The Room Is Smaller and Busier Than It Looks

Me again. I appreciate your appreciation with my SpaceX optimism. I'll keep this one short, but as exciting.

Two weeks ago I wondered aloud how much future the dollar system could absorb at one event, only to find that we are not watching Jaws. Instead, it's more like a Squid Game, all three seasons of it. From the announcement with Cursor, to becoming the landlord, to the SpaceX magic today. If one thing I have to say, it would be this: today's launch is magnificent. Totally enjoyed it.

Well, last week I went through the S-1 and discovered, among other things, that the landlord had been setting his own rent. Today several things happened simultaneously that seem, on reflection, worth noting together. So, as usual...

Disclaimer: All analysis here is speculation and speculation only. Written for fun and intellectual curiosity. Not financial advice. Not an accusation of anyone, any organization, or anything. Just someone connecting dots and asking questions when there is nothing better to do.

I said I'll keep this short. Don't take it as it is not important, or the last 48 hours was smooth and quiet.

SpaceX enters its roadshow in the very fortunate position of being the first. The queue is becoming rather crowded with companies that have, by conventional measures, better financials and much simpler structures. Yes, you hear me all right. I am saying OpenAI's structure is simpler. Anthropic's quarterly revenue is already twice SpaceX's annual figure. OpenAI's numbers are larger still, and neither of them needs to buy rocket fuel, or position the rocket company is actually an AI company.

If you are extremely cash abundant, skip this portion. But if you are like me, who struggles to balance living cost and investment dream, this is for you: will you spend all your hard-earned coins on the first opportunity? Do you want to save something for OpenAI or Anthropic, or just purely saving because gas might go up still.

This matters less for the IPO itself than what could happen later. A certain kind of investor that are perfectly rational, might decide to buy SpaceX on the float, enjoy whatever narrative momentum follows, and rotate quietly into OpenAI when that window opens. Individually, a sensible enough trade. In sufficient quantity, it is an exit strategy dressed up as enthusiasm.

Of course one cannot assume retail will hold the door forever, right?

And OpenAI has been very lucky recently. The jury in the Musk v. OpenAI case deliberated for ninety minutes before finding for the defence. The judge remarked she had been prepared to dismiss on the spot. One notes this without further comment.

Which returns us to the question of who, precisely, could be buying the other ninety percent.

This morning China's securities regulator moved against Futu, Tiger Brokers, and Longbridge. The language indicates this is likely a mid-to-long term policy decision. The thing would impact the IPO is that new buy orders are frozen with immediate effect. According to 36kr, Futu and Tiger alone custody something in the order of three trillion dollars in their client assets. I couldn't find numbers for Longbridge, and the impact might not stop at these three firms. The million or so mainland investors affected represent less than one percent of China's retail shareholder base. But this one percent represent people who had already decided, on their own, that American equities were worth the paperwork. One does not replace that kind of conviction with a different pool of capital. The Chinese investors that could spend on SpaceX is now un-invited to the party.

The Gulf sovereign funds present a different texture of problem. They have not stopped investing. Mubadala, PIF and QIA deployed nearly twenty-five billion dollars in the first quarter despite the conflict. But there is a perhaps obvious distinction between capital that is active and capital that is available for a decade-long commitment. Especially to an American rocket company whose disclosure obligations have just been quietly relaxed for five years, and whose Starlinks could be used in battle field. The funds are not absent. They are, one might say, otherwise engaged.

Nor can we expect the world peace shall stay uninterrupted. The President of the United States cancelled his Memorial Day golf plans this afternoon and will remain in Washington. He cited government circumstances. He did not elaborate, but we all know it must be something urgent, something important, against the evil will of bad guys around the world. Listen, golf plans are impacted.

Well, I still think IPO will prevail. Musk will almost certainly do something striking in the coming weeks, as is his custom, and the headlines will be appropriately large. I wish him well, and I mean it. Mainly because the alternative is not a calmer market. The second half of this year is OpenAI, then Anthropic, then a midterm election, then whatever the oil price decides to do next, against a geopolitical backdrop that is keeping American presidents indoors on bank holidays.

Markets, like the rest of us, occasionally need a moment to catch their breath.

Good luck up there.