SpaceX’s IPO Could Create Thousands of Millionaires & MSG Stock is Up on the Knicks

0:01Marketers, 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 raymond lou and i'm kyle haggie today bitcoin is down down bad and get your popcorn ready because movie theaters are so back it's friday june 5th let's ride

0:47good morning yes today is friday i'm joined by kyle haggie kyle welcome back to mbd so pumped to be here, man. Yeah, we'd love to have you. Fun fact, Kyle and I actually live in the same building. That is true. I think we have the most popular podcast in the building. I hope, unless I'd like to think so. I'm looking for Kylie Kelsey. If she moves in, we're in trouble. Alex Cooper just joined our building. Yeah. We actually took an Uber here, so it made our commute very convenient. Yes, it was fun to have a commute, buddy. I'm either alone in an Uber or with 10 ,000 strangers in the subway, but today I got to ride in with you and do the podcast.

1:20Yes. So Kyle moved into my building about a year ago and you told me about it. And then that whole year, I never saw you. I mean, granted, we kind of have different schedules. Yeah. You're waking up at 4 a.m. every day. But I see people in my building constantly, kind of just see the same people. I never saw you for a full year. And then finally, I think we hung out finally. And then after that, I've been seeing you ever since. I know. We're so back. It's good to see you. Okay. And well, now a word from our sponsor, Sage. Kyle, do you ever find yourself putting something off until the end of the month?

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2:28To learn more, head to sage.com slash morning brew. That's sage.com slash morning brew. In what might be the hypiest hype IPO of all time, Elon Musk's SpaceX is aiming for a record breaking debut when it plans to trade publicly on the Nasdaq on June 12th. The company plans to open with a 555 million shares at$135 apiece, according to a filing with the SEC. Now, if that price holds, SpaceX would have a market value of nearly$1.77 trillion. The goal of raising$75 billion in the IPO would crush the previous record held by Saudi Aramco's$29.4 billion back in 2019. Now, in case you're wondering why SpaceX wants to go public, that's because it has bigly plans to expand its infrastructures in AI computing, satellite constellations, rockets, and maybe those ambitious plans of building data centers in space, all of which cost a lot, a lot of money.

3:27Now, it does bring in sweet cash flow through its satellite business, Starlink, but being a public company does give it the option to tap the broader market for funds to raise money faster than any other major players like OpenAI and Anthropic, who are also hoping to go public themselves. But some analysts point out the pitfalls of going public. It will have to start reporting its financial performance every quarter and answer to Wall Street, which means any bad news that comes out could result in sharp declines. Kyle, because this potentially could be the biggest IPO of all time, everyone is doing what they can to hop on the gravy train.

4:04Want to go halfsies with me? I think we got to hop on the gravy train, Ray. I mean, I'm already levered up all in on SpaceX. I'm kidding. My wife would definitely kill me if I did that. But you're right. There's so much money to be made that a lot of groups are trying to get in on the action. And I think it's worth breaking those down. First is employees. This IPO is expected to create upwards of four thousand millionaires, which is amazing. Meta famously created. I miss the memo. I know I miss that, too. So just north of a thousand million years when Meta went public. And what's really interesting about this IPO is the employees are actually banding together to try to get better and lower fees for financial advisors because they're about to come into a lot of wealth.

4:48There was originally about 200 people in this group. It's now climbed to, I think, close to a thousand, representing about$20 billion. They're going to different banks to try to negotiate for the best rates. Now, let's talk about the big banks. JP Morgan and their clients are also trying to get in on the action. Jamie Dimon, the CEO of JP Morgan, is actually doing a live event at the new JP Morgan HQ. That's going to be simulcast to about 90 JP Morgan locations across 26 states, hitting about 2 ,500 of the bank's clients, trying to encourage them to buy in and help them get in on this deal. Now, those roadshows are common, but they're not normally this big.

5:27It just speaks to, to your point, the hype of this IPO. Coinbase might have the most interesting way to get in on the action. They are rolling out a new product that lets their customers effectively kind of bet on the price of the IPO. Will it go up? Will it go down? It's called a PERP or perpetual future contract. And you're essentially making a bet if the price will go up or down. It allows you exposure to the IPO and to SpaceX without actually owning any underlying assets. And then finally, we have to talk about Elon. With the SpaceX IPO and his Tesla holdings, he might become the first trillionaire.

6:11I guess you heard that right. The first trillionaire ever. Me and Elon have a combined net worth of trillion dollars if that happens. That's pretty exciting. Ray, I remember when millionaires were cool, but now trillionaires, I mean, we got to go back to the millionaire days. I know. And, you know, Musk owns 42 % of SpaceX and 12 % of Tesla and also other smaller stakes in Neuralink and the borrowing company. But here's the thing. It does kind of have to all work out for Elon Musk to turn into the world's first trillionaire. Because it isn't quite guaranteed. Because if there is a significant drop in Tesla stock price, it could mean that he kind of stays below$1 trillion, kind of preventing him.

6:49Plus, he also has that contract where he has to stay on as Tesla CEO until January 28th. And if that somehow changes, he actually has to forfeit$121 billion in Tesla options, of course. So that being said, again, a lot of things have to kind of go right for this to work out in Elon's favor. I do want to touch on the fact that not everyone is buying into this blockbuster valuation. So some are wondering if it's even realistic. In fact, Morningstar says SpaceX is actually worth$780 billion, which is actually less than half of its IPO target. because there's this big question of whether such a large valuation can be sustained in public markets.

7:29Keep in mind, SpaceX recorded a net loss in the last quarter of over$4 billion after losing nearly$5 billion in 2025. So they're essentially saying, let's pump the brakes here. Hold on for a minute because don't rush in because maybe the hype dies down a little bit. Maybe the price will drop to a reasonable level. Yeah, this is I mean, it's always interesting with any Elon company. There's a level of hype that you don't see in other companies and particularly hype from retail investors. Now, SpaceX, we've seen the rockets go to space. They also own Starlink. This is a real company, but you combine it with a massive hype and post IPO, we'll see what's real or what's not.

8:10In addition, I think this IPO is encouraging for IPO markets. As you mentioned, OpenAI likely going to go public this year. Anthropic likely going to go public this year. So going public is sexy again, which I think, again, is good for public markets. Here's an interesting wrinkle before we move on, is that there are SpaceX investors who are maybe not so jazzed about this. Because when they originally invested in SpaceX, they were investing in a space company. But if you remember, SpaceX acquired XAI, Musk's other AI company, ahead of its IPO. So what that essentially is saying is that now those who have invested in the space company are really exposed to the AI industry.

8:49And so they're kind of like, wait a minute, maybe they're a little bearish on the industry. So they're just having big risk and exposure to it. And then also, if SpaceX is viewed as this wild horse that's hard to tame, given that Elon Musk is behind the helm, it might translate to a lower market value than what the company was hoping for. So let's not forget, AI space, super crowded, super competitive. Let's move on. It's Friday, which means it's Stock of the Week, Dog of the Week time, the segment where we pick... the segment where we pick one stock that just red pointed their 12 C project and another who failed attempting a burly Gaston lock off on a tidy crimp to a left hand rose move on a really sketchy feet.

9:29Shout out to my climbers. I lost the pre-show game of who can do the most burpees. Kyle, don't think it was necessary to do 100 burpees before the show, but whatever gets you ready in the morning. So you get to go first. Right. I just got to say that climbing lingo. Incredible. I hadn't heard half of those words. Very impressive. Yes, let's talk about the dog of the week. And my dog of the week is Bitcoin. Those who have been hodling or holding on for dear life, the backronym that became famous in crypto circles, well, they've stopped hodling and they've started selling. That's right. Bitcoin has fallen to its lowest levels in four months, hovering just above$60 ,000 per coin.

10:09These long-term holders or people who have held onto their coins for five months or longer were largely inactive earlier this year. They've turned into sellers in recent weeks, dumping about$2.4 billion in Bitcoin as the coin has struggled to climb back towards its October record of more than$126 ,000. Now, this represents over a 50 % drop in value since Bitcoin's all-time high. Now, we've all heard about the crypto winter, but this year it feels like we're getting crypto winter, spring, summer, and fall. A crypto winter for seasons, if you will. Ray, will Bitcoin ever recover? Oh, the door. That's all I think about.

10:49Well, you know what? When the diehards show signs of giving up, it's a bad look. Here's the deal. Bitcoin always needed a good story to kind of prop it up for years. It essentially had two. One, it was a safe haven like gold. So no matter what was going on in the world, Bitcoin could be immune to all of it. And two, it was kind of seen as like this growth asset like tech. But since the Iran war, Bitcoin actually fell while gold largely held up. Meanwhile, the stark market has been ripping, hitting record highs, but Bitcoin hasn't quite followed suit. AI stocks have become the market's dominant growth trade now, and retail investors are actually pouring money into short-dated options and prediction markets.

11:35So they're taking money out of crypto and kind of putting it into these other markets. So a lot of investors are looking at Bitcoin and kind of wondering what is the actual investment case here? Yeah, I think you're spot on. This is a bit of a narrative violation, and we'll see how Bitcoin comes out on the other side. I do have a suggestion potentially for those selling Bitcoin. There is this asset. It's backed by the world's largest standing army. It's necessary to pay taxes. It's accepted nearly everywhere, and you can easily use it to acquire other assets or hedge against uncertainty or inflation.

12:06It's called the U.S. dollar. So maybe people can check that out. It's very interesting. We're seeing maybe people flee from Bitcoin into other assets when it used to be the other way around. I mean, one prominent person fleeing Bitcoin is Michael Saylor, the co-founder of Strategy, also known as the Never Sell guy, actually sold. So he sold 32 Bitcoin valued at roughly$2.5 million back in May, making it the first time he actually sold Bitcoin since 2022. But he blames it on what he calls a capital rotation, quote, where capital markets are moving into AI, as I mentioned earlier. On his social media, he showed the significant Bitcoin outflows that's happened since May 14th, more than$4.3 billion worth, according to data from Farsight, as evidence of the rotation that is dragging down the asset.

12:53Again, Michael Saylor has kind of been seen as like this poster boy for Bitcoin. He even was like, maybe it's time to sell. Yeah, and I think if you zoom out, it's still impressive that this Bitcoin phenomenon has grown to the market cap it has. And so we'll see going forward if it stays stable around this price, if it continues to drop, or if it goes up more. Let's move on. My stock of the week is Knicks owner James Dolan, who before was arguably, quote, the worst owner in pro sports, a marker given by Bloomberg at some point. And is actually now three wins away from owning a championship team.

13:30Since taking over in 1999, the Knicks lost their way, making the playoffs only seven times over the next 23 years. They actually had the worst record in the NBA in 2019. And it wasn't just the team's performance on the court. Dolan publicly battled the fans, his employees, city officials, and even his own players. He once fired an employee after she reported being sexually harassed by Isaiah Thomas, the team's president of basketball operations at the time. She sued and was paid millions in a settlement after a jury ruled that she was improperly fired. Then there was the feud between Dolan and Nick's fan favorite, Charles Oakley.

14:07In February of 2017, he was asked to vacate his court side seat at MSG. Now, reports varied as to the reason why, but it was publicly known that his relationship with Mr. Dolan had been strained for years. But if the Knicks bring home a championship could all be forgiven, the Knicks have been on a tear lately in the playoffs, winning their last 12 games and hoping to extend it to 13 straight in Game 2 in San Antonio tonight. Kyle, despite the flack that James Dolan gets, it's done little to hurt his businesses where he owns Radio City Music Hall, the Beacon Theater, the New York Rangers, and, of course, the Las Vegas sphere.

14:44He's doing all right. Well, first I have to say, when someone moves from Minnesota to New York, good things happen in Ray. No, I'm not talking about me in this podcast. I'm talking about Carl Anthony Towns going to the Knicks from the Timberwolves. Shout out to my guy, Kat. I knew doing this story, you sneaking a Wolves reference. I got to find a Minnesota land somehow. But let's get back to business. It is Dolan's world right now, and we're just living in it. The Knicks are expected to generate more than$140 million in revenue during this final runs at about 55 % profit margins. The MSG sports stock is now at an all-time high, up 45 % this year.

15:20Obviously, Dolan owns the Sphere in Las Vegas. It's making seven figures a day with this AI-enhanced Wizards of Oz on the big screen. And he's looking to bring more really popular IP to that production. And the Spheres stock has also skyrocketed up 125 % since last April. There's plans to bring another Sphere to Washington, D.C. And so he's making a lot of money. The Knicks are winning. And in some ways, I do think the relationship fans have with their sports team, winning does cure a lot. That is what sports fans care about. So if the Knicks take this home, I mean, Dolan might get Timothee Chalamet to play him in a biopic at this point.

16:03They're on fire. There's also this potential Knicks-Rangers separation, which actually has Wall Street excited about it because soaring NBA valuations can be had in a single stock. So there's this thing apparently that I learned called the Dolan discount because the private valuation of the Knicks and Rangers have traded below the enterprise value of MSG Sports. So separating them, a breakup could actually boost the franchise's valuations because now you have this idea that they're worth more separately than they are together. And lastly, I do want to highlight Leon Rose, who's actually the current president of basketball operations, who was hired in 2022 and he was formerly an NBA agent.

16:42And a lot of people believe that was kind of like the turning point for the team. Over the past six years, Rose kind of carefully constructed the current rosters that's playing in the finals right now. And then, of course, in 2022, he signed none other than Jalen Brunson to a four-year$104 million contract who also happens to be his godson. So he also hired Brunson's father as an assistant coach. But basically, a lot of people are saying Leon Rose was his pivotal figure in the team's success now. We got to give Rose his flowers. Yes. All right. Let's take a quick break. And when we come back, we'll talk about movie theaters making a comeback.

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18:42They believe active strategies shouldn't be locked away with one person. They should be shared across the team. Their lineup also includes over 80 bond funds. They're actively managed by a 200-person global squad of sector specialists, analysts, and traders. Learn more at Vanguard.com slash impact. That's Vanguard.com slash impact. All investing is subject to risk. Vanguard Marketing Corporation Distributor. The box office is back and there's not an Avenger in sight. That's right. Cinemark, one of the largest movie theater companies in the world, recently announced it delivered its highest ever domestic box office performance for the month of May.

19:20And these record level results were not fueled by one smashing Marvel movie success, but broad moviegoer enthusiasm and a well-balanced movie lineup that included, yes, blockbusters, but also breakout content and strong holdovers from previous months, including Michael, The Devil Wears Prada 2, Mortal Kombat 2, The Sheep Detectives. Yeah, you heard that right. The Sheep Detectives, Star Wars, Obsession, and Backrooms. Backrooms delivered Cinemark's biggest horror opening day of all time. So lots of records being set, but it's not just about the box office. It's also about the Coke Zero that's the size of your face and popcorn dripping with so much butter it would make your dietician weep.

20:00That's right. It's about the concession stand and Cinemark delivered there as well, achieving its highest ever food and beverage per cap spend for the month of May. Although back in my day, you didn't buy concessions. You went to Target ahead of time where snacks were cheaper. And then you try to sneak in as many as possible by stuffing your pockets and hoodies with Sour Patch and Pringles. But that's besides the point. Ray, good times. The box office feels like it's making a comeback. And I got to say, I'm pretty excited about it. Yeah, and the real test is now whether that momentum keeps going because you have the release of Toy Story 5 that's coming out, which is projecting a$170 million opening.

20:33So as long as – we'll see if people keep going into the theaters or otherwise maybe May was just a one-off. But yeah, movie theater chains, they really needed this badly to kind of recover from the post-pandemic slump that it's had for quite some time. But also, you know, movies also have to have crazy buzz. There was this report from Variety that said moviegoers are scrambling to reserve their seats for the Odyssey, which is also coming out real soon. That comes out on July 17th. And the demand for IMAX screenings were so high that AMC's ticketing app completely crashed for a moment. And then when it started back up, wait times were up to an hour.

21:12Can you imagine trying to buy a ticket, a movie ticket, and waiting for an hour? You're just like, what kind of world are we living in now? But it's kind of like this new age of turning movies into big spectacle. These studios with massive marketing budgets have to build this multi-prong marketing machines that include events, social media blitzes, viral campaigns. What they're trying to basically do is how do we create a cultural moment around this movie and generate excitement over something so that way leading up to the movie's releases, everyone's got their tickets. Everyone's excited to go.

21:49So it kind of feeds us into this idea that going out to the movies is a planned out. It's becoming an event versus sitting at home on your couch, scrolling endlessly through Netflix tiles, which is something that I do all the time. And then you ultimately just end up watching you've already seen before. Exactly. And I mean, speaking to this spectacle point, I think Taylor Swift has a song that will be featured in Toy Story 5. I think tapping into anything Taylor Swift is always a good idea. I do think movies coming back is just good for America and good for the world. It's a shared cultural experience that you can talk about with other people.

22:21It's being able to focus on something for two hours without scrolling on your phone. And it's the ability to eat your weight in popcorn without being judged. Like very, very good things. And we're seeing this kind of balanced slate. You have some big blockbusters. You also have Christopher Nolan coming out with his movie Odyssey. You have some sneaky movies that weren't expected to blow up and have. And so the movie theaters have some real dynacism behind them. And I'm pumped to see it. And let's not forget, Doomsday comes out in December, which is a Marvel movie. Now let's sprint to the finish for our final headlines.

22:53Monterey Park just became the first city in the country to outright ban data centers. Measure NDC won more than 86 % of the vote on Wednesday, which is an unofficial count, was a response to a proposal for a data center to be built in the city that sits just east of LA. Other cities and counties and states have set up pauses or moratoriums to ban data centers, but Monterey Park is believed to be the first to permanently ban it at the ballot box. HMC Stratcap, an Australian investment firm, wanted to build this data center about the size of four football fields next to a community park. But opposition began in January when hundreds showed up to a city council meeting to oppose the proposal of the 247 ,000 square foot data center project.

23:39Weeks later, the company notified the city that it would scrap the entire thing. Kyle, could this be the first of many bands like it across the country? I totally think so. And I think this is the NIMBY movement or Not In My Backyard has always been very powerful to block things that communities don't want in their area. I also think just AI and data centers fundamentally have a narrative problem right now. When you hear AI companies saying this might replace all of jobs, well, people aren't going to get excited about that. When you hear companies saying data centers are going to take up all of the energy in the area and prices might rise for an electricity bill.

24:15People don't like that, whether that is true or false. And so I do think there's a narrative problem. You're going to see more of this. I think data centers have to partner with something that people actually want, like, okay, we'll do a data center and we'll do a Chick-fil-A. We'll bring those to your neighborhood. Maybe they can get a pass that way. Up next, here's something to wake you up. A flesh eating parasite has returned to the United States. The U.S. Department of Agriculture confirmed on Wednesday that the New World screwworm fly has been found in South Texas for the first time since 1966.

24:46Agriculture Secretary Brooke Rollins said the case was in a three-week-old calf in La Pryor, Texas, about 50 miles from the Mexico border. Rollins said that there have been no other detections of the fly in the U.S., and officials were quick to say that while the fly's larvae are a threat to livestock production, they don't infest food. But if it does get out of control, the screw worm can be a real threat to living animals and cause damage to livestock if left untreated, costing millions of agricultural losses. The fly was confined in Panama until it broke out of containment in late 2024 and began moving north through Mexico.

25:23Kyle, I have to do this? Are we screwed? Great pun, Ray. I hope not. I mean, it's really interesting. This used to be a massive problem going back to the 1930s. In the 1950s, the USDA actually started dropping what they call this like flywall, sterilized male flies. So then the screwworms couldn't rebreed and keep moving. And they just kept dropping this flywall more south, more south, more south until they brought them all the way back to Panama and the Darien Gap. And so we kind of had this issue solved. Obviously, there's been a lot of budget cuts, different focuses for the USDA. Hopefully, we can bring back that strategy and make sure that this doesn't spread.