The SpaceX IPO Is Here. Time to Lift Off? | REKT Vision

0:07Happy Friday, everyone, and welcome back to Wrecked Vision. Today's a big one, guys. We are recording the final ever episode of Wrecked Vision. And of course, we have Mando back with us to send us off. Mando, how are you doing today, man? Great. Yeah, I'm glad to have come back. Obviously, I had to leave the show, what was it, two months ago now, just for personal reasons, and that hasn't really resolved itself. So it's bittersweet. I may come back in some form, but it's difficult to be the regular show as it is. But yeah, it's been a blast. Yeah, you know, the audience would love to have you back anytime that you are available.

0:50You've been here. WreckVision first appeared on Real Vision in May 2024. So you've been here for over two years. I've done almost 100 episodes, including drinks with OV, market crashes, market runs. There's a lot of crazy moments in between. So glad we can have the final one. And today, obviously, it's not only just the last day of WreckVision, but the SpaceX IPO, huge news, market-breaking news is coming today. So what are your thoughts, just like your initial thoughts, on kind of the lead-up to SpaceX, biggest IPO valuation in history. I think early talks are saying, I don't think it's hit live just yet, but early talks are looking like it might even open at 165.

1:38The pre-IPO is 135. So just what are your thoughts in general on this? I think it's always a difficult one to trade on the first day. It's got a lot of retail interest in it, but it's almost impossible to value because it's all about valuations or revenue that can be coming in the next few years. And that depends on things like data centers in space to build out of Starlink. But there's a lot of uncertainty about the forward revenue, which means that you're really just trading sentiment. I think it will probably stay in between this$1.5 to$2 trillion range. I think there's going to be enough demand from there.

2:20and just with the backdrop of just the strength in the equity market right now i i just think it's got a very unique position in that nothing really else you can uh you can value it against and it's got this uncertainty around uh future revenue that it's really just going to trade the sentiment i think sentiment's strong right now so i think it's going to have a sustained bit around like the one and a half range i think it is live right now it's around 1.6 at least or what I'm looking at hyperliquid, which is basically this. All right. All right. So yeah, just basically kind of hit that mark. Do you think this is pulling away?

2:58I mean, obviously it is, right? We've seen crypto dip and prices go down. And the talk is that people are selling their positions in crypto to have some powder for the IPO and then just get in on this. Do you think this is something that's going to last? Like, is it going to be pulling real capital out of crypto and it's not going to come back? Or is it like kind of, I don't know, like maybe a rising tides type of thing where this will eventually rotate back into crypto? No, I definitely think this is drawing capital away from crypto. Same with the Google secondary offering that happened recently.

3:34And then we've obviously got Anthropic and OpenAI, which will probably be in Q3 and then Q4. So there's a decent amount of money being drawn away right now. I don't think that's all of crypto's problems, but it's not the focus of retail right now. There's no doubt about it. This is the focus of retail right now. Your barber is talking about SpaceX IPO. They're not talking about crypto coins anymore. And that's just something I think we have to accept with. Maybe it's a maturing of the space in general, but I also think it's partly our own failures just in terms of product. How do you think this impacts or what do you think SpaceX does for the other AI IPOs that are coming out?

4:21Chad, OpenAI, Anthropic, do you think this is a gauge for what they'll do? Or are they just, SpaceX is just so different from the other two that it's hard to draw comparisons? I was looking on Polymarket yesterday, just about the timings for the other two. And it seems as though people are expecting Anthropic in September or Q3 at least and OpenAI before the end of the year. So I think it's going to go Anthropic next, then OpenAI in terms of the timing. Anthropic, I think there's a lot of demand for that right now just because of the curve in revenue that they've seen. is just so wild that I think people just want part of that story.

5:06So I actually think that one will be relatively well-received, whatever happens with the SpaceX IPO. I do think the OpenAI one is going to be a little bit more shaky. And that may be like a mini top in the whole space. But AI just feels so incredibly strong right now, particularly on the memory and chip side. It doesn't even seem like crazy valuations. If you look at them on earnings multiple, although it may just be one year of earnings, it's difficult to work out. But I don't see this AI trade ending. And I'm classing SpaceX as an AI company because I think it has some parallels in what the forward revenue projections are all about with data centers.

5:52And I don't think this is going to end here with SpaceX. You may have some indigestion, but I feel like this trade is continuing. Yeah, I'm glad you mentioned that because I was going to ask you about the valuations because they just seem like just such wild valuations, like almost$2 trillion for SpaceX. And you have Anthropik and OpenAI pushing literally the trillion dollar valuations. And it's just funny that you also mentioned the OpenAI thing because there was that story that came out that someone tried to get a loan on their OpenAI and the bank was like, well, we don't think it's actually worth that much.

6:28Obviously, I don't have that verified or anything, but it was just a funny story. But yeah, just in general, these valuations seem so wild. And you're saying they don't even seem that crazy and they could just still run. So I just think that's just crazy, right? The valuations of the IPOs are definitely more shaky than some of the other chip manufacturers, I think. If you look at Micron or you look at some of the Korean chip manufacturers, they're kind of trading at single digit earnings multiples. So they're not that insane. these obviously open ai anthropic spacex they're all burning cash so they've been having to they've had to be valued on a revenue multiple and also forecasted future earnings um there's a big case to be made that you know anthropic if you see the the the increase in demand that they've seen that they will turn free cash to policy pretty soon and they could have a huge enterprise clients or paying them so much.

7:27And that could be the same case for OpenAI. But I think the case for Anthropocic seems slightly stronger. I don't think you ever really are going to value these companies on their bottom line. They're going to be valued on their top line right now just because there's just so much future earnings growth potential. But for the rest of the AI space is what I'm talking about. I don't think the valuations are that crazy, if I'm honest. like um on the chip side like i said it's there are definitely names which look okay to me and then even like the the hyperscalers like google's trading not far from like 20 times earnings i mean that historically that's maybe high but in the current in the current index that's kind of middle of the range and a few of the others are like meta is actually quite quite low um like They're all not that crazy to me from a free cash flow perspective.

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9:29Good, good reference there. You know, you've in the past mentioned Google and just like kind of the incredible work they're doing with AI, right? The Gemini model. And I feel like Google kind of gets thrown, not thrown, but like they kind of fly under the radar in terms of like the work they're doing because Anthropic and OpenAI just have so much of the mindshare. But like I've started recently using Gemini and it's just absolutely incredible. So like, what do you think? How do you think that like whole dynamic plays out with the SpaceX is, the Googles, the OpenAI, Anthropics, you know, all of those players in the world, NVIDIA, right?

10:04Because I think NVIDIA was like essentially felt like the Bitcoin of the open AI space, but it feels like with open with SpaceX and these others coming, it might not so much be the case. How do you think of of all of these like Mag 7s and potentially, I guess, what Mag 10s even now coming into play? Yeah, the two interesting ones, probably NVIDIA and Google. I mean, the history of Google is that basically everyone that went on to form open AI and and Anthropic used to work at Google. Google has had an incredible AI department for many, many years. And they bought DeepMind and before they had their Google brain.

10:44But you look at where a lot of them all used to work as Google. So they've always had this great pedigree of AI. And they have built their own chips, TPUs, for their own internal neural nets and AI models. It's an interesting play. I do think the latest models are worse than Mythos, for example, or Fable, the anthropic one. So they're slightly behind on the model, but they have so much of the AI trade that I think they can play into because they're obviously in the chip-making game as well, and they're in the hardware game. And I think that company will do very, very well. but they probably just need to focus on getting a slightly better model, I think, in the short term.

11:32But I do think that they have an interesting play. And then NVIDIA is another interesting one. We're kind of moving into CPU chips now and have invested in a ton of other companies. This is the other thing. Google owns about 15 % of Anthropik. It has a huge stakes and has a decent stake in SpaceX as well. So Google has been a big investor in some of these new AI companies or SpaceX being a space company. And NVIDIA is going to do a good job of that, too. It has stakes in pretty much everyone, too, just from asset swaps. So I think those two are probably still the most interesting plays out of the hyperscalers.

12:15And I think they'll continue to do well, if I'm honest. So real quick, when you talk about AI stuff, right? We talked about some of the memory trades. The semiconductors obviously have been really hot as well throughout the time. How do you identify an AI company or a trade that you might want to get into? What are some things you look for? Because these are new, right? And they do come out of nowhere seemingly. So how do you essentially evaluate what a good AI trade is going to be for you? Is it like how many things they have on their order books? Like what their build-out process is going to be in data science?

12:57What do you evaluate for those? There's two kind of, like I said, there's multiple different AI trades going on right now. The one that's really shone this year has been the chip and memory trade, which has been traditionally there has been somewhat flexible supply of these things which has meant that often when the chip makers or the memory makers run that it's towards the end of the cycle and what you see is supply they basically build out new fabs and the trade kind of unwinds over the course of the next few years the real but they're not trading up high multiples now of their current earnings.

13:42Like Micron could make over$100 billion next year just in terms of earnings. Now, I think that there is a debate about when that supply will become a bit more elastic, let's say, and also how much of the... Because often now, because there's so much demand, you have to buy up basically all the inventory for the next one, two, three years. And there's just like a question about the quality of the demand for that inventory over the next three years. But it does feel like the memory trade, to me, I like. I like SK Hynix in Korea and I like Micron in the US. Those are probably my two favorite ones because they may trade at low multiples.

14:29And I think actually, particularly SK Hynix, because the form of memory that it makes is very high quality. that I think that's an interesting one. So you've kind of like, that's an interesting bit of the AI trade. And then the hyperscalers, like I said, I like Google and I like NVIDIA. Other people have been going like down the AI bottleneck trade, which has been, you really go down the weeds of like every single bit of the AI process. particularly the manufacturing process of the chips. And you look for anyone that looks like they have some form of emote and there's just going to be infinite demand.

15:18There's been some interesting trades there. This is like Bloom Energy has been an interesting trade there around energy demand. And there's been some of the photonics trades this year have been very, very big. So there's been big moves on some of that stuff. I've gotten less on that sort of route because that is – I find it more difficult to work out how inelastic supply is for some of that sort of stuff. But I think the balloon energy trade is quite an interesting one. RAOUL PAL, Yeah, we have Chris Bullock has been talking about rack space, basically saying like all these data centers are going to need rack space.

15:55So he's been talking about like the racks that the servers are going to need, the chemicals and stuff. So I was like, yeah, you're right. You can go down so many rabbit holes in this. RAOUL PAL, You go down the rabbit hole. RAOUL PAL, Yeah, absolutely. I yeah I just for me the cleanest one is still the memory trade in my opinion I like the South Korea trade as well because they've they've brought into new regulations which basically South Korea if you uh as a as a con as a country it was always traded a very low p ratio because it didn't really do dividends and they didn't do buybacks um so now they've put forward these new regulations last year, which basically are going to force the companies to do that.

16:35And I mean, South Korea traded at lower multiples than China, and China trades at very low multiples. So I think that South Korea just as a macro trade is also an interesting one. So do you like something like DRAM, right? I think they have Micron, SK Hynix, Samsung, and probably a few others looped into that ETF. Is that something that interests you? or do you prefer to hold the individual stock over in the ETF in that case? Yeah, you could earn the ETF, but I do think the only, like, the best stories there are Micron and SK Hynix, I think, by some distance. So switching over a little bit, Saylor famously sold 32 Bitcoin, right?

17:15And said, I never said that my company wouldn't sell it. I just told you not to sell it. And obviously, the timeline went crazy. uh you know even in our discord people were going a little crazy asking is this the next ftx uh what is what was your take on that whole situation as it was unwinding i'm not a sailor fan i think he's um i think he is smart enough to know what he's built is uh very risky right now and uh he's made it complicated enough that that i think he kind of feeds into that almost um i think i was a fan up until he started issuing preferred equity and then um i thought what he did the other day where he brought back the converts um and used up his cash balance to do it was was just not smart business so i um yeah i'm just not a fan of the guy.

18:17I think he will, I don't think he blows up. There are 6 billion of bonds that will become put up below the next two years. First ones are in 2027, some of them in 2028. I think he will probably just issue MicroStrategy stock to take those out. I don't think he'll be able to refinance them normally. And I think Microsoft strategy will continue to be

18:52the thing that holds up the whole structure. They're going to have to issue so much stock to pay back the dividends for the preferred, which is about$1.7 billion a year. And then I think they're going to have to do it to repay this debt as well. So I think if you're a MicroStrategy holder, it's just a really bad instrument now. And I think you should just own Bitcoin. I think it trades about on an equity MNAV about 0.83. The overall MNAV of the whole company is about 1.2. I think we will see the equity MNAV go down about another 20 % to 30%, is my guess. RAOUL PAL Yeah, it's crazy because people not too long ago were essentially using MicroStrategy as their Bitcoin.

19:41RAOUL PAL It's just not Bitcoin anymore. Yeah, maybe you are slightly helped from an increase in the price of Bitcoin, but you've seen that when he sells, it's a disaster. and I think he will think twice about selling again which means that for all upcoming liabilities I think he will just issue Microsoft and he has this metric where it's like 1.2 times total MNAV that he said he would issue it but I think that will be tested and I think he'll issue it all the way down to 1 MNAV which on equity MNAV level means that you're going to drop by another 25 % in my opinion so yeah I'm really not a fan of Sailor I think he played a blinder, and then he decided he wanted to own as much more Bitcoin as he could.

20:36And he ended up doing it in a way which is really going to affect microstrategy equity holders. And I think that's, yeah, I just think he's, I wouldn't trust him. While we're on the topic of Saylor, who is a very public figure behind his or kind of the face obviously of micro strategy do what do you think like elon's uh like role in the spacex uh ipo is going to do help hinder elon just going to do elon things what do you think here well if you look at the hyperscalers or let's say the mag 7 tesla also trades a crazy earnings multiple. We're talking like 100 plus. There is a lot of belief that investing in Elon companies is investing in the future.

21:35And that's over a range of different things. And also that eventually they may all merge into one thing. So I actually think it massively helps. If this was buy somebody who was an Elon, I think this would trade nowhere near the level it does. But because people are very comfortable with the idea of this trading on a revenue multiple and potentially even like a two-year forward revenue multiple, that's what Elon can do with this company. So I think it massively helps the SpaceX IPO. I'm a big fan of Elon. So I think he's been a massive net win for society. I think he obviously, since the Twitter acquisition, he is more divisive politically.

22:25But I do think the companies that he built are incredible companies. And the technology that he's trying to strive for is incredible. You can see it like Blue Origin tried to basically do the same thing as as SpaceX, what was it, a month ago? And the rocket blew up. Like, what he has done with some of these companies is, like, incredibly difficult to do. It was incredibly difficult to do with electric cars, with SpaceX, with Starlink. And I know he has a number of, like, smaller ventures. But, like, I do think he is one of the world's great entrepreneurs. And you just have to respect that. So I think it really helps.

23:08And I think it's basically the basis of the whole valuation. So because there obviously has been, and you just touched on that, there has been that speculation about them all merging. So Tesla, SpaceX, Starlink, XAI, right? Those all merge together. You overall then will be more bullish on SpaceX? It's the same, less? How do you think of that? I think they're definitely going to all merge in my opinion. like if you look at the businesses they are all slightly related and they are all kind of dependent on ai so like um they just bought cursor right or they have the option to buy cursor and the whole idea is that right we may get a if we can win on the hardware side of the business with data centers in space then we can potentially and you know they're building testers building massive fab plants in the u.s right now then they can get the best ai across all of their different businesses, including the cars, the robots, whatever else he's going to end up doing.

24:10So I think naturally, it just makes sense for them to merge, or else they're just going to end up doing huge business deals between them, like a creative valuation. So I think it just makes sense. I think it will. Maybe not right now. Again, I don't really know what that means for the SpaceX valuation. Maybe that's not the right question for me to answer. But I do think that the desire for them to merge is 100 % going to happen. Yeah. Another interesting stat about the SpaceX IPO, it is the first company in history to IPO with crypto on their balance sheet. They had like, what,$18 million Bitcoin?

24:50Yeah, so pretty wild stuff there. Speaking of crypto, right, we had, what, less than a week or almost almost exactly a week ago, we had the Zcash exploit. Obviously, just through the market for a complete spin, Zcash dropped, I think, over 40%, maybe even 80%. I forget exactly how much they dropped, but quite a bit, but they have bounced back since then. So AI Claude found a bug in Zcash, for those of you that are unaware, that essentially created a counterfeiting vulnerability within Zcash, allowing people to mint Zcash tokens unknowingly, which I guess is one thing for a privacy coin, right?

25:37But what's your overall take on it? Were you a fan of Zcash before this? And does this crisis change your take on this privacy coin narrative? I am a fan of privacy as a theme. I think privacy prediction markets ups are the three like major themes in the market right now i um privacy at the protocol layer i'm less of a fan of um just because of this sort of stuff like once you start adding certain levels of privacy it becomes increasingly difficult to verify things like supply and um i prefer it more as a feature for the chain which is kind of what near and even suey's actually started to go down slightly so i am a fan of zcash i think though i don't know if it will be the winner let me put it that way i think uh there is something to be said about it being like the private bitcoin but it may not be the private uh the thing that you use to like actually transfer assets privately of which case i think something like near would be like the eth of privacy then uh with what they built or you know eth actually has got some protocols itself too but i um yeah like i'm i do think it's going to be a strong narrative so a quick break in your regular programming if you're serious about your future grab my free report called prepare for 2030 i think you've got five years to make as much money as possible and this guide will help you navigate what's coming the link is in the description download it now in terms of uh my favorite trades in that it is probably near like i do think near built a really interesting system with Near Intense, which is their cross-chain privacy decks.

27:30You can just go try that at near.com. It's less of a bridge, just more like they've got a solver of which people compete to basically bridge assets. The thing I like about that is that they basically decided that all the fees for everything they're doing at Near now are going to be used back for buyback. It's become less of just your generic L1 chain they've built a great product and they've said hey we are going to now turn more into like an app chain with all of our uh successful apps and i've been you know really really calling out for for people to do that so i'm like a big um i'm a big fan of what they've what they've done there uh and i i think i think that one can go a decent uh that that's like more than my favorite place I mean, I think when I last came on this show, and people will probably remember this in Q1 and Q2, my favorite trade was Hyperliquid.

28:30And that's been a great trade versus all the other L1 trades. I have not liked L1 trades in general. But what I do want to see from L1s is then say, right, look, this is what Hyperliquid's done. Let's do the same thing. why can't we build a system here around our best apps and then do buybacks around it? And I haven't seen that from any, like some people are helping to build apps, but they haven't then also made the next jump, which is we're going to do buybacks, which is kind of what the hyperlicted trade was. You know, ETH's not doing that. Solana, you know, they did try to build perp decks recently, but didn't really take off as I think as much as they planned.

29:18And then Sui, I think is building a similar sort of like privacy style or AI focused like start app. But again, they haven't really moved to the buyback stage. So I think, I think near is my favorite trade in the market now, alongside hyper liquid. Those are, those are my two. Wow. That's I, then I never really heard near, I guess I've never even used near to know really enough, but I've never heard it talked about as like, you know, from the privacy perspective. So that brings a new kind of bullish narrative on near because obviously they've been successful from the AI, you know, perspective as well.

29:58Right. I think they, they're like making a move for the agentic economy and things like that. So Jamie Coutts has also done some deep dives on near and he famously added it back into his portfolio as well. So I think he heard you talking about Amanda. And so what do you, how do you like, how do you look at near from the AI perspective? Do you think like, so first of all, I guess it's a two part question. Do you think this agentic economy thing is going to really kick off in the next few years? And how do you see near like fitting in next? I know SWE is also making a play for that. But like, do you think near is better positioned to capitalize on that with some of the privacy stuff you've mentioned as well?

30:39yeah so so the whole reason about that thing i said is basically to so that any agent can operate across any different chain at any one time privately um the way it's been built as well is is it's a far more secure way than like other bridges uh it looks more like a bridge or a dex But actually what you're asking is you're asking different providers to complete your task. So if you'll say, hey, I want to bridge this to this, on the back end, it has a series of people competing to do that for the cheapest cost for you. So I just think what they've built is something really, really good. I think there is a lot of chains that will try and go after the AI trade.