SpaceX Files for Blockbuster IPO & Nike Can’t Fix its Problems

0:01Neal Freyman:Marketers, tell us if this sounds familiar. You invest in something that seems incredible, like millions of views, but then don't see any revenue. Instead, invest in what looks good to your CFO. LinkedIn Ads generates the highest ROAS of all major ad networks. Spend$250 on your first campaign on LinkedIn Ads and get a$250 credit. Just go to linkedin.com slash mbd. That's linkedin.com slash mbd. Terms and conditions apply. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, is going to grad school worth it? Then SpaceX is going public. It's Thursday, April 2nd. Let's ride.

0:46Good morning. I want to thank all of you who helped me prank Toby yesterday. It went flawlessly. For those who didn't catch it, I inserted a pre-recorded message into the episode unbeknownst to Toby telling listeners to comment on Spotify and YouTube, suggesting Toby said something super awkward, the worst take you can think of. And you all delivered. He was so confused and stressed out. It was an April Fool's to remember. Also, I wish this was an April Fool's joke, but there were real technical difficulties getting the podcast audio up yesterday. We hope that's been resolved.

1:20Neal Freyman:I'd argue it was the perfect level of prank. No one got hurt. It involved a lot of people and now I get full permission to drastically escalate things next year. So thank you for that. 343 comments on Spotify, 420 comments on YouTube. Everyone listening showed out. So you made Neil very happy and me very confused. But Neil, I do have a question. Where the heck are you right now? Yeah, actually it's four questions, Toby. Please get it right. I'm at my parents' place for Passover and we're going to see just how far sound travels in this house. Perfect. And now a word from our sponsor, Company Retreat.

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2:35Jury Duty Presents Company Retreat is streaming now on Prime Video. Clock in and grab your popcorn. It's time to root for the underdog.

2:43Neal Freyman:The big one is here. SpaceX confidentially filed for an IPO yesterday, setting up what is expected to be the largest public debut of all time sometime this summer. SpaceX started as a rocket company, but has since grown into a conglomerate of Elon Musk side projects. The rocket company combined with his AI company, XAI in February, which had previously combined with his social media platform X to create an Elon Steins monster worth trillions. And this group project of companies with X in their name, it looks like SpaceX will be doing much of the heavy lifting. It's the leader in the rocket launch business, receiving billions of dollars in government contracts to be the workhorse of the US space program.

3:22Neal Freyman:It also has Starlink, the satellite-based internet company that is now the company's main cash flow generator. XAI is sort of the personality hire of the group, burning a lot more money than it makes as Elon tries to keep up in the AI race. It all adds up to a valuation that is projected to be somewhere in the$1.75 trillion range, which would raise about$75 billion, by far the largest IPO of all time, leaving Saudi Aramco in the dust. It is a gaudy number, but as Tesla has shown, people are very comfortable betting on Elon's vision for the future. Neil, as we get closer to the IPO, investors will get a peek at the company's financial performance to see what's under the hood.

4:03Neal Freyman:But by all accounts, this is a generational debut in the making. I'm excited. Are you excited? This is going to be so fun. I mean, mega IPOs, we haven't had many of them in the past few years. And it's really exciting that SpaceX is going public because, I mean, just Wall Street has never seen anything like this, like this particular scale. SpaceX potentially could raise up to$75 billion. In second place, the current record holder for IPOs is Saudi Aramco, with just$29 billion. So the scale is truly unimaginable. It's truly galactic, like SpaceX's ambitions. According to Dan Permac, he put it more in perspective.

4:40This would raise more than And all U.S. listings did in 2024 and 2025 combined, the entire U.S. IPO market has only raised more money in two of the past 10 years. And SpaceX will also become the first company, will attempt to become the first company to ever go public at a valuation of$1 trillion or more. If it goes public, when it goes public, it'll be immediately worth more than Walmart, ExxonMobil, or Meta. So this is truly gigantic in its size.

5:10Neal Freyman:It was very funny, too. The amount of banks involved is just a who's who of Wall Street. There are 21 banks lined up to help with this giant IPO. The project has a codename. How many IPOs get a codename? It's codenamed Apex. And I saw a lot of jokes online that was, if your bank that you work at wasn't included in this IPO, then you're not going to make it, unfortunately. And as I said, this is a confidential IPO filing. So we don't actually know what the financial performance of this company is yet. There have been some hints over the past few years. In June, Elon Musk posted on social media that he expected SpaceX's revenue to reach$15.5 billion in 2025.

5:51Neal Freyman:Only$1.1 billion of that is coming from NASA. That is up from$7.4 billion in 2023. Starlink alone, which is the internet satellite company, generated$8 billion in sales in 2024. Now, the ugly stepchild in the room is XAI, which is burning a lot of money. XAI allegedly is burning$1 billion per month. So that kind of brought a little bit of uncertainty into this debut because SpaceX is a business, very fun. It's dominating rocket launches. XAI, on the other hand, not so fun. What if you just wanted exposure to the space company? Now you have to have exposure to Elon's entire portfolio of companies.

6:32Neal Freyman:That had some people kind of scratching their heads saying, was this the right move to merge these companies? Definitely put a little bit of a cloud over the IPO because people were excited just to invest in SpaceX. And it's currently dominating the space industry anywhere around the world. But Elon Musk, of course, has this vision that goes beyond our feeble minds. And that is to combine XAI, which he wants to be an AI competitor with the likes of OpenAI and Anthropic and Microsoft and Google. He wants them to be as big as that and combine that with SpaceX and you get what is building the infrastructure for orbital data centers.

7:08He wants to put a million data centers into space by combining SpaceX and XAI. So he looks at this from a vertical integration perspective and says, OK, this makes a lot of sense to have Grok, XAI, Starlink, SpaceX, Starship all combined into one conglomerate that is controlled by him because that is the ultimate vision. And it's also one of the reasons, probably the main reason why he needs to IPO this thing very fast because XAI is losing a lot of money, putting a million dollars, putting a million data centers into space. I don't know the actual price tag of that, but it's going to cost a ton of money and going public gets you that funding that you need.

7:44Neal Freyman:Meanwhile, as we're on the topic of space, the Artemis 2 mission did successfully launch yesterday. There was a few delays while it was on the launch pad. It eventually launched about 11 minutes late, but it went up into the sky. It was beautiful, you know, framed against this awesome sunset, and it just made everyone very pumped for space travel again. There was an issue once they went to orbit, and it was a potty problem on their Artemis II moon ship. It's not their number one priority. That's a little pee joke because the glitch in the space toilet made it so that they could, you know, poop in the toilet, but they could not pee in the toilet.

8:20Neal Freyman:So this was like the big, you know, troubleshooting that was happening on the mission. I guess if you're going on a mission to deep space and the only thing that is broken is the toilet, you'll take that. But it was very funny that that was kind of like the big bug in the original mission was the toilet was broken. God, I love rocket launches. It was so fun to watch. I mean, we're all at this place ready to sit down for dinner for Seder. And then, you know, the lady was like, we all need to sit down, ring the bell. And then like 20 people gathered around the TV and we were just watching the rocket launch and we're like, no, five more minutes until it goes up.

8:53And there was just, you could not hear a sound. Everyone was so glued to the TV to see this rocket launch. So looks like they're on their way to the moon to go around the moon and they probably will reach it if all things go well by Monday, April 6th. Moving on, Nike is finding out that reviving its business is a little more challenging than saying, just do it. Shares plunged 15 % yesterday after the sportswear giant dropped a shockingly bad earnings report on Tuesday, showing that the much-hyped turnaround strategy is not just failing to kickstart sales, it might be sending Nike into reverse, and investors are losing patience.

9:29A huge problem area is China, a key market where revenue is projected to fall by up to 20 % in the current quarter. Another glaring weak spot, Converse, which your fashion friends already know is decidedly out. Sales have cratered 35 % from a year earlier to a 15-year low. It all means CEO Elliot Hill is not having any fun. The Nike veteran was brought in 18 months ago to make Nike's business trajectory resemble its logo, but it's been more of a slog than anticipated. Bloomberg reported that at an all-hands meeting on Tuesday, Hill told staff, I'm so tired, and I know you are too, of talking about fixing this business.

10:04I want to move to inspiring and driving growth and having fun. But Toby, there's a long way to go before the smiles come back to Beaverton.

10:11Neal Freyman:Yeah, China is a real issue right now. And part of the reason why Nike's not doing so well is local competition has finally started to heat up and is sort of eating Nike's lunch a little bit. Anta Sports is a upstart brand on the domestic side of things. They saw sales jump 13 % in 2025. They basically undercut Nike in price, too. So Nike is seen as a premium offering, but these other shoes are getting up to the same quality as Nike but are sold for a lot less money. If you look on our running shoe geeks, one out of 18 posts mentioned a major Chinese running shoe brand. That is up from one out of every 40 posts the previous quarter.

10:51Neal Freyman:So clearly, Chinese running shoes are infiltrating the U.S. market as well. Li Ning is a big name to keep an eye on. But yes, China is a big growth driver for Nike. And if they can't figure out that market, while also facing some headwinds in the domestic market when it comes to their fashion brands, Nike's not off to a good start. No, I mean, this turnaround is taking way longer than anticipated. What Elliot Hill was brought in as CEO year and a half ago is trying to do is move Nike away from those more fashion forward sneakers to more performance sneakers that were a hit with the running community, right?

11:27That's what Nike made. That's what made Nike Nike in the early years. And they got a little bit away from that and let on and Hoka and Brooks and these other brands kind of steal the spotlight from those from the runners from the top tier athletes that Nike really cut its teeth on. So he's trying to move away to that, and that seems to be working. But, you know, in fits and starts, the so-called performance products, like Shoes for Runners, sales climbed more than 20%, and it's sort of Gorpcore offerings. It has this line called All Conditions Gear Brand, where you can wear it outside and hiking and stuff like that.

12:00That is going well as well. But as we're seeing with Lululemon and other brands in the athleisure space, they're getting absolutely wrecked right now. People are just dressing up a little bit more. They're looking a little more presentable, and they're moving away from athleisure that dominated from 2020 to 2025. And Nike's really caught up with that because they have a ton of inventory in that space they're just trying to get rid of.

12:20Neal Freyman:They do have an ace in the hole, though, and that is the World Cup coming to their backyard this summer. Adidas actually tends to outperform Nike when it comes to soccer, but again, this World Cup is literally on Nike's home turf. It is in North America, so that is an advantage for the brand. And hopefully this is a moment that they can capitalize on and show like, hey, we are still Nike. We're still the big dogs when it comes to sports. Check out this awesome mega event that we're going to have a lot of athletes wearing our jerseys, a lot of athletes wearing our cleats. Maybe that, you know, zhuzhes up its financial performance in the coming quarters.

12:54Neal Freyman:Moving on, Anthropic needs some Flex Seal because it's springing leaks left and right. Last Thursday, Fortune reported that the AI company had accidentally made thousands of internal files publicly available, including an announcement of a powerful new model that is waiting in the wings. And then earlier this week, the big one, nearly 512 ,000 lines of source code were accidentally posted laying out the blueprint for Claude Code, its most valuable product. It wasn't the actual AI model itself that was posted, but it did paint a picture of how Anthropic coaxes it to behave and perform tasks autonomously for millions of users.

13:30Neal Freyman:According to the Wall Street Journal, the leak was a goldmine for competitors who want to know what Anthropic's secret sauce is. One of the leaked features involves the model revisiting past tasks to remember what it's learned, a process Anthropic refers to as dreaming. There's also a piece that tells Cloud Code to hide the fact that it's an AI in certain situations, like when it's pushing code to GitHub. Someone found a reference to a Tamagotchi-style virtual pet called Buddy that people can interact with. If Claude is Oz, this link gave everyone a pretty good look behind the curtain. Neil, this is a double whammy for Anthropic.

14:07Neal Freyman:There's the hit to its reputation as the safe AI company. And then there's the hit to its actual business sense. Competitors now know some of its inner workings. It is a claudatastrophe. For developers, this is like a kid going to Disney World for the first time. You have maybe the world's foremost AI company who employs the smartest AI nerds on planet Earth, basically just handing you their closely guarded trade secrets. It's like a free world-class engineering education. No surprise that this spread like absolute wildfire in developer communities. So if you're just a hobbyist developer or someone who's in this industry, I mean, it's just an amazing education to be able to look at how the smartest people in the industry are putting together something as complex as Claude Code.

14:49And then if you're a competitor, I mean, this is like finding$1 ,000,$100,$1 ,000 bill in your pocket you didn't know was there. Because, you know, these AI companies are fighting tooth and nail for every piece of market share in this business. And coding is a huge part of that. Cloud Code is a huge part of Anthropics' business. It's their cash cow. The product reached more than$2.5 billion in annualized revenue recently. So this is Anthropics' big business, and it basically just gave the secrets away.

15:16Neal Freyman:Where are you finding$1 ,000 bills lying around? I got to find one of those in my pocket. But you're right. I think there was sort of this giddiness around peeking through this code because it turned out to be a lot more art than science. I mean, that dreaming function is kind of an imprecise science of, hey, remember everything you learned and kind of compress it into a packet that you can remember going forward. But then there was also some just very funny lists that were released. There's a list of spinner verbs that include scurrying, recombobulating, and topsy-turvying. These are official phrases that Anthropic is using to coax its model to do what you want.

15:53Neal Freyman:Then there's cursing analytics that were also dropped. Claude will log swear words as, you know, the code is is-negative. And basically, Anthropic wants to track how often are you raging at your AI chatbot. So there's all, even though you think that it's this magic black box, Anthropic is kind of just pushing it and pulling it in different directions and hoping that it can do what you want it to do. So that was the big takeaway is that it's not an exact science by any means. Anthropic is literally coaching their AI chatbots to do what they want just like you and I are. All right, we're going to take a quick break and come back with Neil's numbers right after this.

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17:29Neal Freyman:Thank you. ...one size absolutely does not fit all. Get a quote or find an agent today at thehartford.com slash smallbusiness. Neil, it's dangerous to do your taxes alone. You're exactly right. Well, except the danger part. But that's why there's National Admin Night from Tax Act. There's social gatherings for getting through your to-do list. Get ready for a night of fun, finding deductions, and filing your taxes with Tax Act. And right now, you can file your federal and state return for just$49 through April 8th. Let's get together and get them over with. Visit taxact.com slash admin dash night for details.

18:09That's taxact.com slash admin dash night. Welcome to Neil's Numbers, the segment where I share three stats in the week's news that won't help you do your taxes, but it will make you a more well-rounded person. For my first number, hey, actually, this might help you do your taxes. Early data show that the new overtime deduction is a smash hit. According to Politico, almost 20 million taxpayers have claimed the overtime break so far this tax season, showing up on about 23 percent of all returns and far up pacing most existing popular tax breaks like the mortgage interest deduction. The overtime deduction dates back to last July when President Trump signed the one big beautiful bill act into law.

18:49Among other changes to the tax code, the overtime break allows couples to deduct up to$25 ,000 for certain types of work in specific circumstances. Apparently, that has become an extremely popular thing to do. But many questions are still unanswered, Politico notes. First of all, we don't have information about why people are filing for the deduction. For instance, whether they're working more to claim it or they're just logging their normal long hours and are finally able to snag a break. Others are even more skeptical, saying that the numbers could be inflated. As I mentioned, the tax law came into effect halfway through last year.

19:22The company said it would be too complicated to calculate the amount available to each worker for the entirety of 2025. So without employer cooperation, it could be the case that many people are claiming the overtime deduction who aren't eligible for it. Either way, Toby, a surprise winner of tax season, overtime.

19:38Neal Freyman:Yeah, when you look at other deductions that have been claimed that were introduced this year, it is lapping the other ones. Senior deductions, which you can get up to$6 ,000 per person, that was claimed by 17 % of taxpayers. Tipped income deductions, remember this was a big talking point going into this tax bill, which allows you to claim deductions of up to$25 ,000 on tips. only 5 % of filings, and then a car loan interest deduction was only claimed by 1.1%. So you have over time, being the lion's share, by far the most popular new addition to the tax code this year. And just to remember, it is temporary.

20:13Neal Freyman:It is set to expire at the end of 2028. But as a lot of lawmakers have kind of said, once you introduce a temporary deduction, they have a habit of becoming permanent because of course no one wants to give up this awesome deduction that they've relied on for the last four years. My next number is for anyone considering grad school. In some areas, it's absolutely worth the cost, but in many others, including some of the most popular programs, it has a negligible impact on your future career earnings. A new report released by American University's Post-Secondary Education and Economics Research found that you get the most bang for your buck in grad degrees relating to medicine, law, and pharmacy.

20:50A medical doctorate, for instance, can expect their lifetime earnings to nearly triple, while a pharmacy doctorate's EARNINGS ARE EXPECTED TO JUMP BY TWO-THIRDS. BUT AS THE WASHINGTON POST REPORTS, THE ADVANTAGE OF GOING TO GRAD SCHOOL EVAPORATES IN OTHER DISCIPLINES WHEN ACCOUNTING FOR THE TIME AND COST OF GOING TO SCHOOL. GRAD DEGREES IN ARCHITECTURE AND SOME TYPES OF ENGINEERING ONLY SAW A SMALL INCREASE IN THEIR LIFETIME EARNINGS, WHILE THERE WERE NO GAINS AND SOMETIMES EVEN NEGATIVE ONES FOR DEGREES IN PSYCHOLOGY, SOCIAL WORK AND CURRICULUM AND INSTRUCTION. Toby, of course, a lot of people go to grad school not to secure a more lucrative career.

21:21There's other reasons. And many others get financial aid that reduce expenses. Still, this study should serve as a warning to do your research before taking the grad school plunge.

21:29Neal Freyman:Yeah, I thought it was interesting, too, that when looking into who is actually benefiting from this, there were women, there were full-time students, there were people who had lower-paying undergraduate degrees. But then also, if you went to a school that had a higher U.S. News and World Report ranking, you tended to have better outcomes. I mean, it seems really obvious on the surface, but not all grad degrees across industries are equal, but also not all graduate schools are equal. You should probably try to go to the best grad school possible within your respected field. For my final number, do you find yourself a little more distracted as a driver when there's new music you're itching to listen to?