# Super Micro Falls on $7 Billion Offering to Fund AI

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 10 Jun 2026, 22 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/7f534b8c-9e91-429a-b102-ae3c00090c6d/753a07ce-2193-4703-b62e-b4650114bef6/audio.mp3?utm_source=Podcast&in_playlist=0ad812bf-fd15-4012-a18c-ae3c00090c76

Watch Paul and Scarlet LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg Intelligence hosted by Paul Sweeney and John Tucker - Woo Jin Ho, Bloomberg Intelligence Senior Hardware and Networking Analyst, discusses Super Micro Computer saying it plans $7 billion in equity and equity-linked financing transactions to fund component purchases to satisfy around $39 billion in AI server orders it has received from customers. - Caroline Hyde, BTech Co Anchor, discusses SpaceX’s IPO. Gulf wealth funds have put in orders for shares worth several billions of dollars in SpaceX’s initial public offering. Saudi Arabia’s Public Investment Fund and Kuwait Investment Authority have each placed orders for shares worth $1 billion to $5 billion. -Steve Man, Bloomberg Intelligence Global Autos and Industrials Research Analyst, discusses his research on Tesla and SpaceX. According to Bloomberg Intelligence: A Tesla-SpaceX merger looks far from assured in the medium term, widespread market speculation aside, as benefits from Terafab chip work, the Macrohard software development project and any Tesla role in space exploration are years away. -Diana Rosero Pena, Bloomberg Intelligence Consumer Staples Analyst, discusses Chewy's earnings. Chewy shares drop after management gave additional guidance metrics on the conference call including cautious comments on customer additions, and profit measures. The company stated that it is seeing a “modest level of incremental pressure on premiumization and product attach rates” from its current customer base. See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
[0:10] Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am
[0:14] Speaker 1: Eastern on Apple Coarclay, and Android Auto with the Bloomberg
[0:17] Speaker 1: Business app. Listen on demand wherever you get your podcasts,
[0:21] Speaker 1: or watch us live on YouTube.
[0:24] Speaker 2: One of the stories that we've been talk about today
[0:25] Speaker 2: is super Microcomputer. There's a company started the day with
[0:28] Speaker 2: like twenty five billion a market cap and they announced
[0:30] Speaker 2: a seven billion dollar equity raise.
[0:32] Speaker 3: Kids. I don't know how you do the math, but
[0:34] Speaker 3: that's diluted.
[0:35] Speaker 2: I don't know by how much, but in the stocks
[0:36] Speaker 2: down seventeen eighteen percent today.
[0:40] Speaker 3: You just don't see that very often, would you know?
[0:42] Speaker 2: Joins us here senior technology channels for Bloomberg Intelligence, which
[0:45] Speaker 2: I've been doing.
[0:46] Speaker 3: This Wall Street thing a long time.
[0:47] Speaker 2: That's a monster follow on equity offering given the market
[0:52] Speaker 2: cap size.
[0:52] Speaker 3: What's the math tell you?
[0:55] Speaker 4: The math quite frankly tells me at face value. What
[0:58] Speaker 4: we wrote was twenty percent plus diluted to shareholders. I
[1:04] Speaker 4: think there's another sale sider who said it's up to
[1:07] Speaker 4: twenty seven percent.
[1:09] Speaker 5: Deluded to shareholders.
[1:10] Speaker 4: So yeah, investors aren't happy, about it. But but quite frankly,
[1:14] Speaker 4: like Christina said earlier on a recap, short term pain
[1:19] Speaker 4: mainly to long term gain.
[1:20] Speaker 6: Okay, they're going to use the money for what? And
[1:23] Speaker 6: when does it pay off? Two big questions?
[1:25] Speaker 4: Yeah, yeah, hey, hey Charlie so so hey John, sorry
[1:30] Speaker 4: about that mehe so really really straightforward. Look, seven billion
[1:37] Speaker 4: dollars in equity financing, and you you try to back
[1:41] Speaker 4: that with the thirty nine billion dollars in orders. Most
[1:44] Speaker 4: of those orders are coming in fiscal twenty twenty seven,
[1:47] Speaker 4: which is starts in July. And you know, the way
[1:51] Speaker 4: I'm factoring it in is like thirty let's just say
[1:54] Speaker 4: thirty billion of that comes in the second half of
[1:57] Speaker 4: this year, specifically orders for what AAI servers? Okay, right,
[2:03] Speaker 4: and these deals are really really expensive. So if you
[2:06] Speaker 4: think about it from from this standpoint, a typical AI
[2:10] Speaker 4: server deal can range anywhere between a billion to five
[2:13] Speaker 4: billion dollar each billion dollars each. So we're talking about
[2:17] Speaker 4: a handful of deals that they're trying to fulfill. And look,
[2:20] Speaker 4: they only had a billion dollars in gross cash, and
[2:24] Speaker 4: they really needed the cash to buy the GPUs to
[2:28] Speaker 4: fill those orders.
[2:30] Speaker 2: So I go to the FA screen for super microcomputer,
[2:33] Speaker 2: and I'm looking at kind of their growth rates and
[2:35] Speaker 2: profit margins. I'm surprised to see a profit margin on
[2:39] Speaker 2: the net income line of kind of like.
[2:41] Speaker 3: Four or five percent.
[2:42] Speaker 2: That's not the usually seeing a lot fatter margins for
[2:45] Speaker 2: tech companies. Talk to us about just kind of the
[2:47] Speaker 2: business here.
[2:49] Speaker 4: Yeah, look, Hardward margins are pretty awful, and and AI
[2:56] Speaker 4: server margins are probably one of the worst in the industry,
[3:00] Speaker 4: primarily because you're selling in a large scale and you
[3:04] Speaker 4: have very little control in terms of the GPU pricing.
[3:07] Speaker 4: I will tell you, and I'm gonna get a little
[3:10] Speaker 4: nerdy here, is that there is part of the sales
[3:16] Speaker 4: include something that they sell called.
[3:19] Speaker 5: Uh uh what is it?
[3:22] Speaker 4: Dc bb S, right, And that's a margin. That's a
[3:27] Speaker 4: margin creative business. Now, Consensus has gross margin around eight
[3:30] Speaker 4: point two eight point three percent for the next next year.
[3:34] Speaker 4: If they can get a half of you know, fifty
[3:37] Speaker 4: BIPs on gross margin improvement, we're talking about a dollar
[3:41] Speaker 4: dollar EPs secretion if they were able to get sixty
[3:44] Speaker 4: billion dollarsand sales instet of fifty billion dollars in sales
[3:47] Speaker 4: for next year. So look, this is why I think
[3:50] Speaker 4: This could be ultimately positive over the long term, even
[3:54] Speaker 4: though shareholders are hurting right now.
[3:57] Speaker 6: Who's their big competition, like every building?
[4:01] Speaker 4: No, no, no, Look, we've been joking around on this
[4:04] Speaker 4: program quite a few times. You got to get a Dell, right,
[4:08] Speaker 4: and Michael Dell has just been killing it on the
[4:10] Speaker 4: AI server side. Sixty billion dollars in AI servers on
[4:14] Speaker 4: tractive for this year, and I think consensus has about
[4:16] Speaker 4: seventy five billion dollars in next year. And that's one
[4:18] Speaker 4: of the reasons why that super Ma. I'm kind of
[4:21] Speaker 4: positive on the demand side for super Micro because they're
[4:24] Speaker 4: only one of two of these providers in the US
[4:26] Speaker 4: that can provide that level of scale for AI servers.
[4:30] Speaker 7: Stay with us. More from Bloomberg Intelligence coming up after this.
[4:37] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[4:40] Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
[4:44] Speaker 1: with the Bloomberg Business app. Listen on demand wherever you
[4:47] Speaker 1: get your podcasts, or watch us live on YouTube.
[4:51] Speaker 3: Got a big IPO pricing tomorrow.
[4:53] Speaker 2: We Do, We Do, We Do, And it's spaceships, it's Mars,
[4:58] Speaker 2: it's AI, and it's el On.
[5:00] Speaker 3: So it's about everything. It's got something for somebody everybody else.
[5:03] Speaker 2: It's got a lot of promises, yes, and we need
[5:06] Speaker 2: some clear reporting on that.
[5:07] Speaker 3: So we turned to Caroline Hide, she is a betech
[5:10] Speaker 3: co anchor.
[5:11] Speaker 6: Here.
[5:12] Speaker 3: What are we hearing about the road show, Caroline? I mean,
[5:16] Speaker 3: there's one.
[5:16] Speaker 8: An extraordinary road show.
[5:17] Speaker 3: What an extraordinary I saw the.
[5:19] Speaker 9: Jammy Diamonds hosting the bro Love that went on.
[5:22] Speaker 7: That was very cool.
[5:23] Speaker 3: I saw the video look pretty cool. I mean, there's
[5:26] Speaker 3: seeming like something for everyone out there. But boy, you
[5:29] Speaker 3: really have to just hit your wagon too, Eli.
[5:32] Speaker 6: I goett to just say for that road show. The
[5:35] Speaker 6: next day, I was reporting on it for the morning
[5:37] Speaker 6: and I was trying to pull a cut of Elon. Yeah.
[5:39] Speaker 6: I couldn't use anything. Now, I don't know what the
[5:41] Speaker 6: hell he was talking about.
[5:43] Speaker 9: You had to be there as a JP Morgan client
[5:46] Speaker 9: listening inherently, and then Morgan Stanley's been doing it too. Look,
[5:49] Speaker 9: all of this is as the hype around this IPO
[5:53] Speaker 9: is extraordinary. It's done everything slightly differently. Like we know
[5:56] Speaker 9: the price that they're raiming for even though they're so
[5:58] Speaker 9: called technical pricing. Tomorrow it's gonna be one hundred and
[6:01] Speaker 9: thirty five dollars. We understand, of course it's we be
[6:02] Speaker 9: raising up to one point eight trillion dollars of market
[6:05] Speaker 9: valuation and so many five billion dollars of new equity.
[6:08] Speaker 9: But this is going to be thirty percent outlocated to
[6:11] Speaker 9: the retail community.
[6:12] Speaker 8: They're still going to get all tomorrow.
[6:16] Speaker 9: What's interesting is, of course, depending who you get allocation
[6:18] Speaker 9: through is how quickly you're allowed to flip it. Now
[6:20] Speaker 9: a lot of these retail offerings, if you go and
[6:23] Speaker 9: buy it through fidelity, they're going to punish you if
[6:24] Speaker 9: you try and sell her on the day, so you're
[6:26] Speaker 9: going to be like contained for fifteen days. But there's
[6:29] Speaker 9: a lot of volatility that's going to go into this,
[6:30] Speaker 9: and many think that the price is going to be
[6:32] Speaker 9: pushed higher by the amount of passive funds they're going
[6:34] Speaker 9: to rush in to buy SpaceX because there's been this
[6:37] Speaker 9: fast tracking of entry into a lot of the main
[6:39] Speaker 9: indices like then as that for example of SpaceX shares,
[6:43] Speaker 9: and so suddenly if you're a passive fund and you
[6:44] Speaker 9: need allocation, there's going to be the sort of fuel
[6:47] Speaker 9: and frenzy behind it.
[6:48] Speaker 8: But all of this is to say that demand is
[6:50] Speaker 8: clear two hundred and.
[6:52] Speaker 9: Fifty billion dollars worth is what's been reported by Reuters,
[6:54] Speaker 9: and we understand from our sources that that is similar
[6:57] Speaker 9: in terms of level of demand.
[6:59] Speaker 7: Some big fund.
[7:00] Speaker 9: Managers are coming in asking for up to ten billion
[7:03] Speaker 9: dollars worth of SpaceX shares because of course they've got
[7:05] Speaker 9: so many funds they've got to distribute it within. And
[7:08] Speaker 9: then you're looking at which particular areas in geographically the
[7:13] Speaker 9: Middle East, in investors who have been very long the
[7:15] Speaker 9: Ai trade very much puning into Xai, Open Ai Andthropic. Well,
[7:20] Speaker 9: we know the Kuwaiti Investment Fund has been asking for
[7:22] Speaker 9: about five billion dollars worth. We know that there's been
[7:24] Speaker 9: big demand coming from the other players as well. So
[7:28] Speaker 9: clearly the hype cycles there. I mean, we just got
[7:31] Speaker 9: two more days to white knuckle this.
[7:33] Speaker 6: Yeah, like Prince aloied Bin Tallala, he was one of
[7:36] Speaker 6: the early backers of Elon Musk. He's going to get
[7:38] Speaker 6: a big pay day, it looks like, right, And it's.
[7:41] Speaker 9: Going to be interesting as to whether people hold on
[7:42] Speaker 9: to their allocation, whether it's paper money, whether they want
[7:45] Speaker 9: to sell more broadly in the future. And look, this
[7:47] Speaker 9: is why there was that great reporting yesterday, wasn't there
[7:50] Speaker 9: showing the truest data that if you look back at
[7:53] Speaker 9: the thirty biggest tech IPOs in the last fifteen years,
[7:55] Speaker 9: generally they all a majority of them will sink in
[7:58] Speaker 9: their first twelve months of trade. That's because lockups expire
[8:02] Speaker 9: CEOs and people want to be able to make some profits.
[8:05] Speaker 9: Liquidity wanted from some of the people that work at
[8:08] Speaker 9: these companies, so there is some sort of pressure. But
[8:10] Speaker 9: more broadly, this looks as though a lot of people
[8:13] Speaker 9: are going to be not only holding it in their
[8:14] Speaker 9: private funds, but maybe you wanted to even buy it
[8:17] Speaker 9: in their public funds.
[8:17] Speaker 8: Too, maybe want even more skin in the game.
[8:19] Speaker 3: All right, I'm going to put on my analyst hat
[8:21] Speaker 3: here valuation.
[8:23] Speaker 2: Bloomberg Television had a great graphic they ran yesterday just
[8:26] Speaker 2: looking at IPOs, big tech ipeos multiples of revenue and
[8:31] Speaker 2: fifteen here twenty times there. Crazy stuff we never talked
[8:34] Speaker 2: about back in the day. This one SpaceX ninety five
[8:39] Speaker 2: times revenue.
[8:40] Speaker 6: It's Tesla right, Yeah, well I could possibly go wrong.
[8:44] Speaker 2: Is there any pushback we've heard from the marketplace from
[8:47] Speaker 2: some of these meetings on vaguation?
[8:48] Speaker 3: I haven't really seen any.
[8:50] Speaker 9: I think it's all about whether you believe in a
[8:52] Speaker 9: the cultivly La masque, whether you believe in the idea
[8:54] Speaker 9: of getting orbital data centers. They've started to at least
[8:58] Speaker 9: show demonstrations pictures if you like, of how that might work,
[9:03] Speaker 9: So that's been a key focus. But really, in the
[9:06] Speaker 9: same way that Tesla does not trade on fundamentals of
[9:09] Speaker 9: electric vehicles, nor does SpaceX. It's bigger than the sum
[9:12] Speaker 9: of its parts when you're putting all the business together,
[9:14] Speaker 9: because it is the idea of Mars, it is the
[9:15] Speaker 9: idea of the Moon. It is the idea though that
[9:18] Speaker 9: this currently is almost a monopoly.
[9:21] Speaker 8: Look who else.
[9:21] Speaker 9: Has been making these reusable rockets, the cadence and the
[9:24] Speaker 9: reliability that we've seen with a Falcon nine, now with
[9:27] Speaker 9: Starship managing to demonstrate such feats of science.
[9:31] Speaker 8: I think for many it's just.
[9:32] Speaker 9: Like, well, I've been burned if I if I've been
[9:35] Speaker 9: against him in the past.
[9:36] Speaker 6: But there has been some pushback, particularly New York and
[9:40] Speaker 6: California pensions controllers, and the concern there by the controllers
[9:45] Speaker 6: seems to be Elon has too much.
[9:47] Speaker 9: Control governance, and in fact, funnily enough, Shot Carr who's
[9:51] Speaker 9: weighed into this as well is Elizabeth Warren Is sending
[9:55] Speaker 9: a last minute ditch attempt to the SEC Paul Atkins, saying, look,
[9:58] Speaker 9: you've got to stop this IPO process because I'm worried
[10:01] Speaker 9: about governance and I'm worried about that the safety of
[10:04] Speaker 9: retail investors as you are seeing the fast tracking of
[10:06] Speaker 9: shares going into these some of these big indices. Look,
[10:09] Speaker 9: whether you like it or not, you're probably going to
[10:10] Speaker 9: have exposure to SpaceX because it's going to be in
[10:12] Speaker 9: your four oh one k It's going to be in
[10:13] Speaker 9: some of these as you say, the funds that are
[10:15] Speaker 9: managed by the New York City, by New York State,
[10:18] Speaker 9: they're pension funds, right, and they're saying, look, we're not
[10:21] Speaker 9: so averse to this that we're going to rule out
[10:23] Speaker 9: them in our in our funds, but we are going
[10:25] Speaker 9: to keep trying to chew Elon's ear, trying to get
[10:28] Speaker 9: letters to him, which he thus far hasn't responded to.
[10:31] Speaker 8: Saying we're worried about this.
[10:32] Speaker 9: We worried about your eighty percent voting rights, We're worried
[10:34] Speaker 9: about the overall governance structure of the business.
[10:40] Speaker 8: Like for many investors, they want a founder mindset.
[10:43] Speaker 9: They want the ability of Elon must to be able
[10:45] Speaker 9: to drive forward with the big decisions.
[10:47] Speaker 8: And for many long term betters on him in the
[10:49] Speaker 8: private markets. They kind of love that.
[10:51] Speaker 9: In fact, that's why they think eventually SpaceX and Tesla
[10:54] Speaker 9: should merge.
[10:56] Speaker 7: Stay with us. More from Umoric Intelligence coming up after this.
[11:02] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[11:06] Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
[11:09] Speaker 1: with the Bloomberg Business App. Listen on demand wherever you
[11:13] Speaker 1: get your podcasts, or watch us live on YouTube.
[11:16] Speaker 2: We got the SpaceX IPO. That is the big news.
[11:19] Speaker 2: But kind of like a corollary to that is what
[11:22] Speaker 2: is Elon musking to do with the rest of his
[11:23] Speaker 2: stuff that he owns and most notably Tesla and all
[11:26] Speaker 2: the stuff that's in Tesla.
[11:27] Speaker 3: What does he do with that? I don't know.
[11:29] Speaker 2: A lot of folks, I think are suspecting that at
[11:31] Speaker 2: some point, if nothing else, he'll just kind of roll
[11:33] Speaker 2: it up into one big company there under SpaceX.
[11:36] Speaker 3: Steve Man, he covers Tesla.
[11:37] Speaker 2: He's global Autos and Industrials analysts for Bloomberg Intelligence. Hey, Steve,
[11:41] Speaker 2: when you talk to Tesla investors. Is there an expectation
[11:46] Speaker 2: that at some point Elon, Musk and SpaceX will buy
[11:49] Speaker 2: in Tesla.
[11:52] Speaker 10: It really depends on the timeline you're talking about. I mean,
[11:57] Speaker 10: you can speculate there's a lot of synergies probably many
[12:01] Speaker 10: years away from now that for example, uh, you know,
[12:05] Speaker 10: the Tesla vehicles could be could be riding on or
[12:09] Speaker 10: driving on uh you know the surface of the Mars,
[12:12] Speaker 10: or the boring company is you know, drilling tunnels in
[12:16] Speaker 10: Mars for colonization. But you know, that's that's very very
[12:21] Speaker 10: far away. You know, we published a piece of research today,
[12:24] Speaker 10: you know, and we looked at it and really the
[12:26] Speaker 10: only thing that you know, Tesla is really contributing in
[12:30] Speaker 10: a consistent, consistent, meaningful way is actually the battery source
[12:34] Speaker 10: storage business. And even that, it's it's a small chunk
[12:38] Speaker 10: of you know, Tesla's profits. So we don't really see uh,
[12:42] Speaker 10: you know, imminent or near term synergies for a merger.
[12:48] Speaker 6: Okay, So if there were to be a merger, roll
[12:51] Speaker 6: up or whatever you want to call it, is that
[12:53] Speaker 6: an admission that one company is not really performing that
[12:57] Speaker 6: it would need the other to help prop it up.
[13:00] Speaker 10: I wouldn't necessarily say that. I think Elon really has
[13:05] Speaker 10: a long term view on what he wants to do,
[13:08] Speaker 10: so specifically in space exploration, and that's where you know,
[13:13] Speaker 10: Tesla could really contribute. Like I was saying earlier, you know,
[13:17] Speaker 10: you can have you know, cars, automated cars driving on
[13:22] Speaker 10: you know, another planet, or you can have uh, you know,
[13:26] Speaker 10: uh compute or satellites and communications through their uh you
[13:32] Speaker 10: know satellite system that communicates between you know, inner innercontent,
[13:37] Speaker 10: interplanetary communication. I mean, you can see all the possibilities
[13:43] Speaker 10: in both energy and and vehicle, but you know, I
[13:46] Speaker 10: think you know a lot of those a lot of things,
[13:49] Speaker 10: those things need to be proven out first, and I
[13:51] Speaker 10: think that's what they're trying to do, uh in in
[13:55] Speaker 10: on Earth first. And secondly, Tesla really the focus is
[13:59] Speaker 10: really on autonomy, the robotaxi, and I don't think you know,
[14:04] Speaker 10: combining the two company is a good time at the moment,
[14:08] Speaker 10: it's it serves as a distraction.
[14:09] Speaker 5: Really.
[14:10] Speaker 2: Bloomberg News has got some reporting out on the autonomous vehicle.
[14:14] Speaker 2: Tesla has just not fifty nine vehicles in its robotaxi
[14:17] Speaker 2: fleet as of Tuesday, limited to three Texas cities. After
[14:21] Speaker 2: Elon Musky Company would have an autonomous right haling in
[14:24] Speaker 2: about half the population of the US at the end
[14:27] Speaker 2: of twenty twenty five. Talk to us about that part
[14:28] Speaker 2: of the business and where we are and maybe where
[14:30] Speaker 2: the company's falling short.
[14:32] Speaker 10: Yeah, I think, I think, I think for most some investors,
[14:37] Speaker 10: it is falling behind. They were hoping the rollot's a
[14:40] Speaker 10: little bit faster, but they you know, the company did
[14:43] Speaker 10: tell us in the first quarter earnings that you know,
[14:46] Speaker 10: a bulk of this rollout is in.
[14:47] Speaker 5: The second half.
[14:49] Speaker 10: I wouldn't be surprised that, you know, they're you know,
[14:52] Speaker 10: they're waiting for that. You know, the steering wheel lists
[14:55] Speaker 10: the break pedalists cybercap to be ready before they you know, uh,
[15:02] Speaker 10: you know ramp up that you know, up ramp up
[15:05] Speaker 10: that service in more cities around around the country.
[15:09] Speaker 5: So you know, let's let's wait and see.
[15:12] Speaker 10: Uh maybe the cyber cap you know, build out and
[15:16] Speaker 10: and uh and and roll out.
[15:18] Speaker 5: Will be will be at the turning point.
[15:20] Speaker 6: All right, did elon over I'm trying to get you
[15:23] Speaker 6: in trouble here, did the over promise?
[15:26] Speaker 5: Well, you know how he is right. I think he
[15:29] Speaker 5: has grand plans.
[15:31] Speaker 10: He has grand plans It's not a bad thing, you know,
[15:33] Speaker 10: stretch targets, you want to call it that, but you know,
[15:37] Speaker 10: like the reality is, you know, these technologies do need time, uh,
[15:42] Speaker 10: to to to to play out and to do you know,
[15:46] Speaker 10: to be invented, to be discovered, to be developed, and
[15:50] Speaker 10: to make it commercially viable.
[15:52] Speaker 5: So you know, these things do take time.
[15:54] Speaker 2: Steve, one of the concerns from Tesla investors when Elon
[15:57] Speaker 2: Musk was in the US government running the Doge campaign
[16:02] Speaker 2: was that he wasn't paying enough attention to Tesla. Is
[16:05] Speaker 2: there a concern now with SpaceX that once again his
[16:07] Speaker 2: attention will be diverted away from Tesla.
[16:11] Speaker 5: It's it's it's very interesting.
[16:13] Speaker 10: You know, he was very visible within the government early
[16:17] Speaker 10: in the year, uh, kind of quiet down, but now
[16:20] Speaker 10: we're seeing him, you know, on Air Force one from
[16:24] Speaker 10: time to time. I'm sure he's he's got one foot
[16:29] Speaker 10: in and and then he needs to write a lot
[16:32] Speaker 10: of these businesses require regulatory approvals, and you know, I
[16:36] Speaker 10: wouldn't be surprised that you know, he's working on on
[16:40] Speaker 10: all those fronts to you know, make sure his business
[16:44] Speaker 10: you know, runs well and and and gains you know,
[16:48] Speaker 10: gains business new.
[16:49] Speaker 6: Businesses is is Tesla becoming more of this one thing
[16:53] Speaker 6: that does excite me, Paul, more of a battery company
[16:56] Speaker 6: where I can you know, load up on batteries at
[16:59] Speaker 6: my house and draw from the grid at night when
[17:02] Speaker 6: electricity prices are much lower, you know that sort of thing.
[17:05] Speaker 10: Yeah, that's a that's a great question, because, uh, battery
[17:11] Speaker 10: business is becoming, uh you know, a bigger part of
[17:16] Speaker 10: the Tesla. You know, it's thirteen percent revenue, but if
[17:19] Speaker 10: you look at the you know, the gross profit line,
[17:21] Speaker 10: you're you're looking at a quarter to a third of contribution,
[17:26] Speaker 10: and battery sales are becoming more important, especially during.
[17:30] Speaker 5: This in this AI you know build out phase.
[17:34] Speaker 10: A lot of these data center actually requires you know,
[17:38] Speaker 10: their own power systems to to to to run the chips,
[17:43] Speaker 10: and part of that is really having battery backup to
[17:46] Speaker 10: make sure these AI data.
[17:48] Speaker 5: Center is running twenty four to seven.
[17:50] Speaker 10: So you know, you saw a Ford Motor Company getting
[17:53] Speaker 10: into that business, you know, and and Ford's been doing
[17:56] Speaker 10: the Yeah.
[17:56] Speaker 6: I think GM is doing the same thing too.
[17:59] Speaker 2: Yeah.
[17:59] Speaker 10: GM is is also doing the same thing, you know,
[18:01] Speaker 10: repurpose those battery plans that we use for evs into
[18:05] Speaker 10: battery storage. I think there's a demand for that.
[18:08] Speaker 7: Stay with us. More from Bloomberg Intelligence coming up after this.
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[18:30] Speaker 2: All right, let's go to some some earnings here at Chewy.
[18:33] Speaker 2: For those dog lovers out there and pet owners out there,
[18:36] Speaker 2: Shares drop as much as six and a half percent
[18:38] Speaker 2: after management gave additional guidance metrics on the conference call,
[18:41] Speaker 2: including cautious comments on customer editions.
[18:46] Speaker 3: It's all about the poochat there.
[18:47] Speaker 2: Diana reset Opina, consumer Staples analysts for Bloomberg Intelligence strengths
[18:51] Speaker 2: here house business at Chewy because we got a lot
[18:54] Speaker 2: of viewers and listeners that are big fans and consumers
[18:57] Speaker 2: of Chewy.
[18:58] Speaker 3: Yeah.
[18:58] Speaker 11: Well, I mean they were cautious even though results were
[19:03] Speaker 11: were good. Uh, they lower revenue guidance and that was
[19:07] Speaker 11: pretty much because they don't necessarily expect a lot of
[19:11] Speaker 11: discretionary spending going forward. They're you know, they're seeing that
[19:16] Speaker 11: consumers are being strategic. It's something that we have seen
[19:19] Speaker 11: across across our consumer staples worlds, so we're not that surprised.
[19:24] Speaker 6: But still I don't know if given a choice between
[19:27] Speaker 6: cutting back the pets and cutting back on the kids,
[19:32] Speaker 6: I got to.
[19:33] Speaker 7: Be honest, sorry, I agree.
[19:35] Speaker 11: I think it's more onlike the discretionary spending of it.
[19:39] Speaker 6: They may not food, but like the big fluffy whatever.
[19:43] Speaker 11: Screech, yeah, toys and the like. Obviously there's some stabilization
[19:47] Speaker 11: on the pet population, so that is also a headwind
[19:51] Speaker 11: to discretionary so you're not going to likelation. There's there's
[19:55] Speaker 11: a fewer well, it's it's been, it's stabilized. In the
[20:00] Speaker 11: past couple of years. There's been some surrendering more than
[20:03] Speaker 11: adoptions because people that adopted pets during the pandemic they
[20:08] Speaker 11: had to get rid of them, so that obviously diminished
[20:13] Speaker 11: the population in the United States. So now it seems
[20:17] Speaker 11: to stabilize, which is not necessarily a good omen for
[20:21] Speaker 11: discretionary spending in terms of creates and new like leashes
[20:26] Speaker 11: and stuff like that.
[20:28] Speaker 3: Is Chewy a global company or the US only US only.
[20:32] Speaker 11: They're having some operations in Canada and the like. They're
[20:35] Speaker 11: exploring that, but it's mostly US.
[20:37] Speaker 2: So you're modeling out this company in the revenue, do
[20:42] Speaker 2: you do it by dog like is it dog population
[20:44] Speaker 2: increasing or is it just a function of like GDP
[20:47] Speaker 2: kind of growthro I mean, because it seems like we
[20:49] Speaker 2: did as you mentioned, people are probably peaked in their
[20:52] Speaker 2: dog adoption and so on during the pandemic and then
[20:53] Speaker 2: it's been winding down since.
[20:55] Speaker 7: Yeah. So there's two metrics that are important for Chewing.
[20:59] Speaker 11: It's the active consumer growth, so people going into the
[21:03] Speaker 11: platform and being acquired in the platform, like you know,
[21:08] Speaker 11: in you know, becoming.
[21:10] Speaker 3: Customers of Chewy.
[21:11] Speaker 7: And also how much they're spending, and.
[21:14] Speaker 11: Right now they're getting closer to usually the typical consumer
[21:18] Speaker 11: is spending about.
[21:19] Speaker 7: Six hundred dollars a year on Chewy.
[21:23] Speaker 11: That has increased and that is the biggest metric that
[21:25] Speaker 11: they say that they're probably going to see softness in
[21:28] Speaker 11: twenty twenty six.
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