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The SpaceX IPO: Opportunity or Overvalued? · Merryn Talks Money

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  Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
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  Speaker 2: Welcome to Miron Talks to Your Money, the personal finance
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  Speaker 2: edition of Marin Talks Money. In these bonus podcasts, we
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  Speaker 2: talk about the best strategies for making the most of
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  Speaker 2: your money. I'm Maren's unset web Bloomberg UK Money Editor
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  Speaker 2: at Large, and with me today is Anna McDonald, investment
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  Speaker 2: strategy director at Hugurus LANSDN. Welcome.
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  Speaker 1: Anna, thank you very much for having me Maren.
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  Speaker 2: It's a pleasure. We haven't had you on for a while,
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  Speaker 2: but regular listeners will know that you have been frequently
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  Speaker 2: on and also have appeared at our Friends show, and
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  Speaker 2: anyone who's listened to those recordings will know that Anna
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  Speaker 2: is expert on almost everything. But today we're going to
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  Speaker 2: go We're just going to talk about one small thing,
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  Speaker 2: or rather one absolutely huge thing. I've asked you on
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  Speaker 2: how to talk about the SpaceX IPO and what it
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  Speaker 2: really means for ordinary investors who an awful lot of
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  Speaker 2: them have had to go at getting a piece of
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  Speaker 2: this largest IPO ever. Right never heard from some of
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  Speaker 2: the retail platforms that they've seen multiples of the level
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  Speaker 2: of applications they have ever seen for an IPO before
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  Speaker 2: you've seen the same at Harger's Lantern.
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  Speaker 1: We absolutely have. We had fifty thousand applications this time,
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  Speaker 1: and the usual for an IPO is fifteen hundred. So yes,
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  Speaker 1: that's quite a big that's quite a big jump up.
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  Speaker 2: Okay, interesting and were most people going for one thousand pounds,
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  Speaker 2: twenty thousand pounds, fifty thousand pounds?
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  Speaker 1: What what did look like anyone who applied Just to take
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  Speaker 1: you through, anyone who applied for up to twenty shares
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  Speaker 1: got their fulfill and we know that you got all
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  Speaker 1: your nine shares and I did get chats, I did, yes, yes,
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  Speaker 1: And looking at our own clients we met, we see
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  Speaker 1: that fifty two percent, so just over half got over
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  Speaker 1: one hundred percent of their allocations. So yes, those were
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  Speaker 1: those were at that kind of level, around the two
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  Speaker 1: thousand pound level.
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  Speaker 2: One of the things that is interesting to me is
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  Speaker 2: through which rapper people have been buying SpaceX. So I
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  Speaker 2: saw from one of the platforms that the majority of
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  Speaker 2: people were buying inside their ices and inside their SIPs.
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  Speaker 2: Rather suggest that certainly if they're buying them inside their SIPs,
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  Speaker 2: they're not buying them to flip, although possibly if you're
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  Speaker 2: buying them inside and I say, you might have thinking
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  Speaker 2: you can flip them very quickly and there's no capital
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  Speaker 2: gains to pay where we're u seeing people buying in
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  Speaker 2: ordinary accounts for long term, long term rappers or everything.
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  Speaker 1: We're seeing in everything, But our data shows about the
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  Speaker 1: same as that shape that you've just read out, you know,
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  Speaker 1: in terms of ices and SIPs being being the main areas.
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  Speaker 1: So yeah, I mean I suppose, I mean you can
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  Speaker 1: you could buy and sell quite easily in a SIP.
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  Speaker 1: You could buy and sell quite easily on our platform.
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  Speaker 1: But the what we're seeing is I just got our
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  Speaker 1: dealers to check, and we're not seeing a huge amount
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  Speaker 1: of you know, we're seeing a very very large majority
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  Speaker 1: of our investors are still holding.
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  Speaker 2: Okay, interesting and in order to buy in the first place,
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  Speaker 2: do you think they sold other stuff? I'm one of
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  Speaker 2: the things that we worried about a lot. Not I
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  Speaker 2: say we, I mean the market in general worried about,
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  Speaker 2: and the run up to SpaceX was that people would
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  Speaker 2: take money out of say, for example, some of the
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  Speaker 2: some of the AI names or something like that. Maybe
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  Speaker 2: even they were taking money out of gold to put
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  Speaker 2: it into SpaceX and that would create quite a lot
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  Speaker 2: of volatility in the market, and at various points in
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  Speaker 2: the run up for the IPO looked like it was
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  Speaker 2: creating some volatility. Is that what you saw? Did you
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  Speaker 2: see people using cash they had already or topping up
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  Speaker 2: with topping up with cash rather than selling the buyer.
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  Speaker 1: There was some topping up of cash, and of course
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  Speaker 1: some people, you know, we got quite a few people
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  Speaker 1: opening accounts with us, so you know they were they
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  Speaker 1: were we don't know exactly, you know, where that came from,
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  Speaker 1: but obviously that was cash to us. So what I mean,
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  Speaker 1: I think the broad point is that, I know we
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  Speaker 1: did see some volatility in the lead up to this,
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  Speaker 1: but remember we were also on i don't know, the
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  Speaker 1: thirty fifth consecutive announcement of the strait of formos opening up,
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  Speaker 1: and there was just that general feeling of market nerves.
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  Speaker 1: I think where we saw most of the action in
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  Speaker 1: terms of individual shares might not surprise you, as a
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  Speaker 1: lot of it was in Tesla and Nvidia, and then
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  Speaker 1: of course there was good, good old Strategy Inc. Which
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  Speaker 1: you'll know well from with what we've seen in terms
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  Speaker 1: of cryptocurrency. And i'd rather sell a kidney than sella
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  Speaker 1: bitcoin bitcoin, so I think that could have also been
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  Speaker 1: slightly higher risk clients thinking well, I'm not quite you know,
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  Speaker 1: making making it taking a view on that. And then
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  Speaker 1: in terms of funds and the active funds, I mean
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  Speaker 1: maybe not surprise as well, a bit of selling down
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  Speaker 1: a Bailly Gifford American, you know that maybe makes a
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  Speaker 1: bit of sense. And then some just general global equity
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  Speaker 1: that hasn't been performing very well interestingly enough, so some
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  Speaker 1: of those big names that we know that have been
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  Speaker 1: not doing so brilliantly.
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  Speaker 2: Okay, so you've got now, you've got an awful lot
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  Speaker 2: of small investors holding SpaceX. They've already made quite a
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  Speaker 2: lot of money on it. Shared behears has gone up
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  Speaker 2: appreciably since the since the launch, which was already at
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  Speaker 2: on any ordinary metric, although it's impossible to judge SpaceX
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  Speaker 2: on ordinary metrics, of course, but on any ordinary metrics
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  Speaker 2: already insanely expensive, popped quite a lot from there. Is
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  Speaker 2: this a sensible thing for people to be holding in
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  Speaker 2: a portfolio? Let's say that. I mean a lot of
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  Speaker 2: people don't hold very many individual shares right Mainly they'll
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  Speaker 2: hold ETFs they'll hold a few active funds maybe, but
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  Speaker 2: mostly ETFs. A few maybe very big, very big shares,
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  Speaker 2: but not that many individual shares. Is this a sensible
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  Speaker 2: thing to have sitting in your portfolio?
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  Speaker 1: Well, I mean we've very much tried, and other impossible
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  Speaker 1: questions and other impossible questions.
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  Speaker 2: But we've.
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  Speaker 1: We've very much tried to get investors to think about, Yeah,
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  Speaker 1: you know, have your have your core, your sort of
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  Speaker 1: your your your bastions. Whether that's a you know, could
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  Speaker 1: be a track of fund, it could be a global
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  Speaker 1: fund that you really like. It could be something in
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  Speaker 1: the UK, something in Europe, something in emerging markets. Have
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  Speaker 1: that as your kind of base, your core, and then
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  Speaker 1: have your your satellites can be the bits that really
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  Speaker 1: interest you. I know it sounds dreadfully dull probably to
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  Speaker 1: say it like that, but I do think that you
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  Speaker 1: should think about companies like this that you know, it
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  Speaker 1: is it is a pretty you know, this is a
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  Speaker 1: very unusual company. This is it's coming at a very
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  Speaker 1: it's coming as you've talked about evaluation. That is, it
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  Speaker 1: has definitely you know, raised some eyebrows, but other people
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  Speaker 1: feel very comfortable with it. And it's and it's coming.
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  Speaker 1: You know, there's a very small amount floating initially free
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  Speaker 1: float as in the number of shares that you can
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  Speaker 1: buy themselves, very small. So it's it's it's not really
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  Speaker 1: a surprise that it's very exciting for people. But I
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  Speaker 1: suppose what I would say is that you know, you
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  Speaker 1: could have have a bit of excitement. There's no there's
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  Speaker 1: no harm having you know, something that really, you know, does.
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  Speaker 2: Really arouse your interest.
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  Speaker 1: But be very aware that this is not going to
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  Speaker 1: be you know, you shouldn't put all your eggs in
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  Speaker 1: one basket, and you might want to just you know,
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  Speaker 1: have a bit and then you can also you know,
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  Speaker 1: you might want to have something which you could have
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  Speaker 1: other you can hold other things as well, which will
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  Speaker 1: give you exposure to this same kind of pretty exciting
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  Speaker 1: exciting area in terms of AI. But you don't have
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  Speaker 1: to hold you know, you don't have to put all
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  Speaker 1: your eggs into this one bust.
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  Speaker 2: More diversified way for a trust or something like that.
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  Speaker 1: So yes, today I went to see Maggie Finari. She
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  Speaker 1: is CEO and runs the ri T Capital Markets. It's
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  Speaker 1: the Rothschild Investment Trust and they have not only holdings
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  Speaker 1: in space X, they also have and tropic and open
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  Speaker 1: ay so as well as are very diversified portfolio in
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  Speaker 1: other private companies. In public listed companies they have you know,
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  Speaker 1: they've got a real mix of investments in there. So
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  Speaker 1: there are ways to get get get into that theme
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  Speaker 1: that don't involve sort of just putting everything in with
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  Speaker 1: SpaceX because I think a lot of people I've spoken to,
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  Speaker 1: you know, it's this pop. I hope you're feeling good
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  Speaker 1: about the pop and the share price, but we don't
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  Speaker 1: already know what the settled price is going to be.
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  Speaker 1: We don't know how it's going to react to index inclusions,
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  Speaker 1: we don't know how it's going to react when when
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  Speaker 1: some of the investors that are still holding it when
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  Speaker 1: they come off lock up. We just, you know, there's
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  Speaker 1: a lot of you know, we just don't know. And
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  Speaker 1: I think that some people I've spoken to say that
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  Speaker 1: it takes quite a long time for something to find
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  Speaker 1: its natural price, and so I think I think just
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  Speaker 1: be aware of that. You you might see some volacility
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  Speaker 1: in both directions.
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  Speaker 2: There's some wider issues around the SpaceX IPO that I
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  Speaker 2: think are beginning to be discussed more widely now. The
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  Speaker 2: original excitement has passed, and one of those courses is
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  Speaker 2: shareholder democracy. The fact that Elon Musk retains the majority
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  Speaker 2: of the voting rights, and so you don't have that
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  Speaker 2: thing that you should get with a listed company, which
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  Speaker 2: is one share, one vote, a proper democratic setup, and
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  Speaker 2: everyone who is a shareholder will have a sense that
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  Speaker 2: they can have some control over the future direction of
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  Speaker 2: the company. And you don't get that with SpaceX, and
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  Speaker 2: that's worried to some people that are listed markets are
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  Speaker 2: now losing their democracy as well.
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  Speaker 1: And I think they've had that worry for in other
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  Speaker 1: shares too. That a I mean, I think it was
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  Speaker 1: much the same with Facebook as was then and and
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  Speaker 1: meta as now, which you know, enable big spending decisions
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  Speaker 1: around things like the metaverse to happen. So yeah, I
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  Speaker 1: think I think with SpaceX there is possibly that I
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  Speaker 1: wouldn't say it's part of the attraction having no control.
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  Speaker 1: That's like saying or having no democracy. But I think
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  Speaker 1: that a lot of a lot of investors think that
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  Speaker 1: they want Elil must to be in the driving seat.
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  Speaker 1: They want that, and so so that they're they're they're
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  Speaker 1: going in very you know, they're they're really cognizant. That
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  Speaker 1: is what's what they're buying. They're buying. I think what
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  Speaker 1: a lot of them are buying is musk. I mean,
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  Speaker 1: and to be.
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  Speaker 2: Fair, Starts Stardust their.
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  Speaker 1: Buying start us. But you know he has you know,
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  Speaker 1: if you look at there are some it's it's a
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  Speaker 1: lost making company, but they are generating revenues and they've
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  Speaker 1: been signing deals and Starlink is quite well established. He's
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  Speaker 1: got his track record at Tesla. You know, it's not
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  Speaker 1: they're not asking you know, it's not someone unknown that
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  Speaker 1: they're handing over the control to. But I do sympathize
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  Speaker 1: with the whole idea that you know, if you're a shareholder,
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  Speaker 1: you should you know, be able to vote to agms
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  Speaker 1: and you should be able to you know, we wantn't
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  Speaker 1: shareholder democracy. But this is I suppose one of those
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  Speaker 1: special cases where you're just going to have to be
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  Speaker 1: aware of that. I do think it's quite fun to
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  Speaker 1: think back about when I used to look at IPOs
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  Speaker 1: in the UK market, which I did quite a lot
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  Speaker 1: when I was at a Marty, and I just used
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  Speaker 1: to you know, apply things like liquidity discounts and shareholder
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  Speaker 1: control discounts and things like that seems to be the
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  Speaker 1: reverse now.
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  Speaker 2: No longer required, no longer required. The other thing that
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  Speaker 2: we've been talking about a lot, and John and I
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  Speaker 2: talked about last week is the idea that the SpaceX
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  Speaker 2: IPO and the discussion about which indices is included in
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  Speaker 2: and not included in effectively marks the end of the
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  Speaker 2: idea that it is possible to invest passively. There isn't
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  Speaker 2: really no such thing. We knew that before, we talked
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  Speaker 2: about it a lot, and that you think you are
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  Speaker 2: a passive investor, but the very active having to choose
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  Speaker 2: your passive constituent is an active decision, So there is
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  Speaker 2: no there is no such thing as passive investing. Really,
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  Speaker 2: but now we're at the point where there isn't even
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  Speaker 2: such a thing as passive investing in the US market
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  Speaker 2: because some indices will include SpaceX and some will not,
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  Speaker 2: So it kind of tells us that all investing is
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  Speaker 2: active investing. Now. It's kind of over.
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  Speaker 1: Standard and poor who or S and P who produced
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  Speaker 1: the S and P five hundred index. They have made well,
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  Speaker 1: I think I think it's quite a sort of a
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  Speaker 1: mature decision in terms of they are not changing their rules,
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  Speaker 1: just to allow fast track entry for SpaceX or Anthropic
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  Speaker 1: or open Aiyes, so they are are still thing thinking
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  Speaker 1: that you know, things like seasoning as in time spent
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  Speaker 1: as a listed company. They think things like profitability and
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  Speaker 1: float are important. Now Nasdaq are waiting, so they they
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  Speaker 1: they as are doing fast track entry, but they they
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  Speaker 1: are applying a waiting to it. So it's not like
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  Speaker 1: it's going to be there's not going to be the
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  Speaker 1: kind of wall of passive money that you might have thought. So,
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  Speaker 1: so that that means, yes, you if you choose Footsey Russell,
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  Speaker 1: you're buying it. If you're you're getting SpaceX. If you
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  Speaker 1: choose DASDAC over the next week or two, you're getting SpaceX.
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  Speaker 1: If you choose s P five hundred, you're not. But
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  Speaker 1: I guess there's always been that argument that, well, if
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  Speaker 1: you're buying the Nasdaq one hundred, you are buying the
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  Speaker 1: top one hundred shares, you're automatically excluding some. If you're
• 13:47
  Speaker 1: buying S and P five hundred, you're automatically buying those
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  Speaker 1: those biggest qualifying five hundred companies. So I suppose to
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  Speaker 1: some extent there always has been some kind of there's
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  Speaker 1: some kind of choice there, but you're right, you are
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  Speaker 1: actively choosing to be to have exposure.
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  Speaker 2: Okay, right, Anna, I've got nine chairs, have you got any.
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  Speaker 1: I actually do have it in I have exposure in
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  Speaker 1: some of my boring diversified trusts. I don't mean they're boring.
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  Speaker 1: I mean you know what I mean. I've not gone
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  Speaker 1: full out on it. I think I think I'll so I.
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  Speaker 2: Have anything that whlds SpaceX is boring exactly, and uh
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  Speaker 2: and yeah, so I think I'm pretty well set in that.
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  Speaker 1: But I yeah, what about what are.
• 14:34
  Speaker 2: You going to do with yours? Keep good?
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  Speaker 1: That's a good long term invest mindset.
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  Speaker 2: I mean yeah, well, no, I mean also because I
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  Speaker 2: don't know what's going to happen. It's you know, with
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  Speaker 2: something like SpaceX, when, as I say, it doesn't fit
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  Speaker 2: any normal metrics. You can either take the well, it's
• 14:52
  Speaker 2: horribly valued on every conceivable measure and therefore I will
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  Speaker 2: take that little flip and sell it, or you can say,
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  Speaker 2: I don't really know what will happen next. I suspect
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  Speaker 2: it's horribly overvalued. But then, on the other hand, I've
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  Speaker 2: said that about an awful lot of companies and almost
• 15:07
  Speaker 2: an awful lot of times I give you, I don't know, Google, Amazon, Video,
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  Speaker 2: palante here, et cetera. So I might as well keep
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  Speaker 2: my nine shares and see what happened. It is nine chairs,
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  Speaker 2: not nine hundred.
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  Speaker 1: And I also think that you could, Yeah, I know
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  Speaker 1: what you mean. You can sort of feel almost like
• 15:24
  Speaker 1: you're a bit like a broken record and whatever is
• 15:27
  Speaker 1: it called climbing a wall of worry? But then and
• 15:30
  Speaker 1: you have the same frustrations on the other side, don't
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  Speaker 1: you with you know, some some whole asset classes or
• 15:37
  Speaker 1: areas of the market that just consistently seemed to us
• 15:40
  Speaker 1: to be undervalued. And you know, when when do we
• 15:44
  Speaker 1: see that switch? So it's not just some shares that
• 15:47
  Speaker 1: covivide the if you believe they are, But you've forgot
• 15:51
  Speaker 1: on the other side that something seemed to consistently have
• 15:54
  Speaker 1: a tough time getting that reevaluation.
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  Speaker 2: That's pretty much all anybody needs to know about SpaceX Anna,
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  Speaker 2: thank you very much.
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  Speaker 1: It's a pleasure.
• 16:10
  Speaker 2: Thanks for listening this week's Maren Dogs your money. If
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