SpaceX Said to Pursue 2026 IPO

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1:11Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech. Coming up, a Bloomberg exclusive. SpaceX targeting an IPO next year. The goal? To raise far beyond$30 billion, the most in history. The valuation around 1.5 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 DeepSeek smuggled thousands of banned Blackwell chips into China. NVIDIA pushes back. Let's get to our top story. It's in the private markets and soon to be public markets.

1:56Bloomberg reporting that SpaceX is very much underway, targeting an IPO in mid-2026. They want to raise far north of$30 billion. In terms of dollar raised, that would be the biggest IPO in history. The valuation we're hearing,$1.5 trillion. There's a lot in play here, but my understanding, this is very real. It had an impact in public markets. Some of the names out there in the space sector, particularly Echo Star 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 private market have been waiting for.

2:39Let'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 of$30 billion. You and I are getting a sense on why they need that capital. Ed, great to be here. And congratulations on your scoop and great reporting. Yes, they are. What we're hearing is a$30 billion raise, which, you know, if you look at the history of SpaceX, you know, Musk is known for his grandiose visions.

3:14They'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 be used for that. He also has talked about, as you mentioned, the idea of putting data centers in space, harnessing solar power and having a huge amount of computing resources in space. They would need to buy chips to do so, so the money could be used for that. Of course, the other side of SpaceX is Starlink, the satellite Internet business, which has grown substantially over the past few years. So there's a huge portfolio that SpaceX is bringing as they transform space travel.

3:51Eric, we're showing the other part of what we reported, which is through our reporting confirmation of this tender or secondary offering 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 about this tender. And for me, the important bit here is that this kind of settles valuation ahead of that IPO. Absolutely. This level sets the market valuation as a precursor to the IPO. But essentially, SpaceX runs biannual tender offers, secondary offerings, where they allow existing shareholders, employees and others, insiders, to essentially generate liquidity from their piece of SpaceX.

4:41And so as part of that, they set a valuation of$800 billion, which is a record, beating OpenAI's latest tally from October of$500 billion. So making it, once again, the most valuable startup in the world. So this is walking up to that IPO. And of course, as you mentioned, the IPO would be$1.5 trillion, roughly, valuation. in the private markets, the share price right now is about$420,$421 a share. There is so much 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 off Starlink, right?

5:27Because 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. That's right. They bring in the majority of revenue. They're expected to do so last year. As I said, now they've got thousands of satellites in low-Earth orbit. It's a booming business. Millions of customers. I've flown on many flights around the country. Airlines are starting to use Starlink. The customer reviews are favorable. So I think investors are seeing that growth. People, as they have watched this company, they're seeing Musk make these huge promises.

6:00and then is iteratively, incrementally delivering on them. So there's a lot to be seen as far as can he continue the growth of Starlink and also direct to sell. That's another nascent business area that Musk has promised to link regular consumer cell phones with this network of satellites in low-Earth orbit. It's just a lot of growth, a lot of promises, but a lot of challenges, right? The company has to meet these expectations, live up to them to earn that valuation and to excite people. Bloomberg's Eric Johnson, who leads the team on space coverage. Thank you very much. And I point out SpaceX hasn't commented on this.

6:38As it stands, Elon Musk has not posted on X about it. That's just the Bloomberg reporting. Let's bring in Phil Haslett for more. He's the chief strategy officer over at EquizyZen, one of the largest platforms for pre-IPO 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 private company that users of your platform are most interested in. In quantifying that for us, just transparently explain what Equity Zen's relationship to SpaceX's private market shares is.

7:21Sure. Thanks for having me, Ed. Yeah, you hit the nail on the head. SpaceX is the most popularly requested private company on equity's end. It's been that way for probably our entire existence as a business over the last 13 years. And that really just means that there is retail exuberance about investing in SpaceX. You know, the company is 23 years old. It's older than a lot of my employees. It has garnered interest. 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.

7:56And what seems to be now an opportunity to invest in it while it's public in maybe even less than a year, which is pretty surprising. 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 aren't that diverse. You have Founders Fund, Fidelity, Google through Google Ventures and through CorpDev, 137 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.

8:36And then there's the Elon Musk factor as well. How does that translate in an IPO environment for anyone that wanted to get into the company? Well, there's a couple other things to think about, which is that a 23-year-old company has had a lot of employees come, stay, leave, right? And so you have a wide swath of shareholders, kind of like a long tail of ownership. And so, sure, there's some concentration in some of their biggest investors and in the founder's shares. But this thing is pretty widely held. I'd go so far as to say that an IPO might also be a solve for the fact that the company is a private entity and can only have 2 ,000 shareholders.

9:11That 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 Aramco, Alibaba, those would actually be 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.

9:45So 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 primary rounds, where the company raises money, issues new equity, you get these kind of anchor investors that come in ahead of an IPO. It might be a year in advance. In this case, what we're reporting is the tender is confirmed. $800 billion valuation,$421 share price. Could you explain that dynamic ahead of a big IPO, how there isn't any new primary around, not raising new money, which, as you know, Elon Musk has been at pains to point out on X.

10:27Sure. In its 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 a new investment injection through a primary? A secondary liquidity offering is a way to reward employees or perhaps early investors by getting them 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 themselves, also set a new kind of external price for their shares, but still maintaining an immense amount of control.

11:06And the only thing I would call out here, Ed, is that obviously$2 billion of liquidity is a big number, But it's actually only 0.25 % of the valuation of this company. And so I hesitate to kind of identify that$800 billion is the new market price for SpaceX, more so that it is the market price that SpaceX has decided is out there. Yes. Yeah, the tender was capped at$2 billion. That's what I reported. We just have 30 seconds. Valuation at IPO,$1.5 trillion. What do you make of that? That, I think, would put it in uncharted waters, right? You've got three public companies that are worth north of$3 trillion.

11:43Where is the upside from 1.5? I'm not sure. At the same time, the bull in me says Palantir had a robust retail investor audience. It trades at north of 100 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. Phil Haslett, Chief Strategy Officer at EquitiesN. Thank you very much. coming up. Meta making moves toward a new AI model from open to close. That's next. This is Bloomberg Tech.

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13:31Meta's 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. 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 understanding is originally Avocado might have been an open source model. It's now not going to be based on our reporting.

14:05Take it from there and then we'll get into the bigger picture. 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 at the moment. And this is a really important distinction because it points to a monetization strategy. And as you know, Meta is under pressure to show that it can return on its multi-hundred billion dollar investment in AI. And this is one path towards that. 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.

14:45In July, Mark Zuckerberg 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 what else are you putting in the story here? Because, you know, Meta was the sort of flag waver for open source. Yeah, I mean, 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 Llama 4.

15:23That was their open source model earlier this year. And so this is a resetting of the strategy under Alex's leadership with close involvement from Mark Zuckerberg, who sits quite close to Alex. 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. The report is a must read. Bloomberg's Riley Griffin with the reporting alongside Kurt Wagner. Thank you very much. President Trump decided to let NVIDIA sell its H200 AI chips to China after concluding the move carried a lower security risk because the company's Chinese arch rival, Huawei, already offers some AI systems with comparable performance.

16:06That's according to a Bloomberg source. Bloomberg tech reporter 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 384 system. Yes, one key detail we've reported is that this Cloud Matrix 384 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 are capable of.

16:49However, 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 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 NVIDIA chips to China. The main focus, as I understand it, is that H200 is 18 months behind Blackwell, generation to generation, and that's the comfort level this administration has.

17:33NVIDIA is down 1.3 % in the session right now. The other big report out there is from the Information, which reported that DeepSeek smuggled in thousands of Blackwell 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 NVIDIA statement, 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. Now, 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.

18:18But this report from the information did say that the smuggling for DeepSeek took place in these sort of eight chip segments that could potentially fit in a suitcase. Bloomberg's Maggie Eastland, who's out in D.C., covers the intersection of tech and politics with the reporting. Thank you very much. Another story, Amazon pledged to invest$35 billion 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 2030 will help create an additional 1 million jobs in India.

19:05Oracle reporting earnings 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 of$500 billion. 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$6 billion in the quarter. Let's preview, let's discuss. Siti Panagrahi, Managing Director, Senior Analyst at Mizuho, covering SaaS, but also covering Oracle. This is the equation. We want to see growth in the cloud division, OCI in particular. But in the background, there's that stat.

19:45Oracle swinging to negative free cash flow for the first time since 1992. Remind us what your price target and call is on the stock, and then how you feel about that stat. That's great. Thanks for having me here. Look, I think what you said right at this point, investors are concerned about free cash flow. Mostly, 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. So what matters at this today in the earnings call is Oracle giving some kind of clarity on that. Look, I think what investors may think is that Oracle has multiple options.

20:27They don't have to raise debt 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, Oracle is not able to tell you how much of the capex, how much debt 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 with the leasing. So that's what I think the one of the concern. We hope to hear from management on that, how they are going to fund the capital, how they're going to build the data center.

21:07Right. 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 of business. $500 billion as it stands. As Bloomberg's reported it, quite a lot of that is open AI. Now, in the future, if something happens and a deal falls through, often in the contracts, there's some kind of penalty for cancellation or severance. But the question's 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?

21:47Yeah, I mean, that's a fair point, as you said. But if you look at right now, there are a handful of AI companies like three or four, OpenAI, Anthropic, Meta, and XAI. So Oracle got most of them except Anthropic. So yes, and OpenAI is a trailblazer in that. So if they have that as a customer, that's, I think, most important at this point. To your point, can OpenAI pay or that contract will fall apart? Look, this is a non-cancellable contract, what Oracle says. So with that, and there will be demand, if we think about AI at this point, the rate it's growing probably will need that demand at this point.

22:31But I think if you look at the concern, Oracle lost more than$300 billion market cap. You know, an open AI contract is only$300 billion. I think if I remember, it's$322 billion market cap loss. So even investors are 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 are an investor, you need to believe on this long term AI story. Growth is accelerating$21 EPS. They guided for fiscal 30. And if you discount it back, even applying 25 times, we get to this$400 price target.

23:14Sili, we just have less than a minute here. Do you like this co-CEO structure and the leadership of Oracle? Yes, I think the way right now OCI is very important for Oracle. So that's where they are separating OCI. Clay is going to supervise. He's going to look at that business and rest of the application and rest of the business. Mike Sicilia is going to do it. I think this model works. Larry is still there. He's the chairman. He's leading the group, leading the company there. So we like it. I think we'll see how it goes. Oracle down three tenths per percent. We're treading water. That is the big earnings print after the bell.

23:57Siti Panagrahi of Mizzou. Great to have you on the show.

24:06Welcome back to Bloomberg Tech. 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$27.75 a share, which is just for the streaming and studios. And one from Paramount Skydunks,$30 per share for the whole enchilada. This is what those stocks have traded 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.