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SpaceX in Talks to Borrow $40 Billion to Buy Nvidia Chips · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios.
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  Speaker 2: Podcasts.
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  Speaker 3: Radio.
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  Speaker 4: News.
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  Speaker 5: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 5: you get your podcasts or watch us live on YouTube.
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  Speaker 6: Let's bring in our go-to guy for all things tech,
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  Speaker 6: Ed Ludlow, Bloomberg Tech host, joining us from San Francisco.
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  Speaker 6: So as John Tucker was pointing out earlier, Ed, SpaceX
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  Speaker 6: raised a whole lot of money with its IPO and
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  Speaker 6: it's tapping the debt market yet again because it tapped
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  Speaker 6: the debt market right after its IPO. Now it's doing
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  Speaker 6: so again. And this is all towards those data centers?
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  Speaker 4: Yeah, I mean, even, you know, months before the IPO happened,
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  Speaker 4: there was a lot of discussion, you know, in the
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  Speaker 4: existing investor base. And then the bankers like this is
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  Speaker 4: going to be the biggest IPO of all time and
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  Speaker 4: they will still go to the capital market straight after.
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  Speaker 4: And so in this case, what we're reporting is. is
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  Speaker 4: that in talks, I think they're pretty early stage talks, right?
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  Speaker 4: To raise or.
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  Speaker 7: Borrow $ 40.
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  Speaker 4: Billion, $ 10 billion is loans, and then the balance $ 30
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  Speaker 4: billion in investment grade credit.
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  Speaker 7: And to the market, that is a little worrying. There
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  Speaker 7: are warning signs.
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  Speaker 4: I think you guys may have seen the CDS chart
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  Speaker 4: that came out this morning after the news hit. But
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  Speaker 4: the market's really happy to support that because there are
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  Speaker 4: bigger picture discussions about, the useful economic life of a
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  Speaker 4: GPU and the best way to finance it to get
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  Speaker 4: it into a data center quickly.
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  Speaker 8: What about this being a blueprint, Ed, like maybe a
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  Speaker 8: troubling blueprint for other big tech companies? I mean, I'm
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  Speaker 8: just thinking, you know, Anthropic and OpenAI who have yet
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  Speaker 8: to come to market. Are we just going to see
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  Speaker 8: them do the same and take a page out of
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  Speaker 8: the SpaceX book?
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  Speaker 7: Really good question.
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  Speaker 4: And on Bloomberg Tech later 11.30, I have JD Moriarty,
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  Speaker 4: who's the vice chair in investment banking at Bank of America.
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  Speaker 7: That's exactly the question to ask him, right?
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  Speaker 4: That when you're waiting for Anthropic and then opening ISO IPO...
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  Speaker 4: Do investors now, right now, need to be comfortable with
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  Speaker 4: the idea that when those massive IPOs happen, they immediately
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  Speaker 4: go to the debt markets? But it's not a blueprint
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  Speaker 4: in SpaceX's case, right? Because remember, all of the hyperscalers,
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  Speaker 4: cloud computing companies who build and operate their own data centers,
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  Speaker 4: have been borrowing at unprecedented levels as well. It's been
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  Speaker 4: happening for 18 months. And so like it's already out
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  Speaker 4: there in the market. And again, the market is pretty
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  Speaker 4: relaxed about it. Not only the borrowing, but the idea
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  Speaker 4: these companies tip into negative free cash flow as a
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  Speaker 4: consequence of their spending and borrowing.
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  Speaker 6: Let's talk about another big tech name in the opposite direction.
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  Speaker 6: We're talking about tangible things that people can buy for
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  Speaker 6: their homes. And that is Apple is entering the smart
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  Speaker 6: home device market. It's looking to partner up with LG
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  Speaker 6: on what smart doorbells, locks and thermostats.
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  Speaker 1: These will not be Apple branded items.
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  Speaker 4: Yeah, so it's basically a JV, which is slightly more
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  Speaker 4: rare in Apple's context. I appreciate a lot of people
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  Speaker 4: listening to us right now, Scott, on radio, and they
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  Speaker 4: might be watching on YouTube, but go to the story
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  Speaker 4: that Mark Gurman published, and there are some diagrams in there, basically,
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  Speaker 4: of what a deadbolt lock would look like, of what
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  Speaker 4: a smart thermostat would look like. But it is in
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  Speaker 4: line with Apple for this much deeper push into the
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  Speaker 4: home that they have been doing of late. you know,
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  Speaker 4: to move away from the smartphone, the iPhone, which is
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  Speaker 4: still their bread and butter, but sort of seeding the
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  Speaker 4: competence of LG in existing product lines like smart locks
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  Speaker 4: and doorbells.
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  Speaker 7: They're good at that. So Apple's kind of leveraging their expertise.
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  Speaker 8: I'm wondering, though, if Apple is late to the home
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  Speaker 8: device or home tech game. I mean, a lot of
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  Speaker 8: folks have sort of decided what they're going to use
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  Speaker 8: for their home. And it takes a lot to have
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  Speaker 8: somebody move. I mean, unless I guess you're part of
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  Speaker 8: the Apple ecosystem and you're just buying into it. But
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  Speaker 8: I just wonder if there's going to be a little
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  Speaker 8: bit of a hurdle here for Apple.
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  Speaker 4: You know, I'm not going to answer this from the
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  Speaker 4: sort of reporting journalistic standpoint. I'm going to answer it
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  Speaker 4: as the consumer. Like in my home, I have a
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  Speaker 4: simply safe security system. I have Alexa-based devices. Echo devices
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  Speaker 4: is my smart home thing, you know, which is from Amazon.
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  Speaker 4: And I use an iPhone and a MacBook computer. So, like,
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  Speaker 4: I'm all over the place. And lots of consumers are
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  Speaker 4: confronting that. The bet from an Apple is... is that, yes,
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  Speaker 4: if you are an iPhone user or you're a Mac user,
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  Speaker 4: that there is an appeal to sort of unifying the
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  Speaker 4: hardware bases that you have.
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  Speaker 7: In this case, again, it's.
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  Speaker 4: A JV of LG, but it's a tough and saturated market, sure.
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  Speaker 6: Yeah, maybe, except I don't want to spend money on
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  Speaker 6: things I don't need to spend money on because my
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  Speaker 6: lock currently works right now. All right, Ed, we were
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  Speaker 6: talking earlier about Alexis and John looking for some wine,
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  Speaker 6: California wine at good prices.
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  Speaker 1: And you have... Figure this out.
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  Speaker 7: This is way more important.
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  Speaker 1: You've got like a hack.
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  Speaker 4: What's going on?
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  Speaker 1: I know I was going to use that word. You
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  Speaker 1: kind of hacked this. What is your system?
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  Speaker 7: You know, so I live in the Bay Area now.
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  Speaker 4: I live in Marin County, but I spend a lot
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  Speaker 4: of time in Sonoma County and Napa County and I
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  Speaker 4: love wine. And Costco has always been a place where
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  Speaker 4: you have to sort of double take.
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  Speaker 7: Is this bottle of wine even real? Is this a fake?
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  Speaker 4: Of course it's not a fake because you are paying
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  Speaker 4: a discount of beyond 50% versus what you get.
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  Speaker 7: If you were a member at that winery.
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  Speaker 9: Ah.
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  Speaker 4: And, you know, there are lots of examples of like
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  Speaker 4: Costco does ad hoc arrangements with different wine makers and stuff.
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  Speaker 4: But remember, like Costco does not make money on the
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  Speaker 4: goods that it sells. It makes it from the memberships.
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  Speaker 4: So that is a sort of artificial model. But right now,
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  Speaker 4: everything John said about the wine industry, based on my experience,
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  Speaker 4: the friends I have there, you know, that's true. And
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  Speaker 4: you can pick up some astonishing deals. A big part
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  Speaker 4: of it you guys didn't discuss, and I love your
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  Speaker 4: audience's take, is people are just drinking less wine.
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  Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
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  Speaker 5: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 5: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
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• 6:12
  Speaker 5: you get your podcasts or watch us live on YouTube.
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  Speaker 8: I want to stick in the food services industry. That's
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  Speaker 8: a nice segue there, John. Thank you very much. Because
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  Speaker 8: McDonald's has been in the news, really for all the
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  Speaker 8: wrong reasons. Stock is down 32% from its peak in February.
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  Speaker 8: It's having trouble getting its franchisees on board with overhauling
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  Speaker 8: its restaurant and its menu.
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  Speaker 3: Why?
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  Speaker 8: Because it's going to come at a huge cost to them.
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  Speaker 8: Let's talk about that now. with Michael Halen. He is
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  Speaker 8: Senior Restaurant and Food Service Analyst for Bloomberg Intelligence, joining
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  Speaker 8: us from our Princeton office. And Michael, give us a
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  Speaker 8: feel for what are the costs here? What would it
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  Speaker 8: cost a franchisee to get on board with McDonald's overhaul plan?
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  Speaker 2: Yeah, McDonald's is asking for $ 1. 2 million, which we think
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  Speaker 2: is is a huge ask for franchisees that are, you know,
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  Speaker 2: being squeezed by higher commodity costs, right? And also suffering
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  Speaker 2: from lower traffic. And some of it may have been
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  Speaker 2: induced by management, right? Chris Kempczynski was, you know, widely
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  Speaker 2: ridiculed for his very weak bite of the big arch
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  Speaker 2: and his calling it a product, right? And then since then,
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  Speaker 2: Some of their competitors, particularly Burger King, really kind of
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  Speaker 2: latched onto that and have seen some really strong same-store
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  Speaker 2: sales growth. So franchisees can't be happy with management right now.
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  Speaker 2: And we don't see many franchisees willing to pay $ 1. 2 million.
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  Speaker 2: We think there'll be some sort of negotiation and a
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  Speaker 2: much smaller remodel and investment package will be agreed upon.
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  Speaker 6: Okay, what is involved in this remodeling that cost this
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  Speaker 6: much money? I mean, how different are these McDonald's stores
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  Speaker 6: going to look after this $ 1.
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  Speaker 1: 2 million refreshing?
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  Speaker 7: Yeah, you know, part of it is they want to.
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  Speaker 2: it sounds like they're trying to do something, um, to
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  Speaker 2: bring back the play place, right. Um, to attract more families, which,
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  Speaker 2: you know, going back to Burger King again, you know, who's,
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  Speaker 2: who's done a good job of, uh, attracting families over
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  Speaker 2: the last year, driving high single digit comps, right. And
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  Speaker 2: McDonald's seems to be reacting to that, right. That, um,
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  Speaker 2: So that's going to be part of the remodel. And
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  Speaker 2: then a lot of it's going to be technology, a
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  Speaker 2: lot of back of the house investments in the kitchen
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  Speaker 2: to drive, you know, smoother and quicker operations.
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  Speaker 8: I want to switch gears for a moment and talk
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  Speaker 8: about Texas Roadhouse, because this company's been going through it, Michael.
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  Speaker 8: Viral social media hoax claiming discrimination at Texas Roadhouse really
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  Speaker 8: did a number on the stock, led to a six-week
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  Speaker 8: sell-off of the company's shares, which surpassed 20% by the
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  Speaker 8: end of September. But you're saying some analysts see this
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  Speaker 8: as an opportunity?
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  Speaker 2: Well, you know, some are. I'm not necessarily saying that.
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  Speaker 2: I mean, I think, you know, to just say that
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  Speaker 2: is the only reason why this.
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  Speaker 1: Stock is sold off.
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  Speaker 2: You know, I don't know. I don't know if that's
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  Speaker 2: the case or not, to be honest with you. But,
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  Speaker 2: you know, that would kind of be ignoring the fact that.
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  Speaker 2: Restaurant sales were weak last month in general across the sector.
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  Speaker 2: Restaurant stocks across our coverage list, across the board, are
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  Speaker 2: getting hit really hard due to the speed of the
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  Speaker 2: ramp in oil and commodity prices. So to say that, yeah,
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  Speaker 2: the stock is only down because of a fake news
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  Speaker 2: story and you should buy it, you know, I think
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  Speaker 2: kind of ignores some of the other risks out there.
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  Speaker 2: Texas Roadhouse is not the only stock that's been down
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  Speaker 2: significantly in the last couple months.
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  Speaker 6: I mean, because of all the things that are kind
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  Speaker 6: of bugging all the restaurant companies, higher costs overall, higher wages,
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  Speaker 6: higher ingredient costs, you know, the headlines, I suppose, on
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  Speaker 6: Texas Roadhouse don't help.
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  Speaker 2: No, definitely not. That being said, Texas Roadhouse is a
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  Speaker 2: very well-run company. They've been driving mid-single-digit same-store sales comps
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  Speaker 2: for years. They're very good operators. They give a ton
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  Speaker 2: of value. Customers receive a lot of food for what
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  Speaker 2: they pay. They get very fast, good service. So there's
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  Speaker 2: reasons to like Texas Roadhouse. But my question is, you know,
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  Speaker 2: are they stepping in front of a freight train? You know,
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  Speaker 2: we think restaurant sales should... should improve a bit here
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  Speaker 2: over the next month or two because we'll be lapping
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  Speaker 2: the government shutdown, right? But we've had, you know, next
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  Speaker 2: year's not going to be easy. We're going to have
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  Speaker 2: to lap the higher tax refunds, right? We're going to
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  Speaker 2: be lapping some strong economic data from early 2026. We're
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  Speaker 2: You know, we think what investors are doing right now
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  Speaker 2: is they're looking past this next month or two and
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  Speaker 2: the stronger sales that we should see into 2027, which
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  Speaker 2: is a concern.
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  Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
• 11:33
  Speaker 5: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 11:37
  Speaker 5: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
• 11:40
  Speaker 5: Auto with the Bloomberg Business App. Listen on demand wherever
• 11:43
  Speaker 5: you get your podcasts or watch us live on YouTube.
• 11:48
  Speaker 8: Alexis Christophorus in for Paul Sweeney today, along with Scarlett
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  Speaker 8: Fu in the Bloomberg Interactive Brokers Studio. We got confirmation
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  Speaker 8: just a little while ago that Disney Plus is going
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  Speaker 8: to stream the 2027 Super Bowl on its subscription service,
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  Speaker 8: both in the U.S. and dozens of countries worldwide. Just
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  Speaker 8: the latest headline coming out of Disney in these past
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  Speaker 8: few days. And here to break it down for us
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  Speaker 8: is Geetha Ranganathan, Bloomberg Intelligence Analyst on U.S.
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  Speaker 5: Media.
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  Speaker 8: She's joining us from Bloomberg's Princeton office. So Geetha, I
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  Speaker 8: guess this really wasn't a surprise, was it?
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  Speaker 9: Not really, Alexis.
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  Speaker 3: So I guess the surprise element is that they are
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  Speaker 3: streaming it on.
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  Speaker 9: Disney Plus as opposed to ESPN.
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  Speaker 3: So we've already seen a lot of different streaming platforms
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  Speaker 3: stream the Super Bowl. Peacock did it this year, which
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  Speaker 3: is the streaming service from NBC. We know that Tubi,
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  Speaker 3: which belongs to Fox, Did it in 2025. So nothing
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  Speaker 3: new here. I mean, streaming has now just become a
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  Speaker 3: part of the overall television conversation here. And, you know,
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  Speaker 3: it's obviously with such a massive event like the Super Bowl,
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  Speaker 3: it becomes a huge subscription acquisition, subscriber acquisition event, as
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  Speaker 3: well as a great retention event. But I think what
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  Speaker 3: this piece of news, Alexis, what it tells us about
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  Speaker 3: Disney's ongoing strategy is that they're really looking to convert
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  Speaker 3: Disney +, which is really more your platform for some
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  Speaker 3: of the old cartoon movies and just their regular movies,
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  Speaker 3: their animation titles. But they're now looking to make that
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  Speaker 3: the front door to the entire Disney ecosystem and what
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  Speaker 3: better way to do it then use the Super Bowl,
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  Speaker 3: the biggest sporting event in the United States.
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  Speaker 9: Exactly.
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  Speaker 8: And ESPN, which we know is owned by Disney, this
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  Speaker 8: will be their first Super Bowl production. But I guess
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  Speaker 8: my question would be, if you can see the Super
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  Speaker 8: Bowl on a number of different platforms, what is Disney
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  Speaker 8: giving the viewer, the paying subscriber? Where's the value for
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  Speaker 8: the viewer in watching the Super Bowl here? What's sort
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  Speaker 8: of the value proposition that Disney is representing?
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  Speaker 3: Yeah, I think the value proposition is, you know, obviously
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  Speaker 3: they are going to do a lot of cross promotion.
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  Speaker 3: They're going to I'm sure, you know, you get to
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  Speaker 3: see a lot of Disney plus content.
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  Speaker 9: They will use a lot of promotional tools.
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  Speaker 3: And the Super Bowl is kind of that window to
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  Speaker 3: get to your Disney plus subscription, as well as the
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  Speaker 3: whole Disney bundle. So remember, Disney is the only company
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  Speaker 3: out there which with such a powerful streaming bundle where
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  Speaker 3: you have Disney plus subscribers. where you have Hulu as
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  Speaker 3: well as ESPN. So you're really attacking all the different
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  Speaker 3: four quadrants of the market and they are the one
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  Speaker 3: comprehensive service. So I'm sure the value to the consumer
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  Speaker 3: is going to be getting a whole lot of content
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  Speaker 3: at a much cheaper price than what they would otherwise get.
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  Speaker 8: So Disney Plus recently raised prices, right?
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  Speaker 9: Subscription prices.
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  Speaker 8: I think it was for ad-free something like $ 3 more
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  Speaker 8: a month at a time when a lot of consumers
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  Speaker 8: are already being squeezed, you know, at the grocery store,
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  Speaker 8: at the gas pump. Is there any indication that prior
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  Speaker 8: times Disney lost subscribers when it raised prices? What has
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  Speaker 8: the past sort of told us about the present?
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  Speaker 9: That's an excellent question, Alexis.
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  Speaker 3: And what we've seen with Disney is they've been extremely
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  Speaker 3: aggressive in terms of raising prices.
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  Speaker 9: So just over the past four years, they've raised prices.
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  Speaker 3: Something like about 80% to 85% on their streaming service.
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  Speaker 3: Compare that to Netflix, which over the same time period
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  Speaker 3: has only raised it about 25%.
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  Speaker 9: So definitely, they've been really aggressive.
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  Speaker 3: And really, the motive there has been streaming has gone
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  Speaker 3: from being a loss leader and a loss maker to
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  Speaker 3: now becoming one of the biggest elements of the whole
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  Speaker 3: profitability story. And one of the ways that they get
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  Speaker 3: to profit and they keep increasing that profit is by
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  Speaker 3: raising prices. But what we've seen for Disney as opposed
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  Speaker 3: to some of their other rival streamers is that even
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  Speaker 3: when they raise prices, they do not necessarily have to
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  Speaker 3: contend with elevated churn. And that's really the power of
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  Speaker 3: the bundle. Most of the people who do take Disney
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  Speaker 3: subscriptions have the bundle. And if they didn't have the
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  Speaker 3: bundle and prices are raised, let's say on a standalone
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  Speaker 3: Disney subscription, this becomes a point for them or this
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  Speaker 3: becomes a motivating factor for them to actually take the bundle,
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  Speaker 3: which tends to be a whole lot cheaper and which
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  Speaker 3: gives them a much better value proposition.
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  Speaker 8: And we're seeing streaming services more and more pay big
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  Speaker 8: time to carry live sporting events. So, Disney, I guess,
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  Speaker 8: this past summer said that they were going to take
• 16:24
  Speaker 8: on Formula E racing, right? They were going to start
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  Speaker 8: offering that to subscribers later this year. Is that really
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  Speaker 8: the next big, I guess, race for the streaming services
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  Speaker 8: is how do they lock in or when possible come
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  Speaker 8: up with agreements where they are going to be like
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  Speaker 8: the home of a particular sporting event?
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  Speaker 9: Absolutely. Absolutely. Absolutely.
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  Speaker 3: A great piece of content, especially when you're trying to
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  Speaker 3: attract advertisers, right? You want a captive audience. Sports is
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  Speaker 3: the best way to do it. Remember, ESPN is the
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  Speaker 3: biggest buyer of sports rights.
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  Speaker 9: Right now in the market.
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  Speaker 3: They pay about $ 11 to $ 12 billion a year. And
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  Speaker 3: Disney's whole content budget, which is close to about $ 25
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  Speaker 3: to $ 30 billion, majority.
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  Speaker 9: Of that, about 40%, is just sports. So this is
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  Speaker 9: a great way for them.
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  Speaker 3: Putting it on a streaming platform is a great way
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  Speaker 3: for them to monetize it, not just for you know
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  Speaker 3: for them in terms of subscription revenue but advertising remember
• 17:20
  Speaker 3: disney is selling a super bowl super bowl spot an
• 17:23
  Speaker 3: ad spot at 12 million dollars that's just a staggering
• 17:27
  Speaker 3: amount compared to like the eight or nine million that
• 17:29
  Speaker 3: we're used to seeing so this is such a great
• 17:32
  Speaker 3: way for them to kind of monetize it across their
• 17:34
  Speaker 3: entire ecosystem and that's that's why you want sports because
• 17:37
  Speaker 3: people will pay advertisers.
• 17:39
  Speaker 5: Will pay This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
• 17:45
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• 17:49
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• 17:58
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