There are competitors. There are parts of the business where they have more competition than others.

29:03But, you know, as we're saying, if SpaceX has a huge problem, NASA has a huge problem. A bunch of satellite makers have a huge problem. They really have the market, you know, more or less cornered in that piece. And then you have this futuristic stuff that, you know, even Starlink to some extent is futuristic. But, of course, the data center thing, which is just like pure science fiction. So Starlink is like the robo-taxi data centers are like the humanoid robots. Not everybody thinks it's science fiction.

29:30Ed Ludlow:Just very quick, all the SpaceX investors that phoned me over the last week, thanks for phoning me. Interesting that SpaceX aren't encouraging you to come on Bloomberg Television and Radio. They also would make the case that it's not analogous to Tesla, but they would also say that SpaceX should get credit right now for being a much more diversified business than we talk about. It is more than rockets and they have a good interim before Orbital Data Center. Ed Lalo staying with us, host of Bloomberg Tech. Max Jafkin, thank you so much. Bloomberg Business Week columnist, host of Everybody's Business Podcast.

30:02Check it out on the weekend. Stay with us. More from Bloomberg Business Week Daily coming up after this.

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33:37Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Yeah, certainly we're focusing on SpaceX. Just we were quickly talking before we got going, and you take a look at what's going on with Tesla. We've seen it up as much as 1.5 % today. It's been down 3 % in today's session. right now, Tim, just to gain about half a percentage point. All right, that's Tesla, but SpaceX certainly only moving in one direction, opening 11 % higher than that IPO price yesterday, up as much as 30.8%, right now up about 27.3%. So far, this looks like a pretty successful first day of trading, I think it's fair to say.

34:17355 million shares, as we speak, have traded hands. Feels pretty calm. Carol Masser, Tim Stenevec, also Ed Ludlow, co-host of Bloomberg Tech, of course, on Bloomberg Television. and Monday through Friday at 11 a.m. who has been all things. How long do you feel like you've been talking about this IPO?

34:33Ed Ludlow:Yeah, I mean, it goes back to when we broke the story even the end of last year that the whole point of the IPO was, oh, they needed lots of money to buy chips to put in space. And as I told you a few times this month, people laughed at that report at the time, like that's not why they would IPO. And then the prospectus hit and here we are. They need money. Yeah, they need GPUs in space, but yeah, they need money for that, yeah. Yeah, I want to bring in Anthony Hughes, Bloomberg News, U.S. equity capital markets reporter. He joins us from the Bloomberg News Bureau here in New York, just steps away from us.

35:06Anthony, pretty successful out of the gate, I think it's fair to say. NASDAQ should be patting itself on the back right now.

35:13Ed Ludlow:Yes, Tim. I think for an IPO of this size, a 20%, 30 % gain is a pretty balanced outcome from the bank's perspective. You've, you know, obviously you never want to see the stock go down, but you don't want to see the stock necessarily go through the roof either. So, you know, 20, 30 percent for a high growth company, too. I mean, you want to see a decent return. So, you know, I think people go away and think this is a relatively balanced outcome compared to a lot of IPOs we've seen in the past. Yeah, it's interesting. You know, we've been talking with you as well to the lead up, Anthony. I don't know what's top of mind.

35:48And what have you been thinking about as you watch the trade today and what's important here?

35:53Ed Ludlow:Yeah, well, I think we've been looking at the level of volume. And certainly out of the gate, they got about 10 % of the stock paired up at the opening print there. So that's sort of something you'd like to see to make sure it's an orderly outcome. I think the main thing, I mean, it can be a little bit of an anticlimax in some ways the first day of trading for a stock because we've said a lot already about this company. We're just seeing basically the results today. But, you know, it's a fairly orderly first day of trading. Started up 11%. I mean, funnily enough, if you go back to Facebook in 2012, it actually went up 11 % on the opening print too, but then finished flat.

36:29Ed Ludlow:So it doesn't look like this is going to happen here for SpaceX. But, you know, sometimes, you know, these early gains can evaporate as the day goes on. But, you know, it's just one day of trading and there's many, many days ahead. And anyone who's been a long-term shareholder of Tesla knows that there's some tough days and some great days. but longer term, Tesla did very well. And I guess a lot of people are hoping to see something similar here. But on a larger scale, and this company's got such a big market cap, it's obviously hard to expect that SpaceX will do something like Tesla in terms of relative gain.

37:01Ed Ludlow:But, you know, obviously SpaceX's got big dreams and sort of unlimited hopes about what they can do in space. I'm glad you brought up Facebook. We were talking about that just a few minutes as we came live to you before. SpaceX up 28%. Ed Ludlow, we're going to get to Nick Colas in just a second. But before we do, just remind us today who can actually sell shares. This is a really important point because there's been a lot of discussion about, okay, who are the new centi-millionaires? Who are the new millionaires and who are the venture capitalists who have made billions on this? Just a few rapid fire things.

37:30Ed Ludlow:There's a big difference between economic ownership of this stock and voting power. So Elon Musk has 84 % voting power, right? And so he's locked up for 366 days. But, you know, he is going to be a big seller and he also has a big options packet that he can exercise. And then everyone else is kind of tiered. So after the Q4 26 earnings release, 20 percent of the existing shares are free of a lockup. Who can sell today is basically anyone that participated in the offering, the 75 billion. And what was so interesting to hear from the buy side today is like begrudgingly their participation in the open market as buyers.

38:08Ed Ludlow:You know, because loads of people didn't get allocations. You know, we have so much time. We can talk about the venture funds later. But, you know, even those that are subject to lockups, the venture funds will distribute the shares back to their LPs, which are endowments, pension funds. They don't just give them cash. Yeah. But those, they won't sell the stock. You know, at least that's what people keep telling me. Yeah. It's longer term, right? They're going to stay with it. Hey, we're talking, of course, with Ed Ludlow, host of Bloomberg Tech. We've also got with us Anthony Hughes, Bloomberg News, ECM reporter joining us here as well.

38:39And then let's roll into the mix. Nick Colas just joining us here on set, co-founder of Datatrek Research. Good to have you here. You're an independent financial advisory firm. Would you be advising institutional investors, retail investors to own this one? Well, what we do is we try to give people a framing to understand their decision. And by that count, the simple math obviously doesn't add up. This is a very expensive stock relative to any rational measure of value. But we're talking about Elon Musk, who has a tremendous track record of not just success, but convincing people that success is durable.

39:14So it's not a calculus based on valuation. It's a calculus based on faith. And plenty of people have a ton of faith and have made billions of dollars with Elon Musk in the past. And they're willing to give him a pass on this one because they think it can happen again. Well, I want to talk connectivity a little bit with you and the focus on really telecom Starlink when it comes to this IPO. In 2025, it was 61 % of the revenue. As I was mentioning earlier, I think for a lot of people who haven't been to a rocket launch or actually are big users of the AI tech that SpaceX has, maybe Starlink is the most tangible part of this business that they've interacted with.

39:52In your view, that's a pretty good business, right? It is a phenomenal business. It is a truly disruptive. I mean, there were so many years when we were talking about, and Ed was reporting on it, the possibility of perhaps that being spun off as its own independent level of a traded company. And there are prediction market contracts on that right now, oddly enough. It is a truly disruptive business in the classic Clayton Christensen sense of the word. It's a new technology that offers a product to an underserved community and then builds up from there. So how Amazon started with books and then blew up to everything.

40:23Starlink started with rural customers and has blown up to everything. It's exactly the playbook investors want to see. And Elon, as usual, has played it perfectly.

40:32Ed Ludlow:I just, you know, I just recap the numbers. You know, I find that so interesting that you're saying you can't do the math. You kind of can, you know, and what a lot of the existing cap table told me for months and months was, how do I start to model for the orbital data center business? And what they would say is 2025, not the revenues from Starlink, but connectivity operating income,$4 billion, and the scale of deployment and rate of deployment, literally the operation of putting it into orbit, they just extrapolate out to space-based data center. Can you use faith or hope and do the same on behalf of clients?

41:11Ed Ludlow:Unfortunately, you have to. There is no other option. There are no orbital data centers in space right now. Right? So you are betting on a brand new technology and what you're betting is the guy who brought you the past couple of interesting technologies and bring you the next one. But it is a faith-based process. It is not based in any math you can rationally model. And I was a sell-side analyst for a decade. I covered the autos. I know how to do a financial model. Oh, goodness. You know, to a very strong degree. And this is not one of those analyses. So people can do whatever math they want to do.

41:40The stock's going to trade wherever it wants to trade. And the two may coalesce. They may not.

41:43Ed Ludlow:Real quick, without betraying confidence, do you have faith? In other words, did you tell clients, like, look, this is a trade based on faith. We have faith. Make the trade. Yeah. What I've told clients is if you want to put in for the stock, I gave you a range. And I just went through the numbers. The average IPO since 1980 up 19 % on day one. So that's the bogey. 161 for SpaceX is an average IPO one-day pop. If you want to look at 2025, it was a 29 % pop. So 174, which is right around where I think we're trading now. 173 and change. Nice. So, boom, 29 % is the average IPO pop from last year.

42:18If you want to look at 1999, just to go bananas, that was a 71 % one-day pop. I remember that. So that was, we all, yes, yes, I certainly do as well. I was working for Steve Cohen at the time, and that was an amazing year. That would be a 231 close. Would Steve Cohen be buying this? Steve Cohen would have gotten an allocation and probably have sold half of it on the open and be trading the other half very intelligently because that's what he does. That's really interesting. Hey, Nick Colas is with us, co-founder of Datatrek Research. Ed Ludlow is with us. Anthony Hughes, you've been sitting by patiently here at Bloomberg News.

42:51You mentioned, though, Nick mentioned SpaceX. The stock right now is up almost 28 % here, 172 and change in its first day of trading. Anthony Hughes, you've been thinking about the valuation, writing about it. Got a question for Nick for us.

43:05Ed Ludlow:Yeah, well, I think one of the interesting questions, Nick, is, you know, we do see it with a lot of these hot IPOs that they come pretty, you know, they can come, it can rise pretty sharply out of the gate and then fall off pretty quickly in the weeks and months afterwards. I just wondered, do you think there's an argument with SpaceX that, you know, perhaps it could do something a little bit differently just because there's such a need for people to buy the stock, the index inclusion and stuff like that? Do you think that could ever be a factor here in helping to sort of put a bit more of a floor on the stock?

43:32I think that it is a factor for the next couple of weeks because we have the queue entry I think on July 5th if I recall correctly 15 days after pricing so you're gonna see some offset of people who are owning this stock right now selling it to the queues when it gets included in the 100 past that there seems to be a fairly even match and they actually did earlier lockup expirations for employees and insiders than usual so you could actually compare the additional add of stock to the queues to the unleashing of stock from the individual owners that have it right now. So it should balance out. But I will make one broad macro point.

44:08Very important. Most IPOs don't work. Most IPOs underperform in year one. And so to beat that, those odds is relatively hard. Stocks take time to season. Managements take time to season. This is not a company that has a lot of prior public market experience. But the executives have a lot of prior public market experience. Elon Musk, For example, I mean, Gwen Shotwell for years, the COO has been talked about, not talked about as much anymore, but being like the adult in the room. Yes, and she is. At SpaceX. So I think people could push back on the experience part of this a little bit. That is fair.

44:43The Elon thing cuts both ways. Look at the five-year chart on Tesla and tell me that thing's been a value creator for the last three years. It just hasn't. So there is. Is Tesla the model we should be looking at, Nick, in terms of for SpaceX or that's not fair? I think it's entirely fair because both are basically on a Musk premium and a massive one. Tesla's going to earn maybe$2 a share this year. Stock trades, what, 200 times that? So you're talking about big valuations in both names. And I thought it was interesting looking at Tesla at$1.5 trillion and this at, call it, $1.92. You're talking about two very large companies based on one person's vision but not a lot of cash flow.

45:23That's the common factor. And you can be a season management team, but I don't know any other season management team that can hold those together besides Elon's teams. Yeah. Ed, I want you – do you have a question for Nick? Because I know Nick's going to leave us after this segment. You know, the lockups are so interesting.

45:38Ed Ludlow:And, like, you know, we remind ourselves the oversubscription. Actually, like, you know what's crazy? 4X to 5X oversubscription doesn't even seem that wild to me. Like, look at what's happening in China market for IPOs, like 20X sometimes. I digress. There's a lot of evidence that SpaceX employees wanted to buy more shares. And the unusual difference with SpaceX is the secondaries market. They've had regular liquidity windows. Might that be a difference this time? It certainly could be, but everything's a function of price, right? If this thing goes to$400, even the most ardent insider might be tempted to sell.

46:12So it's a function of price. All I'm going to say, if the stock tanks a little bit, it makes it cheaper for SpaceX to buy it and merge the companies.

46:20Ed Ludlow:Very, very quick. Many times, SpaceX was the leader of the secondaries. They bought back shares from employees, and we never really reported on it. And that was true at the time. So, yeah. Yeah, I just think there's just like so many moving aspects of this. Nicholas, thanks for jumping in here. We really appreciate it. The perspective and data was really helpful. Co-founder, Data Check Research, of course, joining us here in studio. We're going to continue with Ed Ludlow, host of Bloomberg Tech. Our thanks, too, to Anthony Hughes. Be sure to check out all of his reporting on the Bloomberg and at Bloomberg.com.

46:49a member of our trusted Bloomberg News team. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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50:02Happy brewing! You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Let's get to someone who we talk to a lot when it comes to all things Elon. He's owned and sold shares of Tesla. He owns several Teslas, including the Cybertruck. He's been a fan and a critic of Elon the person. Back with us. So great to have here on this day. Ross Gerber, President and CEO of Gerber Kawasaki Wealth and Management, Investment Management, joining us here in studio.

50:40Hey, Ross, are you? I'm a SpaceX owner, too. You didn't mention that. Well, that's. Yeah, explain. So remind. Yes, explain away. Well, explain away. I got involved with this wonderful deal that was presented to me four years ago to invest in Twitter. And boy, oh boy, did we do great with that, huh? So I had written down that stake in Twitter to about 25 % of its original investment. And then somehow XAI came and bought Twitter. And then somehow SpaceX bought XAI. And now today, you know, I've now made like over three times my money investing in Twitter. So, you know, there is a thing called luck in the world.

51:19And I'm lucky. So you've tripled your money from four years ago and investing in the take private of what is now X and owned by XAI, which is part of SpaceX, of course. What do you do with that part of ownership? Do you hold on to it or do you sell it when you can? Well, I'm building a new pool, but that has nothing to do with my SpaceX. I want to continue and employ lots of people because it's fun. But no, I'm holding my SpaceX for the long term. An actual pool. I was thinking that this is a financial instrument. Yeah, I'm building an actual physical pool. Like in the AI era, I'm taking my AI profits and doing something really worthwhile, employing people to dig holes.

51:59But that said, you know, SpaceX is one of the most interesting companies I've ever seen. And we have such a unique viewpoint of SpaceX because we work with so many SpaceX clients and we're getting more all the time. And we've really been focusing on helping SpaceX employees because it's down the street from us here in Los Angeles is kind of their main one of their main hubs. And so, you know, I've met some incredible people over the last several months doing incredible things. These are the highest caliber engineers in the world that have made our space program, because it's really United States space program, just so amazingly unique and successful.

52:38So what we have in store for us over the next decade is really exciting. Hey, so Ross, just want to ask you, so you own the stock. You're happy about that. Will you continue owning it? Or do you think the valuation is kind of crazy? Yeah, that's what I'm saying. I'm not selling it. you know, I got my 10 year old kid sitting here cause he's out of school. And when I started thinking about what his life is going to be like when he's only 20, you know, like 10 years from now, like space is just going to be something that's like, I keep making this joke. It's like easier to go to space than New Jersey, you know?

53:08And so, you know, the truth is, I think it's harder to go from New York to New Jersey than it will be in space to go to space in 10 years.

53:15Ed Ludlow:And Ross, to be clear, this is you Ross Gerber personally, as opposed to Gerber Kawasaki. uh that's correct i personally own the shares in my firm in our own firm account own shares because when the twitter deal came by you know elon really didn't want to do the deal so we didn't actually sell the deal to our clients because i was like i can't sell this the guy doesn't want to do it you know and so they basically called us the last night and was like do you still want to invest because we're actually doing this and so i just like wrote a check because it was elon you know. But none of our clients have been able to participate in this.

53:51Well, fortunately and unfortunately, because remember, it started off pretty bad.

53:55Ed Ludlow:You didn't get an allocation or submit a bid for an allocation in the IPO or go into the open market today. I'm being mechanical, but I'm just. No, we haven't done open market purchases of SpaceX today because our firm does not buy IPOs for very good reasons, which I'm happy to talk about. Well, yeah. Well, can I ask you. And secondly, we did request IPO allocations for clients of ours that are at Fidelity and Schwab because we work with both of them and they did provide. So some of our clients did get small allocations of SpaceX stock today as well. So the hypothesis - But those were unsolicited.

54:31I understand. The clients really wanted it. Yeah.

54:34Ed Ludlow:The reason that's insightful is like there are people listening to Bloomberg Businessweek or watching Bloomberg Businessweek that are in the same boat, right and they're just thinking like you know what what did i do here but the hypothesis presented to me by loads of people is they didn't sell their tesla shares to get some liquidity to participate in part because they just see that the tesla spacex merger happening imminently and so what would be the point i may ask where you stand on that idea today well i i very i tweeted again this morning i mean i know you did how long does this take till they put these companies together.

55:09And then even Gwen Shotwell today didn't, you know, poo-poo the idea when it was brought to her and actually said it makes sense. So, you know, we know this is going to happen at some point. And I think a lot of that has to do with what valuations SpaceX and Tesla really are to make this combination work for both sets of shareholders so that it doesn't create a lot of, you know, lawsuits and other, you know, issues. So I think it's definitely a foregone conclusion. Now, I do agree with you that that props up Tesla stock because, you know, people are like, well, I didn't say that. Well, OK, my feeling is it props up Tesla stock because people don't want to sell their Tesla if it's just going to get bought out by SpaceX anyways, you know.

55:49And so I do think that that helps Tesla, that the perception is that they will be acquired by SpaceX or merge. So so, Ross, maybe in your view, it works for investors. Does it does it work from an actual operations perspective? Oh, 100%. Why? In fact, well, I would argue that this is really unfair to Tesla. And it's one of the real gripes I've had over the last several years is the way they took, you know, Tesla's chips and Tesla's engineers and built XAI, which was the brains of Tesla's, you know, optimist robot and full self-driving. And then Elon goes on TV and says, this is the entire value of the company is based off if we can can can succeed with full self driving.

56:31But yet the brains of full self driving isn't owned by Tesla. Like that's super wrong. It just doesn't make any sense that I have a bunch of robots and cars that will not work without another company's technology. So Tesla, in my mind, is worthless if it doesn't merge because it doesn't own the IP to the brains to their own products like like it just makes no says. All right. Speaking of the brains, the brains behind anything with Elon's universe is obviously Elon Musk. And we talk a lot about risk to the company. We talk about governance, but we also just talk about how much what he does, his brain, his oddness, if you will, some might say, is what makes this company tick.

57:18Centricity. Yeah, much better. On this and on the governance and stock structure, Nell Minow, Value Edge Advisors vice chairman, joined the closed team yesterday on Bloomberg television. Let's all listen up to what Neil had to say. All of those protections that you talked about, the ability to vote proxies, the ability to sell the stock, the ability to sue, all of those are there to reassure investors having independent directors on the board. All of those are there to reassure investors that their money is being taken care of in a principled way for their benefit, not for the benefit of the insiders.

57:54And all of those have been obliterated by this offering. You know, Elon Musk has appointed himself CEO for life. He's the only one who can remove himself. Not even his board of directors can remove him. He has all the voting control. He has basically built a moat with alligators around himself. And that's not good for shareholders. Nell Minow, Value Edge Advisors, vice chairman on Bloomberg Television yesterday. Ross, my understanding that you were kind of laughing as you were listening to that. Well, you know, there's no companies that have ever been run like Tesla and SpaceX in the history of public companies.

58:34And so I find her outrage to be humorous because that's basically how it's worked for Tesla for the last 15 years. And, you know, the board is not independent. They do whatever Elon says. The pay packages are approved because index funds just push yes to whatever management puts forward. So Elon's taken advantage of a system where 20 % of his companies owned by robots that don't make any decisions. There's nothing worse than Vanguard for shareholder rights. So if she wants to complain, she should be complaining about Vanguard, not Tesla, and the fact that Elon takes advantage of the fact that, you know, there's basically going to be nobody, but you know, somebody like me who goes out on TV, but as far as trying to vote change into Tesla or SpaceX, never going to happen.

59:22So does he take care of shareholders? Yeah, they've made a lot of money. So that's taking care of shareholders. Any way you do the math, whether I vote proxies or not, what matters is whether I'm making money and I've made over a hundred times my money investing in Tesla. And so I just think, you know, when you invest with Elon, you have no rights, you get on the bus, you don't like the bus, get off the bus. But if you want to be on that bus, he has rewarded people who has done that. And that's why people are giving him such a ridiculously high valuation is because he has rewarded shareholders in the past and in a way that very few CEOs have.

1:00:00So, you know, I get the outrage and all that, then don't buy the stock.

1:00:04Ed Ludlow:Ross, may I just... It was very clear in the S1. Exactly. I'm just relying on recounting what was in the S1, right? The restriction that's placed on Musk's comp, I'm just going to read it out because it's the only way the audience will come to have a sense of it. He has a$1 billion restricted Class B shares award that's contingent, A, on market cap milestones. So if he achieves the market cap milestones, the shareholders get rewarded, you say. but Musk's compensation package is tied to establishing a permanent human colony on Mars with at least 1 million inhabitants. I don't want to give a long-winded question, but you explained to the audience how you came to be a SpaceX investor and shareholder.

1:00:49Ed Ludlow:That goal, what does it mean to you? It means I might have a chance of not having to pay him the billion shares, you know? So, so I kind of like that, you know? I don't think we're going to have a million people living on Mars. So, you know, that's good news if you're a SpaceX shareholder. And I can give you a lot of reasons that Elon might want to argue with me about, and I'm a more practical person, but I don't think you could talk a million people into going to Mars, you know? Like, unless Mars looks a lot like Hawaii, I don't think people want to go there and Mars doesn't look like Hawaii.

1:01:28So I don't know. I don't know who's moving to Mars. We're speaking with Ross Gerber. By the way, it's, it's, it's far away. There's no air. Ross Gerber, president and CEO of Gerber Kawasaki Wealth and Investment Management. I did make that, that point earlier in our last hour about when people compared Mars to potentially being the next California. I pushed back a little bit there. I'm not moving from here for anything. Even if they put socialists here, I'm not moving. I still think he's going to put Optimus robots on and one million. That's what I think. That's what I think. I think the robots are the ones doing the work in space and going to Mars.

1:02:06So, Ross, I want to put aside the question of sort of governance right now and these pay packages and just get back to your view of SpaceX shares right now. You said Gerber Kawasaki does not buy on the first day of IPOs. What restrictions do you have or have you put out? It's sort of a rules-based buying when it comes to IPOs. And when would you start getting your clients in, even if they're not asking for it? No, they're asking for it. Some of them, we've talked to a lot of wealth managers lately who have said some people want it badly. Some people want nothing to do with it. Like we've had three examples of that recently this week on air.

1:02:47Yeah, you know, and that's, we have so many clients. We have all those examples, right? What I think, because the way my firm works, you know, we don't tell people no, you know, like if a client's like, I really want to do this. We don't say no, you know, it's our job to advise our clients. So we advise them of the risks of it and then we'll execute the transactions as unsolicited if they want to, if they really want to do that. And we've, you know, we do that. Now we, I haven't done that today for anybody because I've talked them out of it, you know, because they listen to my advice, which is IPOs are really difficult.

1:03:22Okay. And I've been trading for 32 years and I did.com and I, I trade billions of dollars. So just from my experience, it's really, really hard to make binary decisions. Like I'm putting a hundred thousand dollars of my retirement money into SpaceX today, and that's it. And I will never look at it for 10 years because that's just not what investors do. So if you were able to do that, I would say, okay, you know, buy the IPO, pay up for it, but in 10 years, you'll be happy. But nobody actually does that. What happens is they look at their account in six months and it's down 30 % and then they panic and they sell it right before it goes back up.

1:03:59And so investor psychology and behavior makes IPOs extremely difficult because of the volatility. So I don't know what the market's going to do over the next 12 months, let's say. and then you've got a very high priced IPO that has no PE ratio and then maybe markets go down for some reason. Well, SpaceX is gonna go down more than the market. And if the market stays the same or goes up, there's the potential that SpaceX stays the same or also goes up. But what I say is how much upside can you get if you buy the stock today until this company actually produces earnings, which might be three to five years from now.

1:04:37So you've got plenty of time to get into SpaceX. So if you really, really want it, what I tell people is buy 20 % of what you want to buy today. If it's$10 ,000 in SpaceX, you buy$2 ,000 today. And then you wait a month and you buy another$2 ,000. And you wait another month and you get in over the next five months. But what I would really say is wait till the lockups expire. Wait. There's a lot of liquidity. And a lot of people want to get this liquidity. They've worked at SpaceX for a very long time. And they're not going to be quitting and they're not this and that, but they want to buy a house in LA and a house in LA costs two to 3 million just to get in.

1:05:14And these people are living in apartments. You see what I'm saying? So they're going to sell some of their stock to buy a house and they're going to sell some of their stock so that they have some financial security, which is what we're advising them. But many of the employees at SpaceX are not selling their stock. And I just want to make it very clear. Many of them, these are the people who believe in their mission and they're working extremely hard. And after meeting many of these people, I believe in their mission and Elon gets too much credit. I just want to say this. It's not Elon Musk that's made SpaceX successful.

1:05:46It's the people there. Elon Musk is a visionary and he guides the company. But the truth of the matter is he does not really run SpaceX. The people running SpaceX are excellent. Ross, 30 seconds left, though. We do think about succession. So does Elon, does it become even more important on this day where we continue to see the Elon universe get bigger and bigger that there is a succession plan in place? Is there one that you know of? Just quickly. See, at SpaceX, yes. I think if Elon died tomorrow, SpaceX would be fine, actually. SpaceX has great management, and they've been very independent for a long time.

1:06:22And many of the employees, and I'm not going to say where divisions they were, they don't like Elon either. Okay, they, you know, having a mission like going to Mars or going to the moon or building a starship is what motivates people. A lot of what Elon does hurts SpaceX and hurts the company. So SpaceX has a much better management team than Tesla when it comes to succession. And I'm much more confident about its success, even if Elon isn't involved. Well, some great color and context on all things SpaceX and Elon, as he always does. Ross, have a great weekend. Thank you so much. Ross Gerber, President and CEO of Gerber Kawasaki Wealth and Investment Management, joining us from Los Angeles.

1:07:27on the Bloomberg Terminal.

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