Chit Chat Stocks - The SpaceX IPO And Looming Capital Supply Shock That Could Upend This Bull Market

Episode Date: June 24, 2026

On this episode of Chit Chat Stocks, we talk with Rupert Mitchell of the Blind Squirrel Macro newsletter. We discuss: (00:00) Introduction (02:57) Rupert's Background and the SpaceX IPO (06:04) Understanding the Lockup Period for SpaceX (09:04) Market Dynamics and Capital Raising Trends (11:52) The Impact of Indices on Market Valuations (15:03) Hyperscalers and Their Capital Raising Strategies (17:51) The Future of AI IPOs and Market Sentiment (34:40) The Role of AI in Market Valuations (38:17) Understanding Addressable Market in IPOs (46:34) Navigating Bull Markets and Historical Context (50:17) Retail Investors and the IPO Process Blind Squirrel Macro: https://www.blindsquirrelmacro.com/p/its-line-in-the-sand-time-dario?r=9ef2u&utm_campaign=post&utm_medium=web&triedRedirect=true ***************************************************** Subscribe to our newsletter, Emerging Moats: emergingmoats.com  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Will the Fed raise rates 25 basis points in June 2026? IBKR prediction markets let you trade the outcome alongside your stocks and options. Earn interest, get it right, and earn $1 per contract at ibkr.com slash predictions. Last trading day, June 17th. Welcome to Chit Chat Stocks. On this show, hosts Ryan Henderson and Brett Schaefer analyze businesses and riff on the world of investing. As a quick reminder, Chitchat Stocks is a CCM Media Group podcast. Anything discussed on Chitchat Stocks by Ryan, Brett, or any other podcast guest is not formal advice

or recommendation. Now, please enjoy this episode. welcome into the chitchat stocks podcast a podcast to help you find your next great investment my name is brett schaefer and i'm joined by my co-host ryan henderson today we bring on new guest rupert mitchell author of the blind squirrel macro sub stack a sub stack helping uncover macro for civilians ryan and i are two macro civilians and i think plenty of the listeners are as well so i'm really excited to talk today just as a tease for the audience uh to help them know what this episode would be is about we're going to start with uh rupert's background hit a lot of the spacex ipo uh because rupert does have some expertise in all how not how all this process

works and then go through the entire capital raising market and how it's affecting the hyperscalers, the giant companies, and really the market in general. So let's get into it. Rupert, give us a brief background on your career and why you decided to start The Blind Squirrel. Oh, wow. Well, I spent 25 years on the sales side starting in the early 90s. And most of that time was as an equity capital markets banker. And I spent the last 10 years of my career in Asia for Goldman and Citi running Asian equity capital markets businesses for them. I moved down to Australia four years ago, which is when I started Blind Squirrel Macro. I fell in love with a Melbourne girl and moved down here. So yeah, that's where

we are. And that's, you know, hence my close interest in what's going on with all these jumbo ipos because they're pretty unprecedented we're going to talk about some of the some of the big ipos and the big prospective ipos going on uh right now but rupert before we uh before we hit record you mentioned that you uh you you were used to seeing 50 million dollars as a big figure back in the day, does it feel like people have just become desensitized to how large? It's something I think about a huge amount. I mean, the law of large numbers has got us all insensitized to reality somehow. When I first started, a $50 million equity fundraising was a decent meal ticket for an investment banker um now nowadays that's like that's like a sort of

half a day's atm um for a decent size company no i think the numbers the numbers have got out of completely out of um out of whack and um you know sometimes you just have to pinch yourself um when this isn't central banks moving moving moving digits from one side of the ledger to another. You know, when you're talking about risk capital in an IPO, you know, that stock's got to find a new home and people aren't unloading money market funds to buy these stocks. They've got to offload other risk assets to make room for these things in their portfolio. And I think that's a really important thing to think about. Okay. Let's dig into, I guess, what seems like it's been, has been the biggest headline of the last month or even longer, which is the SpaceX IPO.

I guess to kick things off, are you surprised as we're talking today, and granted, it's moving around a lot every day, but it's still sitting around a $2 trillion market cap. Are you surprised that the IPO got out so clean? Listen, I think hats off to the bank team that put that deal together i think it was you know it surprised me how smoothly it went um they'd clearly lined up um lined up demand and it you know they couldn't out of the gates rely on the passive demand or even you know hedge funds bridging to that passive demand they they you know they got whether it was the existing cap table or new people to show up and you know they had to raise 86 billion dollars including the green shoe and they did that incredibly smoothly um traded very well out

of the gate but um you know i don't know whether it was the bond deal that spooked things um this week um but you know that there's there's clearly now a lot more focused on just how much more of this paper comes into the market um i mean i don't know to what extent you've looked at the the lock-up schedule um for spacex but but you know you've got consistently starting from august You've got another $170 billion of supply coming, and then literally it's $60 billion a month, right? These are huge numbers. And then come November, the free floaters is eight times what it is currently in terms of share count. Yeah, maybe we can skip to that question now.

Take us through exactly how you think the lockup period could materialize for SpaceX, and is it different than typical lockup periods? Because really from our perspective, someone who we just buy and sell individual stocks, a lot of our listeners do as well, we just understand that there is a lockup period and it's usually like 90 or 180 days after. Yeah, a typical a typical IPO lockup is six months, 180 days. What they've got here is a staggered, a staggered lockup whereby, you know, there's a there's a drip of that basically come the two days after the Q2 earnings, which is probably going to be the 10th or 11th of August. um you've got an additional 900 million dollars 900 million shares of supply 912 million shares of supply that's that's 150 percent of the stock that's already out there in the market right that gets topped up by a further 455 million shares if spacex's share price is 30 percent above ipo price of 135 right so the test there is 175 50 um so at that point you've you've already

you've already um at that point that's triggered um you've already got three times the free float that the the company started with last the week before last right um then it's not even you know 10 days later, you've got another 319 million shares, another 360 million shares in September, and then some more in October, and then come Q3 earnings, so expect that sort of first week of November, you've got another 1.3 billion shares of supply. So, I mean, you are literally looking between now and November at, you know, just a staggering amount of paper that's got to find a new home. Now, sure, there is, you know, there's index demand from the MSCI, NASDAQ 100 and Russell benchmarked sort of passive and closet benchmarkers. But, you know, that is not a massive number compared to the amount of passive money that is tied to the S&P.

SpaceX won't get into the S&P until it's at least done 12 months of seasoning and satisfied profitability tests. That, by my calculations, is worth about $19 billion of potential demand. but in the context of in the context of this free float it's really not that much yeah i mean you have such a large market cap i saw and one of our listeners said that wasn't really the right way to look at it but i saw that the ipo was four times oversubscribed i don't necessarily know what that means besides that a lot of people wanted to get in on the ipo maybe correct me if i'm wrong here but they have the ability or the need to raise more fundraising or to raise more money excuse me i'm saying that weirdly would that indicate that

they there's demand out there to buy more spacex you know bonds whatever they're doing the capital raise this week or am i looking at that incorrectly well i mean first of all i mean debt markets and equity markets are different funding sources um you know i the fact that they came to the bond market to refinance the pre-ipo bridge so soon you know i think surprised a little bit it's sort of yet more yet yet more demands on liquidity but they are they are different markets and you're right to raise you know the fact that spacex itself is burning a lot of cash right now on a quarterly basis or at least the xai component of it is um you know i i have no doubt that they're going to be back in the market for primary equity pretty soon um and you you've seen how the other

hyperscalers are behaving i mean we had that 85 billion dollar raise from google um meta's been mentioning that it might tap equity um you know is microsoft is microsoft behind that um you know and then we can go on and talk about that but i think that the whole dynamic about how you know the key constructs of the u.s equity market over the last 10 to 15 years is really slightly um going into reverse i've coined this phrase that the age of reverse the equitization is upon us and perhaps we can talk about that in a second yeah we can definitely get into that the one maybe i'm looking again at this incorrectly but there's been the rise of these at the money offerings at least from my perspective they've become more popular

what would be what would stop a company like spacex they're trading at say roughly 100 times sales ford you know still pretty extreme and an absolutely extreme valuation what's stopping them from doing an at the money offering for 100 billion dollars and just getting as much money raised as they absolutely can i mean they're locked up currently okay right the terms of the underwriting agreement but you know that can be waived by golden sacks and morgan stanley if they if they they see demand and if the you know if frankly if the company needs needs the money i mean um i i i i think they would be mindful of just how much secondary stock needs to be absorbed over the course of the next six to nine months um pouring primary on top of that unless they

badly need it would seem like a fairly dangerous thing to try or maybe or ryan go ahead yeah i just and you mentioned the alphabet capital raise which we can talk about in a second but i guess my question would be you talked about the lockup and you talked about all the shares that would become available for sale i mean they had a ton of private rounds i think they got i think at a series end which might be the furthest i've ever seen it how would shares maybe this is a dumb question how would shares not go down after the like how would the share price not go down after the lockup with all well i mean just because the just because they're unlocked um doesn't mean they have to sell but you know ultimately if you are if you're a if you're a venture capital fund

or private equity fund, this is a big realization opportunity. They kind of have an obligation to, in most of these portfolios, this will be their most successful investment on paper in the context of a pretty tough few years for the venture world. Now, what may happen is they may give their LPs the opportunity to just take the SpaceX stock in specie. There are a lot of believers still out there. So that stock might not touch the market directly. But I think net-net, you're going to have to see a decent amount of supply coming to the market. Now, what did you think about the indices?

I know S&P is the biggest player in that room. And then there's QQQ that decided to accelerate, including them. What were your thoughts on that? kind of just in general like good bad was there anything listen i don't i don't think it's a i don't think it's a positive development development for the market at all right if you look at the s&p right now 51 of the s&p by by market cap by by index composition is trading at above 10 times sales right now right and the number i haven't run the numbers for the triple q's but that's going to be much higher for the triple q's just given its sort of tech composition um and that's

before you add um spacex and possibly open open ai and anthropic so when you've got a major benchmark index that's trading at such a rich valuation you know what are your expected forward returns there that would be my concern right and um you know so much you know so much sort of unconscious money drips into these, these benchmarked indices every, every, every month with 401k flows. Um, you know, you, you, you, you multiply that against expected returns that that's, that's a concern. Yeah. I mean, you look at potentially the incentives from someone like Musk, someone like Altman, the, the team at Anthropic to try to include it in there. Is that too i mean maybe i'm looking at it cynically is it to support their valuations to try to just get

some sort of liquidity in there like i feel like i'm looking at it extremely cynically where they want retail and passive flows i don't think the cynicism is misplaced and frankly the likes of musk altman and amodeo be doing their fiduciary jobs to their existing shareholders to try and to try and maximize potential demand for their deals which being part of the index clearly delivers right but the um you know ultimately you know if you're gonna if you're gonna cast any criticism it has to be at the index compilers rather than the companies trying to improve the the lot for their for their existing shareholders right yeah it makes sense makes sense all right let's move on to the big thesis you have on the wider capital raises from these

hyperscalers we saw i believe it's roughly 80 billion dollars from 85 they upsized it slightly right wow all right i mean that kind of leads into my question here how much dry powder that could be the wrong word here is there to soak up demand from big tech like could they issue a trillion like is there enough demand for that i i don't i don't know where i don't know where enough becomes too much, right? No one will be able to give you that number with any degree of precision. I think what's more interesting is if you look at just how, you know, if you look at the way in which the Mag 7 or the original Fangs have outperformed the broader markets over the last 10 15 years i mean the the triple q's right the nasdaq 100 has outperformed the equal a s&p

by a factor of four times since since the mid since since the mid 20 teens right um i i have a theory that a lot of that outperformance is due to simply the amount of stock that companies like apple like microsoft like oracle like like google were buying back from the market right billions of dollars a quarter in terms of buybacks right you then look at the other supporting structure of um of the market of the last 10 to 15 years which has just been there's only been one trade so the inflows both from domestic 401ks and foreign capital coming into the market has just been a sort of a one-way bet in terms of flows right and then on top of that for a lot of a lot of the last 10 to 15 years you had a a constant reduction of share supply in

the u.s equity markets just with the growth of the private equity industry companies getting taken companies getting taken out now um the private equity private equity industry is a different topic for for another day but clearly they're they're looking at lean times in terms of um in terms of returns and in terms of realizations to their LPs. You then look at the whole AI CapEx boom. And, you know, the wonderful thing about the U.S. tech dream story over the last 15 years is that these amazing asset-light tech companies were generating gobs of free cash flow,

which they were redirecting to shrink their share count, a massive sort of pillar, if you like, behind performance of that market. They're now spending trillions of dollars a year on GPUs and data centers, right? They don't have that money for the buyback. So that's gone, right? These GPUs and data centers are doing, well, if you're to believe some, a pretty good job at reducing white collar jobs out there um where does the 401k flow money come from once once once that and that's how that's happened now i i naively thought until quite

recently that there would be um you know there's the internal free cash flow generation and then there would be capacity within the debt capital markets that would support this build out but You know, it's looking to me like they're beginning to tap out the capacity of the debt markets. You know, the top hyperscalers and the neoclouds, if you look at that, they're on an off-balance sheet liabilities to the public and private debt markets. They total just under $2 trillion right now, right? They're crowding out the debt markets. And, you know, that that raise by Alphabet announced a couple of weeks ago, I think, is, you know, a sign that the dam's breaking in terms of primary equity supply from from the hyperscalers to support this capex. And they don't show any signs of slowing down or stopping yet. So, you know, I think that totally upsets the equilibrium that supported equity markets or U.S. equities over the last 10 to 15 years.

And I wouldn't be remotely surprised to see, you know, some kind of mean reversion whereby the forgotten 490 starts to significantly outperform the headline triple Q's, right? Just as hyperscaler equity supply, you know, puts a lid on what those big stocks can do. What did you think about the timing of Alphabet's capital raise here? Do you think they were trying to get in front of the SpaceX IPO and these other potential IPOs? listen i you know that there was clearly a huge amount of you know exuberance and excitement and demand for paper out there so you know as a capital markets banker for 25 years i'd always used to tell issues you you you raise money when you can not when you need right so i think it makes perfect tactical and strategic sense to get out as to get it get out in front of the pack right so you know kudos to them for doing it and and just to be clear not all of that 85 billion

has been raised yet um 40 i think it was 40 billion of the total is coming in the form of an at the market offering so that that that that that's being tapped right now and i think you know i don't know if they're doing it yet i haven't checked the disclosures but um you know ultimately google's been trading pretty soft since since since the deal i wouldn't be surprised if they started then stopped. Will the Fed raise rates 25 basis points in June 2026? At IBKR Prediction Markets, the yes recently traded at $0.05, while the no traded at $0.90. But the markets can change quickly. Trade prediction markets on political, climate, and economic events with simple yes or no prediction style contracts where prices reflect probability. Explore trending data, spot the trends,

and if you get your prediction right, you earn $1 per contract at settlement. Plus, you'll earn a 3.14% APY on your investment with an interest-like incentive coupon, and you'll get $3 for signing up with IBKR Prediction Markets, which you can use for any purpose or to start trading. Prediction contracts are not suitable for all investors. Go to ibkr.com slash predictions and turn your views into IBKR Prediction Contracts today. Last trading day for this contract is June 17th. I look at something like Palantir, I guess, is something I use as a proxy for one of the you know not necessarily it's not one of the giant technology companies but like risk on versus risk off almost the same for at least for me uh for something like bitcoin

where all right when animal spirits are high people love something like pounder they have the last few years and i've seen the stock down 30 year to date would something along those lines and there could be other correlations out there would that be an indicator to you if this continues with stuff like Palantir continuing to bleed, Google continuing to bleed, that your thesis is correct? Is that what, you know, listeners should look out for that? All right, we might be finally seeing this rotation. Listen, I think that there is a massive cohort of momentum investors, particularly amongst retail investors, not just in the US, but, you know, East Asian retailers doing a lot of heavy lifting in the US. Yeah, the stores in South Korea and

taiwan are crazy i know it's wild and it's it's it's your stocks as well as the as as as well as their own stocks that they're bidding up um you know momentum investors back the fastest horse that's running at a given time and you know i think there was a perception rightly or wrongly that that mantle was going to be handed over to spacex um and you know yes the bleed in palantir started um started earlier but i think that's because you know the momentum investors were chasing micron they were chasing the drams they were they were chasing you know the the massive outperformers in in the year-to-date bull run so um you know they will that crowd is always going to run run for the for the fastest horse right should it if you were running the finance department

for running any of these big tech companies. Would you just have an ATM offering outstanding at any given moment? Like, why aren't some of the... Assuming that the big tech companies are still trying to raise money, which it seems like they are, why wouldn't they have an at-the-money available

or at-the-market? I think you're going to start to see it. I really do think you're going to start to see it. I mean, the... Ultimately, these guys still have organic cash flows themselves, and they've got stage payments. They don't have to buy an entire data center or pay for an entire data center up front. And while the market's performing well, while the liquidity's there, ATMs are something that they can put off pretty straightforwardly. But this is a pretty major shift in their muscle memory from the last 10 to 15 years.

They're more used to running multi-billion dollar buyback programs every quarter. All right. Should we talk about the OpenAI and Anthropic IPOs? They're supposed to be later this year, rumored to have it. What are your predictions for these? You have a lot of experience of bringing companies public. Where could the problems arise? What would their strategy be?

How much could they raise? could they do even more than SpaceX? What are your thoughts in general? Well, I mean, you know, listen, all of the valuations are wild at the moment. And, you know, I'm really not sure, just in this, you know, listen, the rocket ship and satellite part of SpaceX is relatively straightforward to value, right? Starlink is a number of subscribers times ARPU business, right? The launch business is straightforward, you know, how many third party pounds of material are you putting into space and what are you charging for it um how you've and how you value the opportunity the opportunity in enterprise ai with that ridiculous 25 trillion dollar tam

i don't know right um ultimately um you know the number on the sheet for for for xai is bigger than both anthropic and ai um you know the numbers being floated around arrays um for both of them is around 40 to 50 billion dollars each so smaller than the spacex deal um on paper um i you know my sense is their ability to raise that number is going to be a function of how well spacex is trading through the summer right um you know there's going to be plenty of rallying around the flag amongst the deep pockets within Silicon Valley to make sure that a lot of people whose incentives are aligned with these businesses, these businesses getting public. Yeah, just listen to the all-in pod for some very unbiased commentary on that one.

I have to employ a stunt double to watch the all-in pod for me. I can't quite cope with the wall-to-wall cheerleading. um but you know listen you've got to be very careful who you listen to around these transactions everyone is long up to the gills in this paper from a much lower valuation than they're going to be talking about when it comes to the ipo so um you know make sure that you've got your ears open to independent voices around these topics is what i would say so this is kind of a It's a long-winded question, but when I look at these periods of history where there have been massive IPOs, usually it's when times are really good. And like you said, you raise money when you can, not when you need it. In your experience, even if the stock you know is going to have a rough couple of years after the IPO, is it best for those businesses long term to just get out into the public?

I mean, listen, I think so many of these businesses have stayed in the private markets for way too long, right? The IPO business is not designed to absorb multi-trillion dollar companies, right? And, you know, the opportunity facing new issue investors that are buying the SpaceX's, the Anthropix and the OpenAI's for the first time at these numbers, you know, is not the same as the opportunity being offered you know part of the amazon deal you know 26 years ago right um you know you could have a healthy debate about you know whether you should expand the total addressable market for amazon in 1999 beyond books right um and you know obviously it's a completely looking completely different looking business today but you know those um those ipo investors back then were genuinely getting into a growth story on the on the ground floor right

in order to believe that you're getting that kind of opportunity with these ipos you've really got to do some spectacular mental gymnastics to get to these 25 trillion dollar tams for example right and particularly you know when you know the return on invested capital around the whole ai build you know is coming into some pretty you know pretty intense scrutiny right now there's a lot of just believe me dude right which you know i i mean listen i'm i'm sure we're all super users i mean you work at an ai company ryan i mean listen we're all big users of the product we know that we're consuming this product at less of its cost less at less than its cost of production generally right and you know maybe maybe i'll pay up right maybe maybe maybe i'll pay up um

i'm not sure if someone shows me my real perplexity bill my real gemini bill my real manis bill right i think i'm gonna have to i think i'm gonna have to cut off a few subscriptions right and um you know enterprises are already questioning some of their their token spend right you've saw the the uber story um you saw the the zillow story you know there's a there's a real affordability issue when it comes to some of this stuff and and then you've got um you know the competition from maybe not as good as the frontier models but you've got the competition from the open source offerings out there, whether Chinese or otherwise.

And, you know, are people not going to just make do with a slightly inferior product at a fraction of the cost? I mean, so, you know, all of these are massive question marks over that $25 trillion number that's being bandied at bat. Okay, I think that connects a lot of things together in regards to, you know, the SpaceX IPO coming public. you have all the hyperscalers trying to raise money it comes down to at least if we're looking at where the index or especially with all you know the index being pretty much populated now

almost entirely or close to maybe half these being pure ai companies or ai related companies if we're looking at the sap 500 it really comes down to at the end of the day what the roi is going to be on all this ai investment if the boom is real or if it turns into a bubble and for as you mentioned spacex this summer that is maybe going to be the barometer of if the fundraising can continue am i off base on that is that how you're looking at things or is it or is it different you know listen i am you know i'm i am focused first second third on this supply issue getting solved. And by the way, it's not just the S&P. If you break down the Russell and look what's contributing to the performance of the Russell recently, that's an AI story as well.

You know, smaller picks and shovel plays in the mid-cap index is really what's been driving performance there so far this year. So, you know, the bigger meta, not related to Facebook, issue on on this front is is you know the u.s economy is highly financialized right and you know if this flywheel starts to sort of sputter out and not work anymore i think that feeds into the real economy quite quickly right you know the the top of the the top of the k-shape um consumer right you know what what is his where does his propensity to consume um i would say that a lot of his propensity to consume is you know the value of his securities holdings right when he's making a lot of money in the market he's probably buying an extra car right um and so that that

or world cup tickets or world cup tickets right exactly so i i think that you know pretty soon a a market problem could become a um an economic problem is what i'm saying here now there's there's no doubt that the the the real economy is benefiting from at least in a concentrated manner but is benefiting from all of this hyperscaler capex you know data data centers getting built you know grid capacity is being built power capacity is being built you know this this all this all creates um economic economic growth but um you know that's that capex you know starts and stops on the whims of a few billionaires right so it's it's it's it's you know it's it's potentially quite fragile i have a follow-up here to connect it back to what you know our listeners

i think mainly are individual investors but i have one quick question that i think you're one of the few people that could answer this how exactly is the addressable market come up with for the s1 like do the investment bankers just put a number on a page what what's going on here because i always see uh numbers that get tossed around as you know potentially being ridiculous well typically i mean the rules around this have clearly got a lot looser than they used to be Because, you know, those kind of statements didn't exist in, you know, prospectuses of 10, 15 years ago, that's for certain. But typically, you require some third party validation of addressable market data that goes into a prospectus or an S1. And so, you know, for something like this, it would be a McKinsey study or a Forrester or a Nielsen report or something like that.

I think that the sourced consultancy that was used in the SpaceX prospectus was some consultancy based in the Gulf, right, that I'd certainly never heard of. But, you know, it's an extraordinary source for, you know, the largest capital raising that's ever happened on the planet and supporting such a critical number, right? Because if you like, that enterprise AI TAM is the only thing that's supporting the number, right? Because as I mentioned before, the Starlink and launch businesses of SpaceX are pretty straightforward to value, right? You know, Twitter's got an advertising revenue line, which, you know, pretty easy to put numbers around that. Really, everything is supported by, you know, Grok becoming a frontier model and delivering return on investment. You know, what's interesting is that I thought earlier in the year that the data centers in space thing was going to be the big MacGuffin that everyone was going to have to clamber aboard. But I I think that I think that was sort of dropped as a as as as the as the thing to the thing to ping pin the valuation on, because ultimately, you know, a space data center is still a gigawatt times rental rate business.

It's something that can spreadsheet. Right. And he needed must needed something that you couldn't spreadsheet. Right. And so that's why I went. And then that sort of slightly sort of curious pivot immediately ahead of the IPO where they, you know, they subleased Colossus to Anthropic to show some nearer term EBITDA for the existing terrestrial data center capacity. You know, there's a lot of smoke and mirrors going on here. But ultimately, I think that, you know, they pivoted away from, you know, a physical infrastructure side to the sort of big story, because it's too easy to put into a spreadsheet and go, yeah, that doesn't math. Right? Yeah, it's the mystery of possibilities is what seems to just... right at the end of the day you know when you're talking about your car is an asset that can go out and earn a living for itself while you're asleep in bed you know the total addressable market for the mobility business is trillions of dollars this is going to replace taxis in every part of the world you know that that's that's how you you you you you have to you have to lean on to

something that you can't really model beyond a really superficial market share of an enormous total addressable market yeah that's a great connection to remind the or just kind of an old musk uh promotional play the full self-driving for any listener doesn't know it was kind of a oh two three years down the line and they were going to have a massive explosion of revenue from this and it's kind of just been a 10 to 20 year project with the data centers in space i'm seeing similar stuff from musk oh two to three years we're going to have this up and running and oh we're going to have a revenue of a trillion dollars by 2030 possibly but it could also be the same scenario where instead of two it takes 20 years and that who knows what that does to the

stock. Yeah. I mean, it's the classic sort of nebulous goalpost shift, right? And it's worked very well for him. Listen, let's be very clear. The man is the greatest ever stock promoter in the modern age. I mean, probably the greatest since, you know, John Law and the Mississippi company um and you know what he's done over the last 25 years is take i mean is ride the zero interest rate policy bubble to perfection by taking gobs of cheap capital and to heavy industries automotive and aerospace and defense right it was a bold if you like gangster move right but there There are, you know, to my mind, there are limits on how you can value the current musconomy. Shifting gears a bit, I guess I have a question on just some of the mechanics behind an IPO.

I'm curious. So we were talking about the TAM numbers and I guess some of the fluff, if you'll call it that, in these S1s. And is that all generated by the investment banks themselves or is that like usually the company going hand in hand with the investment banks? So, I mean, so if you think about who's on the deal team, you've got hundreds of corporate attorneys. You've got the accounting teams. You've got the investment banking teams. You've got the business development teams within the company that's going public. um you know the the prospectus or the s1 is a joint endeavor between between that those four

parties they will go to external consultants to validate um to to to provide sort of data to support um you know the backdrop to the market so you know that's where that's where the the report that supported the time came from but ultimately you know all of the professional services firms and the company needs to sign off on on on the document right and obviously you know everything's disclaimed away you've got 30 40 pages of risk factors people have got so used to seeing terrifying risk factors that they've actually started to completely ignore them um you know when i first wrote ipo prospectuses there might be two to three pages of well thought through you know, risks facing the company. It's now got out of control and it makes very sort of

cheap shot stories for journalists, um, because they, you know, they, they love the alarmist terms in which, um, in, in which the, the corporate attorneys phrase these risks and it makes for good copy, but you know, ultimately, you know, most, most, most, most investors aren't reading them. Yeah. I like the classic, Oh, if there's a cyber attack, our whole business could crumble and it's like well yeah thanks guys cool you know meteor strikes not good right yeah all right you again you have a lot of experience with taking companies public um looking at this general part of the market i think i have a two-part question to help again our listeners like ryan and i that are individual investors trying to navigate this ai boom how do you

how do you personally manage uh during kind of a bull market potential bubble cycle and what does this period remind you of historically because i think given how you're talking today you're a bit of a market historian so i i was very much part of the original sort of dot-com capital raising boom in the late 90s right um you know at the time i was um i was working um for salomon on the on on on the tail end of the fiber alt net and actually original round of data center um data center booms um you know i i was involved in taking asia global crossing um public it was one of the last deals to get out before before that that that that that that that market blew off um it feels a lot similar but the trouble with these things is you need to know whether you

are in um whether whether you're in 98 or late 99 right and it's the same in all of these things um everybody thinks they're going to be smart enough to um hit the exit door at the top that's never how it works and there are people being sucked late into this trade to this day right You're seeing these stories of Taiwanese and Korean retail investors remortgaging their house to buy DRAM stocks when they've just doubled, right, in a matter of the last few months. And, you know, every bull market sucks in the late players. And, you know, the leverage that's in these investor classes, whether it's sort of 2x, 3x ETFs or levered into call options, low delta call options, you know, that's a lot of dry tinder on the ground. When this thing, you know, when this thing unwinds, it's going to unwind exceptionally violently. And the trouble is, if your net liquidation value in your brokerage account, you know, drops by 20% overnight, right? the right thing to do is to take that residual 80 percent and thank yourself lucky you got hit

by your trailing stop and you hold on to most of your capital it's going to feel like the hardest thing in the world to do right and so um you know from my personal perspective i've completely missed the the the memory boom this year um i have some personal ptsd associated with the sector um funnily enough when i was in asia in the early 2000s i was the investment banker that refinanced out of bankruptcy the original hynix twice within the space of two years um you know there are a lot of people saying these guys are growing earnings so aggressively they look still look so cheap. All I would say is that unless finance and cycles are broken completely, there is never such thing as a value play in semiconductors. Semiconductors are the most

brutally cyclical businesses and particularly the memory sector. I feel like if it's trading at four times earnings, that's when you go, all right, that's the alarm bell. listen it's the same with all deep cyclicals they always look cheap at the top always okay i think we're going to start to wrap things up here so last question would be what do retail investors most misunderstand about the ipo process or just about companies raising capital in general i think that ipo stock for retail investors over history has been deemed like a forbidden fruit that really only the big boys got to get hold of and it is true right for most of most of my career putting more than five percent of an ipo into retail was considered a pretty risky thing to do

And let me be very clear, you know, retail as defined in those deals were the uber wealthy clients of the Goldman Sachs and Morgan Stanley's and Merrill Lynch's of this world. This was this was not, you know, Joe Sixpack with his Schwab account or his Robin Hood account. And now we're seeing, you know, now we're seeing in this epoch, you're seeing these unbelievably expensive and potentially very risky investors being offered in huge size to retail. And so the forbidden fruit has become an all you can eat buffet. And the question is, you know, what kind of indigestion are you going to be dealing with with this stock? I mean, you know, pretty much anyone that bought SpaceX stock, you know, in the initial pop, well, at least until today, was underwater, right? Most of the experiences recently with IPOs where retail has been allowed to participate in size, you know, have not been great. The hit rate has really not been great.

All right, let's wrap things up here. before we get out of here again thank you for taking the time today tell the listeners about what you cover at blind squirrel macro and what type of investor should subscribe so um you can find my work at blind squirrel macro.com i'm on twitter at squirrel macro um but you know Essentially, I'm an unashamed generalist. I write about equities, credit, rates, currencies, commodities. I've got experience working in markets all around the world. I write about whatever interests me, and I write about what I'm actually investing in myself.

You know, I eat my own cooking. And, you know, some of, some of, some of the stuff that, um, some, some of, some of my investment themes are based around my beta portfolio, which is 70% of what I do. And, you know, really that is a single digit vol, you know, beta product, right? Not remotely racely. Um, the other 25% of what I do might be a bit more racy, but, um, you know, ultimately I just take people along for the ride with what I'm doing. doing and hopefully amuse them as well along the way. Um, you know, this, I, I find markets to be incredibly fun and I enjoy sharing my passion for them, um, with, with my readers. So yeah, exactly. The link will be in the show notes. The passion came out in this interview as well. We

had some technical difficulties. I don't know what curse was put on our recording studio today, but thank you for the listeners uh for joining us as a disclosure we are not financial advisors anything we say on the show is not formal advice or recommendation ryan irony podcast guests may hold securities discussed in this podcast may have held them in the past and may buy sell or hold them in the future thank you everyone for tuning in and we'll see you next time don't you wish you could just hit skip on the worst parts of your life you know the same way you can skip an ad i get it i'm siaya and i live in ice cove i've made some questionable decisions that didn't end up the way i planned and today i'm still figuring it out somehow things usually

get worse before they get better apparently that's how i roll so bundle up and come along for the bumpy ride. Stream a new episode of North of North Tuesdays on CBC Gem.