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OpenAI IPO Delay Raises New Questions About AI Boom · The Financial Exchange Show

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Speaker 2: Well you made it to Friday. Welcome back to the
1:14
Speaker 2: Financial Exchange. I don't have any great news for you
1:17
Speaker 2: in terms of financial markets.
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Speaker 3: This week has been a just.
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Speaker 2: A pretty consistent and slow pushed downward on equity markets,
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Speaker 2: especially techt shares, for reasons that I haven't fully been
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Speaker 2: able to interpret, which is fine. You don't always have
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Speaker 2: to be able to attribute a specific cause to market selloffs.
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Speaker 2: It's Mike, Mark and Tucker with you here on a
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Speaker 2: Friday morning where we've got all three major usndicies slightly
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Speaker 2: negative for the day, with the NASDAC leading the way down.
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Speaker 3: We had news out of a run overnight.
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Speaker 2: We have some news from Open AI and their planned
1:54
Speaker 2: IPO according to New York Times.
1:56
Speaker 3: But we're gonna kick off.
1:58
Speaker 2: With just a recap of where we have gone this
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Speaker 2: week in equity markets, because as I've mentioned, it's been
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Speaker 2: a pretty sustained push downward over the course of the week,
2:10
Speaker 2: so to be clear, not a very strong one. The
2:13
Speaker 2: S and P five hundred is down only now one
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Speaker 2: point nine percent since the beginning of this week. The
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Speaker 2: NASDAK composite now down about four and a half percent,
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Speaker 2: so I don't think you know. To be clear, the
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Speaker 2: NASDAK composite over the last six months is still up
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Speaker 2: nearly nine percent even with this drop, so like it
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Speaker 2: is not a racing year to date gains. It is
2:36
Speaker 2: not doing anything like that, but a pretty sustained push downward.
2:40
Speaker 2: And I feel as though the narrative has taken a
2:43
Speaker 2: few different forms throughout this week, which I just found interesting.
2:47
Speaker 2: At the beginning of this week we were hearing again,
2:51
Speaker 2: probably mainly just because market commentators were trying to attribute
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Speaker 2: the market sell off to something. They were attributing it
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Speaker 2: to nervousness around Micron's earnings. So Micron, now the ninth
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Speaker 2: largest S and P five hundred company producing memory chips
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Speaker 2: for just about everything but right now, especially the AI industry,
3:08
Speaker 2: came out Wednesday night and blew the door off in
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Speaker 2: terms of earnings. They had a very solid quarter. We'll
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Speaker 2: be talking a little bit about what that meant for
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Speaker 2: them and what they are doing here, but really solid
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Speaker 2: quarter from Micron, dispelling those rumors. Micron stock moved up
3:29
Speaker 2: on Thursday, rest of the tech market moved.
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Speaker 3: Down on Thursday.
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Speaker 2: Then on Thursday, you'd be in part because of Micron's
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Speaker 2: Blockbuster earnings and the prices that they were able to
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Speaker 2: charge for chips. You had an announcement from Apple that they
3:42
Speaker 2: are raising prices on their devices. You had Mac as
3:47
Speaker 2: well as iPad prices moving up between fifteen and twenty percent.
3:51
Speaker 2: Apple stock moved down a good four percent on Thursday.
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Speaker 2: That was yesterday, right, today's yes yesterday confirm, thank you, Tucker.
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Speaker 2: And then this morning we have this announcement or acknowledgment
4:06
Speaker 2: from Open Ai that they're considering a delay of their IPO,
4:09
Speaker 2: which I want to spend a little bit more time
4:11
Speaker 2: on because I do find it concerning if you're very
4:16
Speaker 2: bullish on the AI trade that one of the major
4:18
Speaker 2: leaders there is considering a delay of their IPO, and
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Speaker 2: the narrative keeps evolving. But overall, Mark, we are seeing
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Speaker 2: this new nervousness around tech shares, and I just you
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Speaker 2: can't possibly know, but I wonder if it's just a
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Speaker 2: blip on the radar as we've seen several times with
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Speaker 2: the AI trade, or if it is some sort of
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Speaker 2: sustained new negativity, because I don't really seem much to
4:42
Speaker 2: be negative about when it comes to the fundamental to
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Speaker 2: this those that.
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Speaker 4: We're selling it relatively high price to say book value growthy,
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Speaker 4: exceptionally growthy. Tech stocks have been the hardest hit.
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Speaker 3: Yeah, so called.
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Speaker 4: Value tech stocks, those that comprise some of the bigger
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Speaker 4: names in the Russell one Value Index, which is trouncing
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Speaker 4: growth year to date and over one year. What are
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Speaker 4: some of the Micron is the number one holding in
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Speaker 4: the Russell one thousand value index. You will also find
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Speaker 4: so called tech companies and I'm just speaking very broadly here.
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Speaker 4: It's not a very sophisticated category categorization. But Intel is there,
5:19
Speaker 4: Alphabet is there. Some of these appear in growth as well.
5:22
Speaker 4: Because of the way these indexy in disease are parsed,
5:26
Speaker 4: holdings are parsed are allocated among them. But you've got
5:30
Speaker 4: there are plenty of companies that weren't selling at nosebleed
5:34
Speaker 4: valuations that are benefiting from investment in data. This is
5:38
Speaker 4: I'm just describing here. There's no real insight. I'm just
5:40
Speaker 4: pointing out that there are companies that were not exceptionally
5:46
Speaker 4: optimistically valued. Let's say, I'm not going to pine on
5:49
Speaker 4: whether it's valuation, is it right or wrong? Right now?
5:52
Speaker 4: That are that are benefiting from the almost indiscriminate frenzy
5:56
Speaker 4: of spending on data centers. They've been rewarded, and thus
6:00
Speaker 4: all diversified investors, investors that owned a blend strategy or
6:03
Speaker 4: that complemented their growth with value style active or passive
6:09
Speaker 4: management or being rewarded.
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Speaker 2: So let's dive in then to the Micron earnings, which
6:15
Speaker 2: again were a They might not have been a catalyst
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Speaker 2: for higher stock prices, but I think they were a
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Speaker 2: signal to the overall market about the pace of demand
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Speaker 2: for memoryship specifically and AI technology generally. So Micron now,
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Speaker 2: like I said, now the ninth company, ninth largest company
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Speaker 2: in the s and P five hundred by market capitalization
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Speaker 2: and their earnings.
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Speaker 3: I mean, I don't think I agree with this statement.
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Speaker 2: But Daniel o'reagan, who's the managing director for equity trading
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Speaker 2: at Mizuho, called Micron probably a top three most important
6:53
Speaker 2: stock in the world when it comes to market influence making,
6:57
Speaker 2: you know, putting them in the same campus in video
7:00
Speaker 2: and alphabet.
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Speaker 3: In his opinion, in.
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Speaker 4: A descriptive sense, he's right, I mean, just take it.
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Speaker 4: Explain what I mean, Just take it at face value
7:07
Speaker 4: when it moves because of its weight. Now, it's going
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Speaker 4: to move intosease, sort of like the part I was making,
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Speaker 4: So go ahead.
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Speaker 2: I think, yeah, it is massive now and is now
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Speaker 2: a signifier of the overall AI.
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Speaker 5: And it's not a very insightful thing, right, I think
7:23
Speaker 5: what I observation, I should say, the observation that I
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Speaker 5: was thinking about and making on Monday and Tuesday of this.
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Speaker 2: Week was that Micron and their earnings are entirely dependent
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Speaker 2: on the demand from the AI industry. Of course, yeah,
7:43
Speaker 2: it's not that you know, Dell and Apple aren't still
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Speaker 2: buying their chips, but that's not the incremental growth that
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Speaker 2: they are seeing. If all of their earnings are based
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Speaker 2: on the incremental demand from the AI industry, like Nvidia liked,
8:01
Speaker 2: Micron is going to be one of the last companies
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Speaker 2: that you look at for a leading indication of what
8:06
Speaker 2: is happening with this overall trade.
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Speaker 3: Right, I.
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Speaker 2: Sure continue to not that that's terribly insightful, but I
8:13
Speaker 2: just want to make that point over and over again,
8:15
Speaker 2: which is I think oftentimes people are looking at the
8:18
Speaker 2: earnings of companies like Nvidia and Micron and saying, oh, well,
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Speaker 2: this will really tell us.
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Speaker 3: A lot about the direction of the AI trade. And
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Speaker 3: I really don't think so.
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Speaker 2: Right the direction of the AI trade is going to
8:28
Speaker 2: come from the end users of these products that are
8:30
Speaker 2: trying to tell you whether or not they are actually
8:33
Speaker 2: worth the money they are paying for them. It's going
8:35
Speaker 2: to come from the model creators, the actual users of
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Speaker 2: the AI because that is the beginning of this supply
8:43
Speaker 2: chain and that is where the cutting edge stuff is happening.
8:47
Speaker 2: It's not to say that you can't make a boatload
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Speaker 2: of money on companies that create the infrastructure that goes
8:52
Speaker 2: into this. I just don't think it's going to tell
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Speaker 2: you much of a leading indicator of what's going on
8:56
Speaker 2: the industry.
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Speaker 4: There's a construction boom and they make the shovels precisely.
9:00
Speaker 4: Of course, their sales are going to explode full stop.
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Speaker 2: And so it's incredibly impressive what they are doing. I
9:09
Speaker 2: think they're being pretty intelligent in terms of business structure,
9:11
Speaker 2: in terms of how they're trying to structure these deals.
9:13
Speaker 2: They're locking up giant companies with five plus year contracts
9:18
Speaker 2: to buy these chips, meaning hey, not only are we
9:21
Speaker 2: going to lock in prices at these current levels for now,
9:24
Speaker 2: but we are basically going to get guarantees from some
9:27
Speaker 2: of the biggest companies in the world that they're going
9:28
Speaker 2: to continue paying these prices and more over the course
9:31
Speaker 2: of the next five years. So you know, a lot
9:34
Speaker 2: of good execution going on from this once sleepy company
9:38
Speaker 2: based in where was it was covered in one of
9:40
Speaker 2: these like Idaho or something like that. I think it's boise, yeah,
9:45
Speaker 2: But nonetheless, I don't think that companies like this are
9:50
Speaker 2: going to tell you much about the direction of where
9:53
Speaker 2: this is all going. They are a beneficiary of the
9:55
Speaker 2: spending that's happening from the very cutting edge companies and
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Speaker 2: designing these AI models. Agreed, Yeah, let's take a quick break.
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Speaker 3: When we come back.
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Speaker 2: I want to talk a little bit more about this
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Speaker 2: chip memory boom and everything that we are seeing right now,
10:16
Speaker 2: because it is not it's not a new phenomenon that
10:20
Speaker 2: we see a new technology drive a whole bunch of
10:23
Speaker 2: investment into big legacy hardware companies. It is not a
10:28
Speaker 2: first time that some of these companies have been major
10:31
Speaker 2: beneficiaries of the stock market and seen their share prices
10:34
Speaker 2: surge seven hundred percent, as we've seen with some of them.
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Speaker 2: I want to talk about the context of this and
10:39
Speaker 2: other companies historically that have seen similar types of things
10:43
Speaker 2: and where ultimately those industries have gone over time quick break,
10:46
Speaker 2: That's next here on the Financial Exchange.
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12:01
Speaker 2: Every once in a while when I very hesitantly described
12:05
Speaker 2: this market as a bubble, I get the side and
12:09
Speaker 2: oftentimes the response that I hear is what are you
12:12
Speaker 2: talking about?
12:13
Speaker 3: AI is life changing?
12:14
Speaker 2: And I have to clarify something, which is I believe
12:18
Speaker 2: that AI is world changing and life changing and one
12:21
Speaker 2: of those transformational technologies that we only see once every.
12:26
Speaker 3: Few decades or in a generation. Like I do firmly
12:30
Speaker 3: believe that.
12:32
Speaker 2: And I was pretty young when the Internet was invented,
12:37
Speaker 2: but that one was pretty life changing too. And I
12:39
Speaker 2: think the key point with all of these is life
12:43
Speaker 2: changing technologies often do create stock market bubbles. And I
12:48
Speaker 2: know we've talked about this before. The Internet was an example,
12:51
Speaker 2: but like going further back, I know none of us
12:56
Speaker 2: had a whole lot of experience investing when the radio
12:58
Speaker 2: was invented, but yeah, it led to stop.
13:02
Speaker 4: Let me tell you, our first Mark wasn't investing back
13:07
Speaker 4: when the radio. I was named after the Marconi.
13:10
Speaker 5: My parents were so thrilled with it.
13:14
Speaker 3: It trains right like the automobile.
13:17
Speaker 2: All led to new entrance, massive investment into the new
13:23
Speaker 2: technology because of the the certainty that the technology is Mike.
13:28
Speaker 4: It's a bunch of BS artists going on what using
13:31
Speaker 4: modern terms, going on CNBC and promoting the latest idea
13:36
Speaker 4: in which they're invested in. They hope to pass the
13:38
Speaker 4: bag along to everybody else before things collapse. These guys,
13:41
Speaker 4: forgive me, Can I be a little synechelesy but hopefully
13:44
Speaker 4: uh speaking non untruthfully, Uh, it's it's there. We're taking
13:52
Speaker 4: the salesman words, salesman's word for it. On AI. Nobody
13:55
Speaker 4: understands this crap. Nobody understands how to code this stuff
13:59
Speaker 4: except the people doing the coding who have so much
14:01
Speaker 4: stock that they're inherently conflicted, and we have to take
14:06
Speaker 4: their word for it. Yeah, including everybody in finance who
14:09
Speaker 4: thinks that these guys in private equity very sophisticated MBAs
14:11
Speaker 4: for the best schools. They don't know jack relative to
14:14
Speaker 4: the people on the inside. We're taking the salesman's word
14:18
Speaker 4: for it. You're breaking the cardinal rule of being a
14:21
Speaker 4: good consumer. We do it every time. Every boom is
14:24
Speaker 4: followed by bust because we take the salesman's word for
14:27
Speaker 4: it and they are inherently conflicted, and finance is the
14:30
Speaker 4: handmaiden of all this because we're in the not us,
14:33
Speaker 4: but finance is in the middle of it. They get
14:36
Speaker 4: to what they're beak two and hopefully again pass it
14:38
Speaker 4: along to some sucker before it collapses. As you point
14:41
Speaker 4: it out, it happens every single time. Don't take the
14:44
Speaker 4: salesman's word for it. It's their job to get you
14:46
Speaker 4: excited and hand.
14:47
Speaker 3: Your money over. So back to Micron for a moment.
14:49
Speaker 2: All right, don't be like I said, ninth largest company
14:53
Speaker 2: in the S and P five hundred. Now, why are
14:54
Speaker 2: they in the ninth largest Because their stock price is
14:56
Speaker 2: up eight hundred and forty five percent.
14:58
Speaker 4: That's not a value company anymore, by the way, Okay.
15:01
Speaker 2: Up eight hundred and forty five percent over the last
15:03
Speaker 2: twelve months on what is genuinely some of the most
15:06
Speaker 2: impressive earnings that any company has ever realized over the
15:10
Speaker 2: last twelve months. I'd like to point out, though this
15:13
Speaker 2: is not unprecedented. I'm going to call your attention to
15:15
Speaker 2: a little company called Qualcomm, who was in the news
15:18
Speaker 2: yesterday because their stock yesterday on some new efficiency that
15:24
Speaker 2: they had found in chip markets. Oh no, they're actually
15:29
Speaker 2: down over the course of the last five days. So
15:32
Speaker 2: I'll take that one back that they had bumped yesterday,
15:34
Speaker 2: but it was apparently not enough to eclipse the downward
15:37
Speaker 2: pressure they've been on for.
15:38
Speaker 3: The last week.
15:39
Speaker 2: But Qualcom in nineteen ninety nine saw their stock price
15:44
Speaker 2: boom by more than one thousand percent. In fact, I
15:46
Speaker 2: think it was more than two thousand percent. It was
15:49
Speaker 2: based on the idea that, hey, they have this market
15:53
Speaker 2: for wireless technology so wrapped up that nobody can compete
15:58
Speaker 2: with them, and for a while they could compete.
16:00
Speaker 4: Think about how that idea propagated. Somebody started the story,
16:05
Speaker 4: somebody with an incentive and fine, and I hate to
16:08
Speaker 4: get I'm sorry to repeat myself a little bit here,
16:10
Speaker 4: but that was amplified and propagated by a bunch of
16:14
Speaker 4: conflicted people and who got left holding the bag. I'm
16:17
Speaker 4: saying only it's a good cautionary tale. Don't let it
16:20
Speaker 4: happen to you.
16:20
Speaker 2: Right So they were the only game in town, much
16:24
Speaker 2: like Micron is kind of the only game in town
16:27
Speaker 2: right now. Qualcomm still exists today. Their stock is worth
16:34
Speaker 2: two hundred and eighteen billion dollars. They are still a
16:36
Speaker 2: large company today that does some very important stuff and
16:39
Speaker 2: is trying to figure out now this AI.
16:40
Speaker 3: Push, But.
16:44
Speaker 2: The insinuation that this type of demand is just going
16:47
Speaker 2: to last forever and continue to grow year after year
16:51
Speaker 2: has no historical precedent. And I think that's the key
16:54
Speaker 2: cautionary tale with all of this is what happens when
16:58
Speaker 2: prices start to skyrocket on hardware technology is by necessity,
17:03
Speaker 2: firms innovate. They find more efficient ways to use said technology,
17:08
Speaker 2: or new companies that can eat up just a small
17:13
Speaker 2: portion of that profit business because of how profitable is
17:15
Speaker 2: enter and find out how to do this stuff as well,
17:18
Speaker 2: and even if it's only ninety percent, even if they're
17:21
Speaker 2: doing it only ninety percent as well and efficiently as
17:24
Speaker 2: those hardware companies, they can find a place in this industry,
17:27
Speaker 2: drive prices down, and ultimately we start to see commoditization
17:30
Speaker 2: across the industry.
17:31
Speaker 3: And I think we.
17:33
Speaker 2: Are frankly nowhere near the beginning of that from what
17:36
Speaker 2: I can tell, the commoditization of the AI trade, Like,
17:42
Speaker 2: I think we've started to see hints here and there
17:45
Speaker 2: that open AI might need to compete on price with
17:48
Speaker 2: some other companies, But ultimately, while I believe that's where
17:52
Speaker 2: we are going, which is commoditization of the entire industry,
17:55
Speaker 2: needing to compete on price in order to keep pace
17:58
Speaker 2: with the latest competitor, as well as remember competition from
18:02
Speaker 2: China and other places that are trying to develop this
18:04
Speaker 2: simultaneously for the time being.
18:08
Speaker 3: The message from.
18:09
Speaker 2: The very top, and I'm thinking about like the end
18:12
Speaker 2: users of artificial intelligence, and I know that Mark, you
18:15
Speaker 2: and I are not. I would not consider ourselves among
18:18
Speaker 2: the power users of AI. But the key message that
18:21
Speaker 2: I continue to hear from all of those are, we
18:24
Speaker 2: don't care the price. Spend your time, money and effort
18:28
Speaker 2: learning how to use these tools because we think it's
18:31
Speaker 2: critical to our business function. And then that seeps all
18:34
Speaker 2: the way down the supply chain to the model creators.
18:37
Speaker 2: It's get it faster, get it to me now, I
18:40
Speaker 2: don't care the price. I'm willing to pay it. To
18:42
Speaker 2: the data center providers, it's the same story. Get it built.
18:45
Speaker 2: I need the compute power yesterday. I'll pay whatever price
18:47
Speaker 2: you need to, which then funnels down to the chip
18:50
Speaker 2: makers like in video, who need stuff from Micron, who
18:53
Speaker 2: need you know everything everywhere. And the directive today is
18:57
Speaker 2: I don't care about the price. The only thing that
18:59
Speaker 2: matters is speed. Get it to me as quickly as possible.
19:03
Speaker 2: That story breaks at some point. I don't know what
19:07
Speaker 2: it could be years from now, but that's how this
19:09
Speaker 2: story breaks to me is ultimately, if prices just keep going,
19:14
Speaker 2: you know, directly upwards, then there's a bunch of stuff
19:18
Speaker 2: you can do cheaper with an intern than you can
19:20
Speaker 2: with artificial intelligence, and that.
19:22
Speaker 3: Starts to break the story.
19:23
Speaker 2: Let's take quick break when we come back. Full market
19:26
Speaker 2: update on a pressure week for tech stocks.
19:29
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Speaker 6: Network, markets mix and relatively flat, with tech flowing back
20:02
Speaker 6: earlier losses. SMP five hundred and NASDAK are on pace
20:07
Speaker 6: for a losing week where the Nasdaq has dropped over
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Speaker 6: four percent, while the SMP five hundred is off nearly
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Speaker 6: two percent this week. Right now, the Dow is up
20:15
Speaker 6: just over a tenth of a percent, SMP five hundred
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Speaker 6: up only six points, NASDAK dipping by nine points now,
20:23
Speaker 6: Russell two thousand is completely flat, Tenure treasure Field is
20:27
Speaker 6: down one basis point at four point three eight percent,
20:30
Speaker 6: and Oil down over three and a half percent. Trading
20:34
Speaker 6: it's sixty nine dollars a barrel. According to The New
20:37
Speaker 6: York Times, Open Ai is leaning toward holding off its
20:40
Speaker 6: IPO until next year. The AA companies advisors are pushing
20:45
Speaker 6: its chief executive Sam Altman to move slowly after SpaceX
20:49
Speaker 6: stock has been volatile and as the startup grapples with
20:53
Speaker 6: financial challenges. Meanwhile, after it's sixteen percent surge yesterday on
20:57
Speaker 6: the heels of its blockbuster earnings, mike 's giving back
21:01
Speaker 6: over two percent or bouncing back two percent today. Other
21:06
Speaker 6: memories excuse me. Micron is down by two percent today.
21:10
Speaker 6: Other memory stocks including sand Disk and Western Digital pulling
21:13
Speaker 6: back as well. On Semiconductor announced an all stock deal
21:17
Speaker 6: to acquire Synaptics and a near seven billion dollar deal,
21:20
Speaker 6: and after sinking six percent yet yesterday following announcement of
21:25
Speaker 6: price increases to its maxim iPads, Apple shares are rebounding
21:31
Speaker 6: by one percent today. I'm Tucker Silvan, that is Wall
21:36
Speaker 6: Street Watch.
21:37
Speaker 2: I want to talk about this Open Ai looming IPO
21:42
Speaker 2: that may now be delayed. But let's start off talking
21:44
Speaker 2: about SpaceX because they brought it up first. So SpaceX
21:49
Speaker 2: debuted a couple weeks ago. IPO price was one hundred
21:51
Speaker 2: and thirty five dollars per share. First trade that took
21:55
Speaker 2: place on Friday late morning was one hundred and fifty
21:59
Speaker 2: dollars to share, and over the course of the next
22:02
Speaker 2: three days, it's shot up by Tuesday of the next
22:05
Speaker 2: week to nearly two hundred and two dollars a share. Okay,
22:09
Speaker 2: since then it has fallen back down day after day,
22:14
Speaker 2: kind of really since Tuesday, June sixteenth, to where we
22:17
Speaker 2: sit now, which is around one hundred and fifty two
22:20
Speaker 2: dollars a share, right about where it started trading on
22:23
Speaker 2: the first day of the IPO. So again, company gets
22:30
Speaker 2: valued at one point seventy five trillion dollars, one of
22:33
Speaker 2: the most highly valued companies in the most highly valued
22:39
Speaker 2: company to go public in history from a valuation perspective,
22:43
Speaker 2: one of the most expensive stocks to go public in history,
22:46
Speaker 2: and remains incredibly expensive. The stock has shot up to
22:50
Speaker 2: two hundred and then come back down. Would anyone in
22:53
Speaker 2: your mind.
22:53
Speaker 3: Describe that IPO as a failure or concerning.
22:57
Speaker 4: Depends on what the objective was. If the objective is
22:59
Speaker 4: to I'm in a really cynical mood today, forgive me,
23:01
Speaker 4: but if it's just too enrich insiders and I I'm
23:05
Speaker 4: going to claim today that the objective of all of
23:07
Speaker 4: these activities are going to talk about is just to
23:10
Speaker 4: enrich people who in retrospect history will judge harshly. I
23:13
Speaker 4: don't know why I'm in such a cynical mood with
23:15
Speaker 4: respect to these titans, but the evidence is becoming clear anyway. So, Mike,
23:22
Speaker 4: if the objective was to raise eighty billion dollars, it
23:24
Speaker 4: was a success. If the objective was to inspire a
23:28
Speaker 4: frenzy of buying that held the share price aloft until
23:31
Speaker 4: insiders could sell, it was a failure.
23:34
Speaker 2: Yeah, but I'm not even sure I would define it
23:36
Speaker 2: as a failure there, right, Like you're still valuing this thing, yeah,
23:40
Speaker 2: more than any of the private.
23:42
Speaker 4: I guess that's my point. When is it enough for
23:44
Speaker 4: these people? They raised capital, put it into the business, innovate,
23:48
Speaker 4: grow the economy. It's never enough. Delaying this IPO. Why
23:52
Speaker 4: is he delaying it? He's not going to get enough.
23:55
Speaker 2: I think that's That's what I wanted to hone it on.
23:57
Speaker 2: Is I would not describe SpaceX's IPO as a failure.
24:01
Speaker 4: Concerning it depends on how you're defining it. From their
24:04
Speaker 4: point of view, it's how much wealth can we accumulate.
24:07
Speaker 2: From my perspective, a SpaceX concerning IPO would be it
24:10
Speaker 2: now trading below its IPO price. It's not even below.
24:14
Speaker 3: Its first trade.
24:16
Speaker 2: I don't think anyone at SpaceX right now should be
24:20
Speaker 2: concerned about what they're going to be able to sell
24:22
Speaker 2: their shares at when their lock up period ends.
24:25
Speaker 3: Because we are still well above the IPO price on
24:28
Speaker 3: this thing.
24:28
Speaker 4: I kind of unless your breed is friggin but forgive me,
24:31
Speaker 4: But unless your greed is bottomless and you are afraid
24:34
Speaker 4: people are going to find out that the potential revenue
24:36
Speaker 4: of the company is not nearly what Goldman represented.
24:39
Speaker 2: My point here is I don't think that that makes
24:42
Speaker 2: sense whatsoever as an excuse for open AI to not
24:44
Speaker 2: go public.
24:45
Speaker 3: I think that's garbage.
24:46
Speaker 2: I don't think you can look at SpaceX's IPO and say, oh,
24:48
Speaker 2: this was really concerning, we shouldn't go public. I think
24:51
Speaker 2: there's something else, and I think specifically is the other
24:54
Speaker 2: thing that was mentioned, which is open Ai is struggling
24:58
Speaker 2: with financial challenges, and so I look at this one
25:01
Speaker 2: piece and say, there's nothing about SpaceX that would concern
25:04
Speaker 2: me about going public. It led to three x the
25:08
Speaker 2: demand for the IPO. The shares went off perfectly. The
25:11
Speaker 2: stock has stayed within its range since it went public.
25:14
Speaker 2: Nothing there is concerning to me. I'm with you. Some
25:17
Speaker 2: within the inside would like to see it shoot up
25:19
Speaker 2: to two fifty, no doubt, but nothing there would concern
25:23
Speaker 2: me where I open AI. Therefore, the piece that I
25:27
Speaker 2: land on is there is something internal there that leads
25:30
Speaker 2: them to believe that their IPO is not going to
25:32
Speaker 2: go terribly well. And I think it has to do
25:35
Speaker 2: more with the realities that open ai than it has
25:37
Speaker 2: anything to do with the market front.
25:39
Speaker 4: What will we find out in whenever this was scheduled, presumably.
25:43
Speaker 2: I think we're going to find out is that it's
25:45
Speaker 2: a heck of a lot less profitable than their main
25:49
Speaker 2: competitor that wants to go public at the same time.
25:51
Speaker 2: That's my suspicion is you have anthropic who does the
25:54
Speaker 2: exact same thing that open Ai does in a number
25:57
Speaker 2: of key categories. Seems to be growing faster and doing
26:00
Speaker 2: better them, better than them, disclosed a little bit about
26:03
Speaker 2: their financial margins in the last few weeks, and now
26:08
Speaker 2: open a eyes looking at this and saying, huh, if
26:11
Speaker 2: we have to go up next to that guy, I'm
26:14
Speaker 2: not sure that we are going to get quite the
26:16
Speaker 2: demand that we want, and so we're pulling this thing
26:18
Speaker 2: because again, I'm only concluding that based on There's two
26:23
Speaker 2: reasons that I can dream up that you wouldn't want
26:25
Speaker 2: to go public. One would be you don't think the
26:27
Speaker 2: market conditions are good for it. I see nothing about
26:30
Speaker 2: market conditions that would say, hey, it's not going to
26:33
Speaker 2: be a good market for an IPO right now in
26:36
Speaker 2: one of the leading AI spaces. Two would be there's
26:40
Speaker 2: something about my business that I don't.
26:41
Speaker 3: Want to try.
26:42
Speaker 4: Are just figuring that out now though.
26:46
Speaker 3: Don't know.
26:49
Speaker 2: Yeah, I don't know what's changed. The only thing that
26:51
Speaker 2: I can think of that changed.
26:52
Speaker 3: Is that.
26:55
Speaker 2: They are realizing that their main competitor is in better
26:58
Speaker 2: financial shape than them. That that part could have been
27:01
Speaker 2: a bit knew that, right, I don't know did they?
27:06
Speaker 3: Did anybody know the.
27:07
Speaker 4: Type of financial question mode? I have no answers today.
27:10
Speaker 2: I don't either I'm not entirely certain that open AI
27:14
Speaker 2: was aware of anthropics financial position. I'm not aware of
27:17
Speaker 2: you know, open aies or sorry, anthropics financial position right now,
27:22
Speaker 2: and if they now suspect, hey, we're in significantly worse
27:27
Speaker 2: financial shape than our direct competitor and everybody's about to
27:30
Speaker 2: learn the details of that via an IPO filing that
27:34
Speaker 2: But does maybe could be a reasoning.
27:35
Speaker 4: Doesn't SpaceX prove that unless it's different than expectations. I
27:39
Speaker 4: didn't think you did just say this. We all think X.
27:42
Speaker 4: It's actually point five of X. Yeah, so that would
27:45
Speaker 4: be a dramatic disappointment relative to expectations.
27:47
Speaker 2: Otherwise, you're right though, because SpaceX. If there's one lesson
27:51
Speaker 2: from that, it's that you can go public. You can
27:54
Speaker 2: lose all the money you want and people will still.
27:57
Speaker 1: Buy or share.
27:57
Speaker 4: Yeah, I like you've got to be really.
28:02
Speaker 3: Granted.
28:02
Speaker 2: There's some extra rope that investors seem to give Elon
28:05
Speaker 2: Musk for any of his companies, so maybe that's unique
28:08
Speaker 2: to him.
28:09
Speaker 3: But yeah, I guess I'm right there with you.
28:11
Speaker 2: If there's one lesson from the space XIPO, it is
28:14
Speaker 2: not that investors are unwilling to buy high growth. You know,
28:19
Speaker 2: no who cares Pie in the sky type companies. You
28:22
Speaker 2: can lose as much money you want, and as long
28:24
Speaker 2: as you've got a cool business idea, people are going
28:26
Speaker 2: to gobble up these shares. So yeah, the the idea
28:30
Speaker 2: of an Open AI delay on the IPO strikes me
28:34
Speaker 2: as unique to Open AI and.
28:37
Speaker 3: Not the market moment that we are sitting in.
28:40
Speaker 2: Let's say a quick break when we come back, a
28:42
Speaker 2: little bit of oil talk, as there were some action
28:44
Speaker 2: in the Strait of Horn Moves overnight. That's next here
28:47
Speaker 2: on the Financial Exchange Mister Show.
28:50
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29:03
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29:12
Speaker 1: Face is the Financial Exchange.
29:27
Speaker 2: Oil markets this morning, shrugging off any concern about traffic
29:31
Speaker 2: through the Strait of Horror moves despite a cargo ship
29:36
Speaker 2: being struck, presumably by the Iranians. I think they took
29:40
Speaker 2: credit for it. The ship was apparently navigating through the
29:45
Speaker 2: Straight on a path that the Iranians have indicated they
29:52
Speaker 2: were not going to allow, and they struck the ship
29:56
Speaker 2: with a drone and have continued to allow traffic flow
29:59
Speaker 2: through their designated route that they have said they're allowing.
30:03
Speaker 3: Which.
30:06
Speaker 2: Oil markets are moving down on the news, right we've
30:08
Speaker 2: got oil prices off nearly four percent, which I do
30:11
Speaker 2: take as good news, but I think is just a
30:14
Speaker 2: pretty stark reminder right now of who exactly is in
30:19
Speaker 2: control of the Straight of hormous.
30:21
Speaker 4: Yeah, it's a new reality, and oil will be on
30:24
Speaker 4: average a little bit more expensive than it was previously
30:27
Speaker 4: until we find a way or Arab exporters oil exporters
30:33
Speaker 4: find a way around the street.
30:34
Speaker 2: Yeah again, you know, we will see obviously, you know,
30:38
Speaker 2: everything's still in negotiation in terms of where this goes,
30:42
Speaker 2: who controls it, whether or not the Iranians are able
30:44
Speaker 2: to charge tolls. But for the moment, I mean, the
30:48
Speaker 2: message right here is, hey, if you don't follow what
30:51
Speaker 2: the Iranians do, then we're going to stop the traffic.
30:54
Speaker 2: As we have seen them pretty successfully exercise that power here.
30:57
Speaker 2: So you know, I applaud energy prices coming down. I'm
31:01
Speaker 2: glad that that is the case. I did not want
31:03
Speaker 2: to see six dollars a gallon gas. But the trade
31:06
Speaker 2: off seems to be, Hey, yeah, gas prices and oil
31:09
Speaker 2: prices coming down in exchange for the Iranians now having
31:13
Speaker 2: a much larger degree of control over traffic over the street.
31:16
Speaker 4: Now, what would break the status quo at this point
31:18
Speaker 4: we resumed military actions, we went in, but the president
31:23
Speaker 4: has already ruled that out. He said, stock market's really
31:25
Speaker 4: important to me. Gas prices are important. If we continue
31:28
Speaker 4: the war, it'll be disastrous. I'm paraphrasing, but barely so.
31:32
Speaker 4: A Ran now knows we don't have the stomach for conflict.
31:35
Speaker 4: I personally don't, So that's fair. What incentive do they
31:39
Speaker 4: have to revert to pre war behavior?
31:42
Speaker 2: Yeah, to your point, like you said, every country in
31:47
Speaker 2: that area now is trying to build infrastructure to circumvent
31:51
Speaker 2: the strait of horm moves, and that may be the
31:54
Speaker 2: economic push that you see. But for the time being,
32:00
Speaker 2: it appears that.
32:01
Speaker 4: Here's a headline.
32:02
Speaker 3: Mic.
32:02
Speaker 4: Yeah, go ahead, Oman warned European allies. According to Bloomberg,
32:06
Speaker 4: ship fees likely needed for horror moves.
32:09
Speaker 3: What do you take that to mean.
32:10
Speaker 4: Well, it was debatable. It was unclear whether Oman would
32:14
Speaker 4: support Oman's on the other side of the strait. Right, Okay,
32:17
Speaker 4: I'm not an expert, but I've seen the maps in
32:19
Speaker 4: newspapers lately, as we all have. If they come on
32:22
Speaker 4: board for tolling, it's effectively a toll. They can call
32:24
Speaker 4: it insurance, a fee, they can call it a donation
32:28
Speaker 4: they're charging. If they're on board for that.
32:31
Speaker 3: I really do hope they call it a donation.
32:33
Speaker 2: Yeah, a gift we would like you to in order
32:35
Speaker 2: to navigate the strait. We just need a charitable donation
32:38
Speaker 2: to our nation's military.
32:41
Speaker 6: They just turn a giant iPad around and how much
32:44
Speaker 6: do you want to tap? Fifteen twenty five.
32:50
Speaker 3: Toast is making a killing right now on their Yeah.
32:54
Speaker 4: I mean, this is why you don't go to war
32:56
Speaker 4: with Iran, and no offense to anybody who loves everything
32:59
Speaker 4: the present it does. This is why you don't go
33:01
Speaker 4: in there in the first place, because you open up
33:03
Speaker 4: this Pandora's box of ongoing phony negotiations, little retaliatory tat
33:12
Speaker 4: tit tit for tat and so forth. There's screwballs over there.
33:16
Speaker 4: They got to sound the hook now they're not gonna
33:18
Speaker 4: let us off. They've got the whole world dancing to
33:20
Speaker 4: their tone.
33:21
Speaker 3: We will see again.
33:22
Speaker 2: We are very early on in negotiations, and who knows
33:25
Speaker 2: precisely where this goes, but again.
33:27
Speaker 4: It goes nowhere. You're going to draw it out for
33:30
Speaker 4: decades if they can. I Ran loves the attention.
33:32
Speaker 2: Right I think the key message right now is very
33:36
Speaker 2: little doubt as of today, who is in control of
33:39
Speaker 2: the straight of hor moves and it does not appear
33:40
Speaker 2: to be the United States.
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34:50
Speaker 2: Well here in Massachusetts, there's been a number of ballot
34:53
Speaker 2: initiatives that have been tossed out and included in the
34:56
Speaker 2: vote in November, and rent control was one of those
35:00
Speaker 2: items that was supposed to or most people thought were
35:02
Speaker 2: going to make it onto the ballot and has now
35:04
Speaker 2: been tossed over a ruling by the Supreme Judicial Court
35:08
Speaker 2: on the wording there from some religious exemptions that were
35:12
Speaker 2: on the ballot initiative. I'm honestly a little bit disappointed
35:15
Speaker 2: that we won't be having that healthy debate about rent
35:18
Speaker 2: control and how it would be, in my opinion, bad
35:21
Speaker 2: for the state. But it won't be on the ballot instead,
35:25
Speaker 2: not instead, but one of the ones that did make
35:27
Speaker 2: it on. There is a vote over the legalization of
35:31
Speaker 2: marijuana in Massachusetts, which occurred a number of years ago,
35:34
Speaker 2: and a group pushing to reverse that legalization in a
35:40
Speaker 2: meaningful way. And I'd like to take some predictions about
35:43
Speaker 2: how dramatically this vote is going to fail to repeal it. Specifically,
35:51
Speaker 2: my prediction would be at at least seventy percent of
35:55
Speaker 2: votes to maintain the legalization of cannabis in Massachusetts, Tucker,
35:59
Speaker 2: So you can write that down in seven seventy percent minimum.
36:03
Speaker 3: Is where we're going to, land Mark. Do you do
36:05
Speaker 3: you have any guests?
36:06
Speaker 4: What are the what are the arguments for repeal? Social
36:09
Speaker 4: course have been higher than expected, Like are we seeing
36:13
Speaker 4: increased rates of hospitalization?
36:16
Speaker 1: Uh?
36:17
Speaker 2: I had there was a great quote. Actually I wanted
36:21
Speaker 2: to bring up me like, you know, a.
36:24
Speaker 4: Bunch of it was a moral Okay, So now we're
36:27
Speaker 4: back to the progressive era temperance people making arguments that
36:30
Speaker 4: it's you know, making husbands behave in any.
36:33
Speaker 2: Vin Kevin Sabbat, president of Smart Approaches to Marijuana, prominent
36:37
Speaker 2: Virginia based anti weed group, was said I was quoted saying,
36:40
Speaker 2: I don't think people voted for a pot shop on
36:42
Speaker 2: every corner, smelling weed everywhere they go and having to
36:45
Speaker 2: protect their kids.
36:46
Speaker 3: I'm just gonna throw this pot everywhere.
36:49
Speaker 6: What are you talking about.
36:50
Speaker 2: Doing precisely, I'm just gonna throw this out there. As
36:52
Speaker 2: a ten years old, I attended a professional hockey game
36:56
Speaker 2: for the Bruins and on that evening I had most
37:01
Speaker 2: of a full beer spilled on me and went to
37:04
Speaker 2: the bathroom and saw a guy throwing up in the
37:06
Speaker 2: toilet from drinking too much.
37:08
Speaker 3: So I don't know.
37:09
Speaker 2: Where we think we have this moral high ground over
37:13
Speaker 2: cannabis when we do absolutely nothing to protect children's against
37:18
Speaker 2: the you know, the visibility of alcohol consumption. Like, I
37:23
Speaker 2: just don't see the difference people.
37:26
Speaker 4: That's hitting him in the wallet. If if it was
37:28
Speaker 4: costing more to provide public safety for these stores, if
37:31
Speaker 4: there were more, if they're more crime that could be
37:35
Speaker 4: solidly attributed, which is impossible statistically, but suppose you could.
37:38
Speaker 4: I mean, you got to show me this is this
37:40
Speaker 4: is costing us more than the freedom to do what
37:44
Speaker 4: you want is worth. And even then it would be
37:46
Speaker 4: a tough argument, right, I mean, it's just it's not
37:49
Speaker 4: to mimic the arguments of the progressives of one hundred
37:51
Speaker 4: and twenty years ago, like is not compelling today, Like
37:54
Speaker 4: I don't care what you find offensive if I'm mine
37:56
Speaker 4: in my own business. Back off.
37:58
Speaker 3: Yeah, So again, we'll see where this goes.
38:01
Speaker 2: My prediction would be that, yeah, legalized cannabis and Massachusett's
38:05
Speaker 2: stays legalized. But that will apparently be on the ballot
38:07
Speaker 2: initiative this November, and you can get out there and
38:11
Speaker 2: vote on it.
38:11
Speaker 4: If you're not too stoned to find your way to
38:15
Speaker 4: the polling post.
38:17
Speaker 2: Yeah, quick break, We're going to Taco Bell and we'll
38:22
Speaker 2: be right back