chollida1
Everyone gets audited financials before the De-SPAC process occurs.
> SpaceX made that even more clear by doing an explicit offering of shares to raise money just months after their IPO, which didn’t raise them any money at all but was just for investors and employees
SpaceX raised $85B at their IPO that went all to the company. It was a primary stock ipo so it was all newly issued stock from teh company included teh 15% additional shoe.
The only IPO's i can see on file where companies didn't raies money were 3 direct listings
- Georgia Banking Company (GBC)
- avion Healthcare (DAVI)
- TurboGen Ltd. (TRBG),
If you know any of those companies you are deep into the cash equity markets:)
They are not a hedge fund, they are a Private Equity/Private Credit fund, a financing firm and a venture fund all wrapped up in an alternative asset management company that does almost everything related to private credit.
1) Stocks priced for perfection. This applies mostly to Google that was priced to beat estimates. They did not and alot of people took that to mean Google was incorrectly priced and should have a multiple shift down.
2) worry about capital expenditures. Google was also guilty here as the market is starting to get worried about these companies getting over their skiis on cap ex. Microsoft did guide their capex lower but Google doubled down and said they'd spend even more. The market punished them for that.
to this point MSFT is only slightly down due more to the sector than the company as they did announce capex cuts for next year.
3) Intel just flat out failed to hit targets on their earnings that the market felt it should have been easy to do in this economy. And they got punished for it.
4) Most hedge funds and other large money managers have had decent allocations to the Mag7 and related companies as if you didn't have any tech exposure you would almost certainly outperform in the past 2-3 years.
This year we're starting to see a slow down or resetting of expectations for tech companies, Anthropic and Open AI seeing their IPO valuations get cut down is one large sign of this.
We've seen a large transition of hedge funds out of tech in the past 6 months that really accelerated with this earnings season.
5) Earnings capture. We're nearing the end of the year and alot of long/short funds are just starting to realize gains to lock them in for the year. Tech has had a good run and if you think that its going to get worse into the end of the year, you realize your gains here, or you get the sell side to write you a bespoke option at the price you want to realize your gains at if you don't want to realize it for tax purposes and then they go and sell the stock to hedge, which has the same effect of pushing down the stock as it would as if you just sold None of this is to say that AI or the tech sector is going away. its more of a changing allocation of money out of this sector due to their valuations getting ahead of their economics.
Otherwise when the market goes bankrupt you'll be left with nothing and you won't have gotten compensated for the risk of holding the perpetual future or tokenized share.
You've got it reversed, the debt BDC's and PC firms write is usually floating rate based off SOFR. That' s why they do so well in rising rate environments.
Now they often borrow at fixed rates by issuing bonds or preferred shares that pay a fixed rate so falling rates has to opposite effect on them.
The private equity and private credit crowd is one of these groups that are currently running into this issue.
There is no way a growing company($15M to $500M in yearly sales is the sweet spot for these private credit companies) can compete with Google on debt terms so they have to raise their rates to compete suddenly, not because of all rates rising but strictly because we've just seen a huge debt issuance from some very solid credit companies.
We haven't seen a shock like this in 20+ years I've followed the credit market where a small group of companies issue so much high quality debt in such a short period of time, note there is also a lot of less high quality debt issued in this same time:)
So much has been issued that credit funds have run out of appetite to acquire Lowe middle market debt at their current spreads. This is just the way markets work so no one is crying in the casino but it is a big shock to the credit markets.
heck there was concern that the US government may have trouble issuing 5-10Y debt at rates they are used to because of the amount of GOOG, META,etc debt that is available at better terms.
Its a wrinkle to the markets that no one really predicted as a knock on effect of AI's growth.
This is all the back drop for BDC(Business Development Companies) and other private credit issuers who normally loan money for 5-7 year terms.
Those cheap 2021 loans to these small private companies are now coming due into this market with the additional head wind that the largest single sector that issued debt was venture backed software companies, who now face the head winds of the macro factors described above and the additional factor of AI commoditizing alot of hte software that these companies are building.
Private credit and equity are going to have a rough couple of years.
Things to watch out for are lack of IPO's and exist from venture/PE backed companies and a proliferation of continuation funds that kick the can down the road.
On the plus side, its a great time to be a credit trader, but not necessarily a credit issuer:)
It seems like 50% of commercials are for gambling. If this goes away then the networks TV revenue will almost certainly go down and that has the potential to make the NHL TV rights less valuable to the networks.
The NHL wouldn't be alone here but of hte big 4 north American sports it the most exposed here.
- Elon's got SPCX today and TSLA tomorrow, can't remember that ever happening before:)
- the biggest driver of Elons net worth and wealth
- he could become a trillionaire if this goes well
- politicians pointing out the conflict of interest “SpaceX got almost $6 BILLION in taxpayer-funded defense contracts last fiscal year,” Van Hollen wrote. “Meanwhile, SpaceX CEO, Elon Musk, has spent over $360 MILLION in our elections this cycle. This should be illegal — but it isn’t. I’ll be introducing a bill to close the loophole that allows it.”
- SPCX refers to AI as AI and SI in different places so the SI term hasn't taken off yet:)
- will they address a TSLA SPCX merger
- earnings call livestreamed on X
- company is roughly flat since its IPO, this seems like it will be the new win for companies that go public with such large valuations, very hard to grow from a $2T market cap.
- if SPCX is worth $2T, it will be very hard for Anthropic and OpenAI to claim they are worth as much with worse prospects, especailly if the rumours of an $80B loss for Anthropic is correct
- Elon says they will have between $500B adn $1T of reocurring revenu by next year, press X to doubt, but its Elon so...
Starlink:
- radio frequency spectrum aquisition shoudl close 27Q2
- subscriber growth was less than expected, but offset by customers paying more
- now at 13.5M subscribers
- will they address the headlines that now claim Elon was personally responsible for the Ukraine Starlink shutdown(wall street journal reporting so likely correct)
- expect to have 100,000 starlink satalites in space by 2029
- looking to do a midspace refuel in H1 next year
- satellite network is contracted for 12,000 planes
Cursor & AI:
- contributed $608M in revenue, for the current AI market boom this is surprisingly low number, like really low, like cursor employees should be concerned about their jobs
- operating profit of $431M on the quarter, pretty darn good
- still up from $1.2B last quarter
- now larger than space in terms of revenue
- hve 1.7GW of compute now, but Elon says he's spending 4-5 days a week in Memphis working to bring on 3GW by the end of the year and 14GW by the end of next year
- named dropped Nvidia Vera Rubin as the main chip they'll be using
- Elon says he expects Grok Bot to be the biggest use of computer/AI from grok users
Finacials
- expected $92B in cash, but only have $51B huge discrenency here, *offset by $38B in securities, so still off but not too far off
- quarterly profit of $0.35/share
- 3Q Net Income $4.40B, Est. $1.88B
- 3Q Rev. $14.58B, Est. $12.87B
- 3Q Adj. Ebitda $8.81B, Est. $6.59B
- 3Q Capex $19.59B, Est. $19.6B
- Space capex is $1.6B, who would have thought that the space program is really cheap to run vs a software business:)
- $4.3B in NASA contracts
- Numbers are good but expectations were sky high so stock could easily fall at the open
- net income got a boost from $1B of other income and $400M of tax benefits, so operating income was $2.8B(vs $2.2B expected)
Starship:
- expenses (R&D and Launches) were up $367M YOY, shows launches are up as is development
- Elon saying they'll fly weekly starting Q2 next year!!!!!, though last earnings he said it woudl be daily by the same period so maybe bet on a launch a month to keep this on Elon time
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But that has nothing to do with the scare tactic headline that says banks are trying tot offload debt. As I said this is exactly how banks work and how they treat all debt they underwrite.
Not sure its just related to centralization, probably more so that information can flow more freely now, but I fully agree.
Sure that could be true, but that has nothing to do with the public debt we're talking about.
Completely different markets.
That's like me saying the condo Market in Miami is hot and you rebutting that single family homes in HOA's in Phoenix are not hot right now.
Both can be true at the same time as they are completely different market that are only very tangentially relate.
I agree with JPM that now is a good time to invest in public debt.
Did you mean CDS? As your sentence doens't make sense as its written.
Well you would expect that given that the market keeps getting bigger and the money in circulation keeps getting bigger.
Inflation alone means each bubble should be bigger than the last all other things being equal.
But the debt we are talking about is not Private credit debt, its completely different animal with far different risk characteristics
They hold it to help stabilize the market for it while its being sold and then offload it once the market has been established.
Nothing out of hte ordinary here, but to be fair the original article isnt' a financial site so they would have no real idea about how this work behind the scenes.
This doesn't seem like a story at all given how robust this debt is trading.
Can you explain how its racist?
Would you use a lawyer knowing they are inclined to turn you into the police if you talk about committing a crime in the future?
The law is the law.
We should be happy about this as for once the AI companies did the right thing.
Who would be the market for this product?
Its expensive so its up market, but all of those buyers would already have phones and would be unlikely to bring another device just to have music that their phone is already exceptionally good at providing.
it's unlikely to be runners or bikers or other endurance athletes as they'll already have their phone or if they use a watch have music on their watch so they don't have to bring a phone.
Phones already do a great job of offline with downloaded music and movies so that doesn't seem like the right crowd.
Most kids get a hand me down phone with no cellular to start with from their parents so that doesn't seem like a good fit.
now i feel like I'm writing the hacker news dropbox review where i say its use case is already easy to do and the product will go nowhere;)
But seriously, who would be the target here?
That's a fair question if you aren't int he industry. Inflation would be the best example of why you can't do that.
Would you rather have a Zimbabwe bond that pays 10%(when they had 10,000% inflation a year) or a US bond that pays 5%
That's not what rates indicate. its one component, but its far from a straight line from higher rates to more risk.
You can't really compare bonds that pay in different currencies by Rate alone.
Dustin Moskovitz and the like started going and wouldn't dare behave the ordinary peasants, by sleeping in tents, participating in the community, bartering for things.
Heck Zuckerberg took a helicopter there one year.
instead they just threw money at the event so they wouldn't have to do the things that made burning man, burning man.
Like i said, its a best practice to run MCP servers, etc with their own user account and access and not with your own account.
The moment you ran your app with your own credentials you exactly granted it permission to everything you can access include ~/.ssh
How would an llm suddenly get access to your ~/.ssh folder if you didn't expressly give it access?
You are setting the bar way to high. We use LLM's for our coding and its most definitely our code and work. How would it be any different than a collogue writing code that you review and commit?