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Vimeo Owner Bending Spoons Files for US IPOs as Sales Rise · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
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  Speaker 1: or watch us live on YouTube.
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  Speaker 2: There's another company.
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  Speaker 3: Have you heard of?
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  Speaker 2: Bending Spoons?
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  Speaker 4: No?
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  Speaker 2: All right, well, Bending Spoons has also filed for USIPO.
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  Speaker 2: Billy Lipschultz has heard about it, and he has reported
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  Speaker 2: on it and he joins us out. He's our senior
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  Speaker 2: equities reporter, Billy Bending Spoons. What is this company? And
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  Speaker 2: it's a reference to the Matrix, isn't it.
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  Speaker 5: It's a reference to the Matrix formed in twenty thirteen.
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  Speaker 5: And kind of the whole pitch is from the movie
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  Speaker 5: that it's kind of like the world is Illusion. But
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  Speaker 5: you don't know Bending Spoons. I don't think anyone really
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  Speaker 5: knows what Bending Spoons is there at Milan based company.
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  Speaker 5: The things that you do know them for, they do
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  Speaker 5: own Vimeo, they do own AOL, they own a number
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  Speaker 5: of these other companies. And kind of their whole pitches
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  Speaker 5: acquire a company, clean it up, fit it into the
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  Speaker 5: broader portfolio, maybe layoff some people, cut some costs, and
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  Speaker 5: really build out that way. I was talking to an
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  Speaker 5: investor this morning on the on the the IPO flip,
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  Speaker 5: because that'll mean it kind of kicks off the process.
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  Speaker 5: I was kind of like, walk me through your quick
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  Speaker 5: thoughts on this company, and he was like, it's similar
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  Speaker 5: to IAC, the Barry Diller company which got renamed to people.
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  Speaker 5: And he was like, again, we haven't quite done the work.
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  Speaker 5: We're all focused on SpaceX right now, but the broader
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  Speaker 5: pitches it's a portfolio company to an extent. In what
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  Speaker 5: that could or could not mean.
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  Speaker 3: I covered IC since it's beginning through. It's because I
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  Speaker 3: followed Barry Diller for forty years.
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  Speaker 6: At no point in time that I know what IAC did,
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  Speaker 6: at no point in time that I know how to
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  Speaker 6: value it.
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  Speaker 3: But it was a bet on Barry Diller. What are
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  Speaker 3: these guys banking on.
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  Speaker 5: I think it's the strategy really is just their ability
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  Speaker 5: to grow. To your point, Barry Diller is a name,
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  Speaker 5: and I don't think when you look at kind of
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  Speaker 5: a younger team. The crew behind Ben Spoons, led by
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  Speaker 5: CEO Luca Ferrari, great name by the way, is really
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  Speaker 5: just the notion that they've grown monthly active users across
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  Speaker 5: the platform of portfolios to about half a billion people
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  Speaker 5: in March. That's up from one hundred and eleven million
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  Speaker 5: back in December twenty twenty three. Obviously a big part
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  Speaker 5: of that is acquiring more platforms, but the broader vision
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  Speaker 5: is to kind of write size this. The pushback that
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  Speaker 5: I've heard initially from investors again everyone's focused on SpaceX
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  Speaker 5: when they look at Benning Spoons without having really dug
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  Speaker 5: too much into it, is how does AI impact the
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  Speaker 5: broader future? Is this a company that can pitch themselves
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  Speaker 5: as a company that can cut costs and lean into
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  Speaker 5: artificial intelligence? Or is it a company when you say,
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  Speaker 5: all right, well, what am I really using Aol or
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  Speaker 5: Vimeo for?
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  Speaker 3: At the end of the day, Aol still exists.
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  Speaker 5: I thought the same thing.
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  Speaker 2: Wow, I just did an Aol dot com and I'm
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  Speaker 2: wondering who I mean. I guess some people still have
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  Speaker 2: Aol email addresses. Yeah, absolutely, including our next gus, which
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  Speaker 2: we'll get into a little bit later.
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  Speaker 3: All right, Billy SpaceX, what's there? On two of the
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  Speaker 3: road show? Day three of the road show? What's the
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  Speaker 3: feedback here?
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  Speaker 4: Yeah?
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  Speaker 5: It seems to be humming along again. We had put
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  Speaker 5: out I believe Friday day time is a flat circle
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  Speaker 5: back to the bending spoons reference to the matrix. It
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  Speaker 5: does seem to be going well. It seems like we're
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  Speaker 5: continuing to marshal along towards that pricing. Thursday evening trading
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  Speaker 5: on Friday, the pushback initially that everyone wanted to talk
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  Speaker 5: about on Friday and over the weekend was down four
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  Speaker 5: percent on the Nasdaq one hundred. Is that pressure selling?
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  Speaker 5: Is that bearish for this company? We're up almost two
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  Speaker 5: percent on the Nasdaq, So those concerns, at least for
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  Speaker 5: the moment, kind of brushed aside. I think the big
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  Speaker 5: question going forward is what level of oversubscription do we get.
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  Speaker 5: Do we see anchor orders? Are we able to hear
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  Speaker 5: who those companies could be? I think the big thing
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  Speaker 5: when you talk about a seventy five billion dollar IPO,
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  Speaker 5: are you getting buy in from the Googles of the world.
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  Speaker 5: Are they stepping up from a strategic perspective, because not
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  Speaker 5: only does that kind of back the valuation that Musk
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  Speaker 5: is seeking at one point seven to seven trillion from
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  Speaker 5: a trading dynamics perspective, if strategics are taking up a
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  Speaker 5: third this, I.
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  Speaker 3: Mean it's even smaller. No, we don't, we don't know.
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  Speaker 3: We don't know that, we don't know those specifics.
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  Speaker 5: I think that's something that's going to be interesting to
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  Speaker 5: track in the coming days, is how they allocate this book,
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  Speaker 5: because if you sell to a strategic you're essentially taking
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  Speaker 5: the float out even further. So less than four percent
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  Speaker 5: gets much tighter more quickly. And then you add on
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  Speaker 5: the fact that it's going to be added to the
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  Speaker 5: Nasdaq one hundred early next month, so that's sky high demand.
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  Speaker 5: It gets kind of it gets more interesting. Is this
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  Speaker 5: is certainly going to be something that we keep a
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  Speaker 5: close eye on as the book gets built, as it
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  Speaker 5: allocations are bulled out.
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  Speaker 2: I mean, this is going to Is this a conventional
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  Speaker 2: IPO or a very unconventional IPO. It's massive. That makes
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  Speaker 2: it unconventional.
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  Speaker 5: It's massive. It came out with a fixed price. It
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  Speaker 5: came out with a fixed price and evaluation. And I've
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  Speaker 5: said this, I think for two weeks. At this point,
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  Speaker 5: we had we and others had reported five months ago
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  Speaker 5: that they wanted to go public around one point seventy
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  Speaker 5: five to two shrillion dollars. We had reported five months
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  Speaker 5: ago that they wanted to raise seventy five billion dollars.
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  Speaker 5: They came out with a fixed rice. They came out
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  Speaker 5: with those metrics already drawn in the sand. When you're
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  Speaker 5: thinking through how this deal is going to come together,
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  Speaker 5: Musk and Company can say, we told you what we
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  Speaker 5: wanted you. If you came to Starbase back in January
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  Speaker 5: and you came to Hawthorne a few months ago, you
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  Speaker 5: knew what we were pitching. And the story is continuing
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  Speaker 5: to be though. The big pushback of the big question
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  Speaker 5: mark is capex if. As we reported they're going to
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  Speaker 5: spend three hundred and sixty billion dollars in twenty thirty.
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  Speaker 5: Is seventy five billion dollar an IPO just the tip
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  Speaker 5: of the iceberg.
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  Speaker 3: Stay with us.
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  Speaker 2: More from Bloomberg Intelligence coming up after this.
• 5:37
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 5:41
  Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
• 5:44
  Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
• 5:47
  Speaker 1: you get your podcasts, or watch us live on YouTube.
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  Speaker 3: This is a big week for IPOs.
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  Speaker 2: We talked earlier about Bending Spoons, a company that owns
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  Speaker 2: Vimeo and AOL getting ready to file for an IPO.
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  Speaker 2: We're of course awaiting details on SpaceX, which Paul is
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  Speaker 2: supposed to price on Thursday and is supposed to begin
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  Speaker 2: trading on Friday on the NAZAC under the ticker SPCX.
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  Speaker 2: But SpaceX's IPO has renewed all kinds of enthusiasm for
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  Speaker 2: all things space related, the whole space economy, rocket companies,
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  Speaker 2: all of that. So let's get into this industry with
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  Speaker 2: Greg Pendi. He is a director and equity analyst over
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  Speaker 2: at Clearstreet. And Greg, it feels like there is a
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  Speaker 2: repricing of the space industry because of SpaceX. What was
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  Speaker 2: the narrative before SpaceX's IPO?
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  Speaker 3: What is it now?
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  Speaker 4: Yeah, thanks for having me. I think what investors are
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  Speaker 4: starting to appreciate one is you have a very flagship
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  Speaker 4: company within SpaceX, which hopefully sets a bar in terms
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  Speaker 4: of valuation, but it also draws a lot of awareness
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  Speaker 4: to what's going on in the sector. So, you know,
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  Speaker 4: to give you an example, as people are looking at
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  Speaker 4: SpaceX from our view, when we think about a name,
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  Speaker 4: we do cover rocket Labs. We're starting to realize that
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  Speaker 4: with it by looking at space actually realizing how tight
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  Speaker 4: the launch market is right now with the Falcon nine
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  Speaker 4: relatively booked throughout two thousand and seven. So as that
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  Speaker 4: message gets out there from SpaceX, people can then look
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  Speaker 4: at Rocket Labs and see how compelling the opportunity is
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  Speaker 4: within launch for a name like that. We're also realizing
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  Speaker 4: when we look at SpaceX, just how big the starlink
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  Speaker 4: service is. And again when we look at our coverage,
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  Speaker 4: a name like AST space mobile a different approach and
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  Speaker 4: going to the market. They have over sixty MNO partners
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  Speaker 4: including AT and T, Verizon in Vodafone. But we're starting
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  Speaker 4: to realize just how disruptive and it's really highlighting direct
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  Speaker 4: to devices for a world where we depended on cell
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  Speaker 4: towers being within range and space really can.
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  Speaker 3: Fill that gap.
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  Speaker 6: What is the what's the market like for space? What
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  Speaker 6: are the economics about the space business these days? What
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  Speaker 6: do people need to know?
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  Speaker 4: So that's an excellent question. So I think most recently
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  Speaker 4: we just saw Planet Labs report a very strong co quarter.
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  Speaker 4: In our opinion on the first quarter, this is a
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  Speaker 4: company that's already poised, we believe to achieve the rule
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  Speaker 4: of forty this year. That's your year over year revenue
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  Speaker 4: growth plus your ebitdam margin. It's a very big mark
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  Speaker 4: that people have often cherished with the top software names.
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  Speaker 4: We also believe and project that Planet Labs will generate
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  Speaker 4: free cash flow this year on top of the prior.
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  Speaker 3: Year, so really a developing business model there.
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  Speaker 4: We also believe that Rocket Labs, if you were to
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  Speaker 4: take out the heavy investment that they're putting in with
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  Speaker 4: their neutron Rocket is close to adjusted EBITDAH positivity. So
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  Speaker 4: you're starting to see some business models really evolve here,
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  Speaker 4: both from a financial perspective, but then also offering very
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  Speaker 4: compelling disruptive growth potential down the road.
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  Speaker 2: So great, So, Greg, there's clearly a lot of enthusiasm,
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  Speaker 2: and I'm sure much of it's justified, but there's some
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  Speaker 2: I'm sure that's also a bit ahead of itself as well,
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  Speaker 2: because even if SpaceX rais is a ton of cash,
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  Speaker 2: which pretty much we know is going to be the case,
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  Speaker 2: and puts it to good use, it's still going to
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  Speaker 2: take a lot of time to build all these things.
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  Speaker 4: Yeah, no, that's a great point. So within the space economy,
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  Speaker 4: we are seeing the early stages of build out in
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  Speaker 4: the cut names. We do cover. So when you think
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  Speaker 4: about Intuitive Machines, which we cover name we're very very
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  Speaker 4: excited about. It's been our top pick for most of
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  Speaker 4: the year. We're only at the early stages of them
• 9:31
  Speaker 4: building a satellite constellation around the Moon, So you're going
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  Speaker 4: out now we're talking about the lunary economy, a very
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  Speaker 4: disruptive and aggressive timelines to build out a permanent presence
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  Speaker 4: on the Moon. But it is something that both the
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  Speaker 4: government and a lot of the space companies are very
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  Speaker 4: serious about. So these are longer term investments finding that
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  Speaker 4: recurring model for Intuitive, though we thought that they had
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  Speaker 4: a game changing acquisition earlier this year of Lantras, which
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  Speaker 4: really brought forth EBITDAH.
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  Speaker 3: Profitability.
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  Speaker 6: Another topic I think we're all learning about as we
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  Speaker 6: kind of go through the SpaceX is space based data centers.
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  Speaker 6: What are the companies that you cover, what are they
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  Speaker 6: saying about that business?
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  Speaker 4: Yeah, so it's a hot button with two of the
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  Speaker 4: names we cover. So we cover Planet Labs, which is
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  Speaker 4: working with Project Suncatcher. That's Google develop space based data centers.
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  Speaker 4: It's a twenty twenty seven story and the beta testing
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  Speaker 4: for them, So their biggest neuroturn catalyst is the OWL
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  Speaker 4: satellite this year, which is a big improvement and resolution,
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  Speaker 4: but they do have plans to start really developing that
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  Speaker 4: in twenty twenty seven. The other name I would point
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  Speaker 4: people to is Intuitive Machines. They're lan Terras thirteen hundred,
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  Speaker 4: which was developed for the Lunar Gateway, actually is one
• 10:48
  Speaker 4: of the most powerful solar arrays in space, and when
• 10:52
  Speaker 4: we think about space based data centers, one of the
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  Speaker 4: key advantages is the fact that you're getting twenty four
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  Speaker 4: to seven solar power drawback or the challenge will be
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  Speaker 4: launch costs. So when we read through the white paper
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  Speaker 4: on Project Suncatcher, it wasn't really looking for parody to
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  Speaker 4: terrestrial data centers until the early twenty thirties.
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  Speaker 2: How do you think about the exclusion of SpaceX from
• 11:19
  Speaker 2: the SMP five hundred. Is that a good thing or
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  Speaker 2: bad thing for the rest of the companies in the industry?
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  Speaker 4: Well, you know, for the companies in our industry, we
• 11:28
  Speaker 4: believe that one of the most supportive things has been
• 11:31
  Speaker 4: sort of ETFs within the sector. That's an area that
• 11:36
  Speaker 4: we've seen within our names. I can't really speak to
• 11:39
  Speaker 4: the SMP five hundred's decision on that. I will say
• 11:44
  Speaker 4: that we've said, SpaceX going public will actually not only
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  Speaker 4: draw attention, but it creates a very strong valuation argument
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  Speaker 4: for the names.
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  Speaker 3: We do cover.
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  Speaker 6: How are your companies to see space companies, How are
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  Speaker 6: they valued by the market place?
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  Speaker 3: That's a great question.
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  Speaker 4: So when we think about valuation, what's different about the
• 12:04
  Speaker 4: space sector is you have to anchor your valuation year
• 12:09
  Speaker 4: differently for each company based on where the payback really falls.
• 12:14
  Speaker 4: So for example, with Rocket Labs, they're making a big
• 12:17
  Speaker 4: bet on their Neutron rocket, which is expected to only
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  Speaker 4: see its first launch in the fourth quarter of this
• 12:22
  Speaker 4: year after heavy investment over several years. We believe that
• 12:26
  Speaker 4: twenty thirty, if they can achieve our estimate for sixteen
• 12:30
  Speaker 4: to I'm sorry twenty Neutron launches, then that's a year
• 12:34
  Speaker 4: you want to anchor the valuation. If I go to
• 12:37
  Speaker 4: Ast Space Mobile, they won't really get to commercialization under
• 12:41
  Speaker 4: our estmates until mid twenty twenty seven, so you have
• 12:44
  Speaker 4: to kind of look out to twenty twenty nine when
• 12:46
  Speaker 4: they have a decent amount of subscribers. We believe that
• 12:49
  Speaker 4: you can accur the valuation there on twenty twenty nine.
• 12:52
  Speaker 3: Stay with us.
• 12:53
  Speaker 2: More from Bloomebrick Intelligence coming up after this.
• 13:00
  Speaker 1: Listening to the Bloomberg Intelligence podcast. Catch us live weekdays
• 13:03
  Speaker 1: at ten am. He's done on Apple, Cocklay and Android
• 13:06
  Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
• 13:09
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 13:13
  Speaker 6: Getting back to earnings, Campbell's Soup Camden, New Jersey based
• 13:18
  Speaker 6: Campbell's Soup Company reported some numbers.
• 13:20
  Speaker 3: That's break it down, Diana rossetto Penya.
• 13:22
  Speaker 6: She covers a lot of these consumer names for Bloomberg Intelligence.
• 13:25
  Speaker 6: What we learned from the makers of Campbell's Soup again
• 13:29
  Speaker 6: Manhattan clam Chowders might go to what's what are the
• 13:32
  Speaker 6: folks in Campbell's.
• 13:33
  Speaker 7: Saying, Well, they're trying to be very conservative with how
• 13:38
  Speaker 7: they communicate with everything going forward. Obviously, tariffs remain a
• 13:43
  Speaker 7: headwind for them, especially in aluminum. You know, they're thinking
• 13:48
  Speaker 7: that that's probably going to abate over the next couple
• 13:51
  Speaker 7: of quarters, but with oil over one hundred dollars per barrel,
• 13:57
  Speaker 7: that's probably going to remain a headwind in fiscal twenty
• 14:01
  Speaker 7: twenty seven.
• 14:03
  Speaker 2: So we talk a lot about soup and the condensed soup,
• 14:05
  Speaker 2: but that's not the only part of their business.
• 14:07
  Speaker 3: In fact, they have a.
• 14:07
  Speaker 2: Big snack business as well. They have spaghetti sauce. So
• 14:11
  Speaker 2: there's REOs, Arouse, Swanson. These are all brands within the portfolio.
• 14:16
  Speaker 2: What brand is seeing the fastest growth, which one's lagging?
• 14:19
  Speaker 7: I would say Rayos and Goldfish had started to stabilize.
• 14:24
  Speaker 3: Wait wait wait wait Goldfish.
• 14:25
  Speaker 2: Yes, yes, Paul's a big, big fan of the goldfish.
• 14:28
  Speaker 3: Nice, there we go.
• 14:30
  Speaker 6: Thank you all right, just making sure every day ten
• 14:33
  Speaker 6: thirty five I go upstairs to the six flour to
• 14:35
  Speaker 6: get my goldfish.
• 14:36
  Speaker 7: Well, I guess Ken to thank you for they were.
• 14:38
  Speaker 6: Not there today. Ken and I were crushed. Ken Fellio,
• 14:41
  Speaker 6: chief technical director, we were crushed.
• 14:43
  Speaker 3: We'll make it up to you guys tomorrow. So talk
• 14:44
  Speaker 3: to us about their other businesses.
• 14:45
  Speaker 4: Well, So the.
• 14:47
  Speaker 7: Soup business is it was down eight percent for the quarter,
• 14:50
  Speaker 7: so that's you know, that was obviously a headwind for
• 14:53
  Speaker 7: meals and beverages, salty snacks. It's not necessarily performing that well.
• 14:59
  Speaker 7: So they mentioned that that's probably going to be a
• 15:02
  Speaker 7: focus in the fourth quarter as well as in twenty
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  Speaker 7: twenty seven. So you know, it was it was okay
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  Speaker 7: then expected. I don't think that the stock is moving
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  Speaker 7: that much. So yeah, it's it's business as usual, I guess,
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  Speaker 7: So what is.
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  Speaker 3: The terriff situation?
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  Speaker 6: What if they called out to people in terms of
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  Speaker 6: how that's impacting their business.
• 15:24
  Speaker 7: Yeah, so basically it was mainly on aluminum for.
• 15:28
  Speaker 3: The suitcaans for the supcaans.
• 15:30
  Speaker 7: Yeah, that was General Mills is also in that headwind
• 15:33
  Speaker 7: as well. They're experience in that headwind. So it's it's
• 15:37
  Speaker 7: obviously with the lapping of that and and some rebates,
• 15:41
  Speaker 7: that's probably going to set to normalize. But they're probably
• 15:44
  Speaker 7: most worried about what is coming down the pipe with
• 15:47
  Speaker 7: the around war and that disruption with fertilizers as well
• 15:52
  Speaker 7: as you know, again oil at over one hundred dollars
• 15:55
  Speaker 7: per barrel, that's probably going to be a little bit
• 15:58
  Speaker 7: of a of a next wave of inflation going forward.
• 16:03
  Speaker 7: And the problem with this is that you know, volumes
• 16:06
  Speaker 7: are very very affected with any you know, potential price
• 16:10
  Speaker 7: increases going forward, So you know, similar to other packaged
• 16:14
  Speaker 7: food companies, we'll see what happens over the next six months.
• 16:18
  Speaker 2: What's the story with m and A here for Campbell's,
• 16:20
  Speaker 2: because a lot of the food companies have been trying
• 16:22
  Speaker 2: to trim down their portfolio, really focused on the best
• 16:26
  Speaker 2: performing brands and get rid of some of the ones
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  Speaker 2: that are lagging behind. And we know that Campbell's recently
• 16:31
  Speaker 2: purchased a part of RAOS that it didn't already own,
• 16:34
  Speaker 2: so it is out there making moves.
• 16:36
  Speaker 7: Yeah, they're actually saying that, you know, in terms of
• 16:38
  Speaker 7: capital allocation, they're going to remain as is. In terms
• 16:43
  Speaker 7: of that, they're not increasing dividends. They're probably going to
• 16:46
  Speaker 7: stay away from M and A for the time being.
• 16:48
  Speaker 7: They're trying to normalize earnings before they are investing in
• 16:51
  Speaker 7: the business more. You know, REOs was a very successful
• 16:55
  Speaker 7: M and A, I would say, compared to like other
• 16:58
  Speaker 7: companies that have purchased thanks recently, like you know, Smucker
• 17:01
  Speaker 7: and host this. But yeah, they're out of that equation
• 17:06
  Speaker 7: for now.
• 17:07
  Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
• 17:14
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 17:18
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• 17:25
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• 17:29
  Speaker 6: The top one percent reap most from tax loophole costing
• 17:32
  Speaker 6: forty eight billion dollars. The ETF industry is exploiting the
• 17:36
  Speaker 6: tax rate at an unprecedented scale. Zach might have, one
• 17:39
  Speaker 6: of the two reporters on this story from Bloomberg News
• 17:42
  Speaker 6: joins us here in our studio. So Zach, talk to
• 17:44
  Speaker 6: us about what loophole you guys found in your reporting
• 17:47
  Speaker 6: and kind of how's it work and who's benefiting.
• 17:50
  Speaker 8: Sure, So, this is a loophole that's been around for
• 17:53
  Speaker 8: a long time. Okay, basically since the ETF industry started.
• 17:58
  Speaker 8: The people who set it up realized that they could
• 18:00
  Speaker 8: take advantage of this kind of obscure chapter of the
• 18:03
  Speaker 8: tax code that no one ever really used for anything
• 18:05
  Speaker 8: and use it to avoid taxes. Now, that used to
• 18:09
  Speaker 8: be a relatively small phenomenon because the ETF market wasn't
• 18:12
  Speaker 8: all that big. Now it's very big. And part of
• 18:16
  Speaker 8: what our reporting shows is not only is that cost
• 18:20
  Speaker 8: today to the government quite significant, but changes being pursued
• 18:26
  Speaker 8: by the Trump administration now could almost double it just
• 18:30
  Speaker 8: in the next few years because they're essentially opening up
• 18:33
  Speaker 8: this loophole opportunity to mutual funds as well as ETFs.
• 18:38
  Speaker 3: How does it work? In Layman's terms? I am the
• 18:40
  Speaker 3: ultimate laymans laid on me.
• 18:42
  Speaker 8: Yeah, So an ETF is it's just kind of like
• 18:45
  Speaker 8: owning a stock yourself. If you buy a stock and
• 18:48
  Speaker 8: it goes up in value and you sell it, you
• 18:51
  Speaker 8: owe capital gains tax on the gain, the difference between
• 18:54
  Speaker 8: what you got for it and what you pay. The
• 18:59
  Speaker 8: funds work the same way. If an ETF makes a gain,
• 19:02
  Speaker 8: they're supposed to send you essentially send you a tax
• 19:06
  Speaker 8: bill that you have to pay tax at the end
• 19:07
  Speaker 8: of the year. But ETFs have are able to use
• 19:10
  Speaker 8: this loophole where they say, well, we didn't actually sell it.
• 19:13
  Speaker 8: We just swapped these securities off to a market counterparty.
• 19:18
  Speaker 8: So rather than sell it for cash, we gave somebody
• 19:21
  Speaker 8: securities and they essentially withdrew from our fund the same amount,
• 19:25
  Speaker 8: so that so there are no cash changed hands in
• 19:28
  Speaker 8: there for there's no tax.
• 19:31
  Speaker 3: Who does this? I mean, do all atfs do this?
• 19:34
  Speaker 8: All ETFs do it all the time. That's just kind
• 19:38
  Speaker 8: of how they're set up. They they I should say,
• 19:41
  Speaker 8: sometimes they sell stuff, they sell their losses, but they
• 19:44
  Speaker 8: don't sell their gains. And that's just the normal way
• 19:46
  Speaker 8: it's worked for decades. But what's different is that the
• 19:51
  Speaker 8: as the industry has gotten so big, that's it's it's
• 19:54
  Speaker 8: kind of gone from being a pretty small, little leakage
• 19:58
  Speaker 8: of taxes to actually a pretty big one.
• 20:00
  Speaker 6: So these gains are they are they gains at the
• 20:03
  Speaker 6: ETF level or at the investor level.
• 20:06
  Speaker 8: They're gains at the ETF level. Okay, So one question
• 20:09
  Speaker 8: you might say is like, well, wait a minute, if
• 20:11
  Speaker 8: if the ETF doesn't send me a tax bill, I'm
• 20:14
  Speaker 8: still gonna have to pay tax when I sell my ETF.
• 20:17
  Speaker 8: That's true. So some of this is just kind of
• 20:21
  Speaker 8: a deferral. Right, you get to postpone your tax bill
• 20:26
  Speaker 8: until however long you own the fund. But in a
• 20:28
  Speaker 8: lot of ways that actually becomes avoidance because, for instance,
• 20:32
  Speaker 8: if the ETF did short term trading and had short
• 20:36
  Speaker 8: term capital gains, that magically becomes long term capital gains
• 20:39
  Speaker 8: to here, which are less expensive.
• 20:41
  Speaker 6: So I mean, again, all we read about it for
• 20:44
  Speaker 6: the last a dozen years about how the big the
• 20:48
  Speaker 6: ETF market's getting, the influence we get Eric Bochuda is
• 20:50
  Speaker 6: coming in here, everybody telling us it's just the same story.
• 20:53
  Speaker 6: Gajillions of dollars flowing in the ETFs. Has this gotten
• 20:56
  Speaker 6: the attention of tax authorities, of Congress, of anybody who
• 21:01
  Speaker 6: should be paying attention to this.
• 21:03
  Speaker 3: Yeah.
• 21:03
  Speaker 8: So Senator Ron Wyden, the Democrat from Oregon, back when
• 21:07
  Speaker 8: he was Senate Finance Chair, kind of floated a proposal
• 21:10
  Speaker 8: to hey, let's just close this one off. It never
• 21:14
  Speaker 8: went anywhere, and he actually dropped it when he updated
• 21:18
  Speaker 8: his reform proposals last year, but he says he still
• 21:21
  Speaker 8: wants to do something about it. The problem is there's
• 21:24
  Speaker 8: so many ETF investors, right, You're talking about twenty million
• 21:28
  Speaker 8: Americans or something like that, and so even though most
• 21:30
  Speaker 8: of them get very little from it, there's a lot
• 21:33
  Speaker 8: of people out there who would be, you know, concerned
• 21:38
  Speaker 8: if their taxes were going to change.
• 21:40
  Speaker 6: It just seems like, again, forty eight billion dollars a year,
• 21:44
  Speaker 6: that's not chump change, you know, And it seems like
• 21:46
  Speaker 6: somebody would want to get their hands on it if
• 21:48
  Speaker 6: I'm the government like the irs. But again, it's it
• 21:55
  Speaker 6: just is it also because maybe the administration's not pushing forward?
• 21:58
  Speaker 3: Is there a sense that maybe the political environment's not
• 22:01
  Speaker 3: right for this type of thing.
• 22:04
  Speaker 8: Yeah, I mean it's it's it's not a super high
• 22:07
  Speaker 8: profile issue, and it's one that you know, Republicans generally
• 22:10
  Speaker 8: aren't looking for ways to raise people's taxes, right and
• 22:13
  Speaker 8: so you know, they're in charge right now. So if
• 22:16
  Speaker 8: you know, if different Congress, maybe if they had something
• 22:19
  Speaker 8: they wanted to spend money on, they might they might
• 22:21
  Speaker 8: look at this again.
• 22:23
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