The Danger With SpaceX | Eric Jackson

The dangerous thing about SpaceX right now is that it, because it's such a high-profile name, like a lot of people, you know, have opinions about it, are following it, are interested in it, and if there was a pullback in the markets, if there was a lot, you know, Nvidia had a bad quarter or something, a name like SpaceX is going to really feel that and and could potentially, you know, trade down a lot. So, and then a lot of people that were sort of the last in the boat, um, because they were got all excited about the IPO and everything, they're they're going to be the first ones out and then they sort of contribute to the selling. So, that's that's the risk.

Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Tagert. And today we're talking with somebody who it's his first appearance on this channel. Uh, although it's a bit of a throwback in time for me. Um, we're going to be talking with Eric Jackson. Um, he is the founder and CIO of a very successful hedge fund. Uh, he's also the founder of Event Horizon IQ, which is a risk intelligence platform. Um, Eric has also been uh quite an successful activist investor and that's how his paths and my original mine originally crossed, um, where he was um following Yahoo very closely and I was an employee at Yahoo at the time. Um, he also is a former PayPal VP. Eric, thanks so much for joining us today.

>> Great to be with you, Adam. Great talking again.

>> Thanks. Uh, great to see you and it's really been fun to watch your career continue to vault to new highs after um, you know, our relationship there during the Yahoo days. Um, you have been a follower of of some great companies and and and great sort of, you know, market stories, you know, companies that have uh vaulted to amazing highs, uh, or have crashed and then made great comebacks from that. Um, what I want to talk to you most about today is the SpaceX IPO. Um, it, you know, was all the rage in the headlines just a few short weeks ago. Uh, and also, I think a really interesting sign of, um, obviously new technologies and where the economy could be headed. Um, but but also, um, it it's certainly a marker of the level of speculation that's in the markets today. So anyways, it's a company that people are really still trying to figure out and you have been putting out a ton of content sort of giving your your um, you know, breakdown of the company and and your thoughts on its prospects. So I want to roll up our sleeves and get into all that today.

Before we do, if you don't mind, um, since it's your first time on the channel, I just love to give folks sort of an introduction to sort of how you see the world right now. So um, I'm going to ask you a relatively broad question. and answer it any way you like, which is what's your current assessment right now of the financial markets?

>> Well, I think it I think um I tend to be an optimist, Adam. So, I um am not the most common question I get from I guess u novice investors who start following me uh and they hear me opining about SpaceX or other stocks. Uh the most kind of the first question that I get more than any other is um oh uh the market I keep hearing the markets are at all-time highs and so I'm just going to wait for the next pullback before I get in. And I tend to be the type of investor that I I more jump in with like two feet uh into the situation. And that's burned me a lot of times on stocks and on uh and market timing and such. But uh that's you know I I tend to be more optimistic than pessimistic. And so I tend to say that to those investors and I and I tend to believe right now about the markets that uh I don't I don't see any calamity uh around the corner. Uh I was around during the dotcom era. I don't find anything in the current environment. Well, I mean there are some some uh similarities with the dotcom era, but I find the level of um uh speculation to be probably like, you know, a three out of 10 uh compared to that time where it was I think it was more like a 10 out of 10.

>> Uh there was just the you know obviously the the taxi driver type conversations that you were having back then were about what what hot stock you were jumping into next. you don't have any of that right now. Um, I think SpaceX and Elon Musk are are are sort of like a there's a they're an N of one. There's really only one type of them and we we can talk about the the the val the valuation connected to it and so forth. Um, but with I would park that like in a a special category. Um, and the and the pixie dust that sort of you know sprinkles over Elon most uh for most of the last 15 years by the way that pixie dust has been more right than it's been wrong uh tied to him. So um, but we can talk about like whether that's going to continue with SpaceX or not. Uh, so I I only find the the current valuations tied to the, you know, the big LLMs, Anthropic and, uh, Open AI to be, I'd say, like more questionable or, you know, open to, um, you know, poking holes into like the public markets and the public stocks though. Uh, Nvidia probably would be like the poster child for this. I find very reasonably uh, priced. um, not kind of not anything like what we saw with like Cisco or Microsoft or you know anything else like back in the day during the docom era where you know it was sort of like a rising tide that that

>> where there were no actual earnings.

>> Yeah. No earnings. Uh, it was like price per eyeballs if you remember and uh people like willing to look far into the future. So um, now there was like reason for people to be excited. Now when you look back and you you see how things evolved uh but obviously like there was like hyper speculation at that point in time tied to those companies at that moment and what their actual revenues were and what their actual earnings were. Uh, but like you know we've seen like uh the Amazons of that time continue to go on and be successful. We we've also saw like the biggest failures of that period and the ones that people like to point to as signs of excesses were what things like web van, um Cosmo

>> uh and and yet like that's now a daily part of our life you know like those those business models not those companies pets.com you know became Chewy you know we have Instacart we have Uber Eats and all this kind of stuff so

>> right all all these big failures are actually now highly successful sustainable companies a funny little irony. My my wife actually worked at Webban for a while.

>> Wow. That's

>> We still have the like celebratory um champagne where they IPOed.

>> I I'm on the board of a company called um Pro Cap Financial uh which started out as a as a Bitcoin uh company and um uh like a Bitcoin treasury. I mean, they have they still have like something like $500 million of Bitcoin on the balance sheet, but they purchased an AI company called CFO Sylvia a few months ago. And now that's going to be like the main operating business. And CFO Sylvia, as you could imagine, it's sort of like a uh, you know, your personal CFO. It's an AI agent that you talk to, you upload information to. And I was reminding like the CEO Anthony Pompiano of it of this uh last week at the end of a sort of a board meeting that one of the last big failures of the dotcom era was this Jim Barkstdale backed company called my CFO. I don't know if you remember that.

>> I do remember my CFO. Yep.

>> And it was supposed to be like the next big thing again too early for its time. It failed after raising something like hund00 million at the time. And essentially though like that this is what Anthony he didn't even know about it till I told him but this is now what he's trying to birth into life today 20 you know probably almost 30 years later uh after that. So it's it's it's sort of going to go into the uh into the Cosmo and the web van category I think eventually.

>> Okay. So I you know I interview all sorts of different types of people on this channel. Um, Eric. Um, but I would say, you know, of late probably twothirds would would, if I had to put them on the bull or bare side, I'd say about twothirds are probably on the bare side. Um, and valuations are definitely one thing they mention a lot, although they all recognize that valuations are a terrible timing tool. Um, and you know, they'll point to things like uh, you know, the overall market valuation versus traditional metrics like cape ratios or buffet ratio or things like that. They'll point to things like record margin debt um, in the market, whatnot. Um, it sounds like you're more in the bull camp, which is great if that's indeed true. Uh, because I'm always wanting to get people of of of different um, perspectives here. Um, now we're going to talk about SpaceX, which again I I think I understood your caveats, which is saying, hey, don't look at SpaceX as a proxy for the market. It's kind of its own very unique unicorn uh out there. Um, that being said, um, it is something that is going to have a quite a big impact on the markets. One, just because it's got a tremendous market value. it's now a pretty big uh fraction of of the index relative to most other stocks. Um, and we're at the point where a lot of um, the indices are going to have to start including it uh in them. So it is going to be very influential. So I guess w with that background and thank you for kind of sharing with us how you see the general market. Um, let's talk specifically about SpaceX. Um, and also if if you can any way in which you think it's going to influence uh the the Wall Street landscape.

>> Well, like you said, it's I mean it is now the biggest IPO ever. I mean, it passed Saudi Aramco uh in terms of like uh how how large it was, what what it raised. uh and uh probably by design I would I would imagine uh and like you said it has to be immediately within a certain period of time like included in all these major indices and so there are going to be a bunch of uh ETFs that just are forced buyers of the stock you know because of by definition of of its size and category and um so it is an impactful stock I I I agree with you and if it uh was to No single stock can you know I don't believe can take down the market but you know uh there are certain bellweather stocks I you know my you know uh Nvidia Apple a lot of the mag 7 names where if one of them caught a cold you know and showed weakness they're they're influential and then so and they're read they start getting read as a proxy for some broader category and uh probably there's no bigger category right now than AI and so SpaceX uh has become an AI company. I mean, if we'd been talking about them 10 years ago, we would have said it was just simply a a rocket launch company and and that's a big market and that and that's a unique market and they have a they have their you know 20 plus years of experience in that market which is difficult for others to uh recreate and compete with them against but now they've morphed into this um AI company as well. they've they bought Cursor uh and sort of like a tooling um adjacent company to to AI. But you know, I think probably what's garnering their biggest the biggest proportion of their valuation though is is clearly like their ability to sort of power um, you know uh the AI revolution that we're all a part of. And so uh that's what's getting people probably most excited about the name today. So if they were to trip and fall in the next few months or quarters, um, it could have a you know, a detrimental impact on the markets because uh it would impact the the performance of the indices. It would be probably seen as a read through to these other companies and uh you know, if it began to snowball into something where people had a loss of confidence that maybe we we got too excited about AI just like we did back in the dotcom days. It's not, you know, we're it's sure it's going to be successful over the next 10 years, 20 years, but for the next year, or the next two years, maybe we got ahead of ourselves. Maybe doesn't doesn't deserve to trade at 200 bucks. Maybe SpaceX I'm talking about here, maybe it deserves to trade at half that or, you know, uh, you know, a quarter of of that type of valuation. and you know the rerating that could then follow on to other other stocks and and the NASDAQ in general would uh be significant. So it it is an important company worth worth uh paying attention to.

>> Okay. Well, so let's pay attention to it um right here in this conversation. Um, really I just kind of want to wind you up and let you go. But in terms of just sort of as you deconstruct the company and look at its its strengths and its challenges um lay them out for us. But but also you I think the key question that folks would love answered at some point in this discussion is is do you think it's worth the current price uh that it IPOed at and then you know quickly rose to. Um, or is this a case of kind of the market getting ahead of itself and that you think there's going to be a process here of digestion where yeah maybe maybe the stock actually has a pretty material correction uh until the business operations start proving that it might be worth more.

So I uh said uh on the the day of the IPO, like there was um there were gray markets uh that were projecting that the thing was going to come out um over 200 bucks a share. I think I I got up that morning at 5 in the morning and I think one of one of the gray markets was suggesting 211 per share was going to be where it traded to. It it uh it turns out that the the the Wall Street markets were not as buoyant as those gray markets were because it it ended up opening later that day around 150 bucks and it quickly started going up. Uh and over the next few days it uh I think it went past 211. I think it got I think the all-time high I don't have it in front of me here was something like 217 or something per share. uh but now it's in the re more recent days it's pulled back uh and it dropped below that 150 initial uh price that it traded at. So anyway on the on the morning of though I I said then and I still believe now that when you look at the company at anything like over 200 bucks a share um you know you're talking obviously trillions in market cap for the company. Mhm.

>> It's just um you know, it's you're pricing in everything. You're buying in at uh a very bullish, you know, optimistic uh valuation for the company. That's sort of saying it it's sort of implying that everything's going to go right over the next few years and they're they're in the driver's seat. And so there's a there's a good chance that that could happen. Uh, but it's it's not if you think about a bell curve like you're not sitting at the heart of the bell curve in terms of the probabilities. You're you're more at that right tail of the bell curve where everything could go right. And so the um I'm I was just saying like I would rather buy in at uh, you know, something closer to 100 bucks a share because then you you know, your your downside is more modest. You still have sort of like upside ahead of you. Uh, but with Elon Musk uh the the fact is that most of the time all the way along if you follow like what Tesla did over time or something like Solar City um, you know, most of the time his stocks that publicly trade trade towards that kind of red tail. And so, um, I just my my I'm never a a buyer of like IPOs probably like in the first 6 to 8 months um, after they come out because I find a period of

>> the disproportionate amount of them generally are trading at a pretty substantial discount to their IPO price eight months later.

>> Right.

>> That's right. Um, and you know, you have things like the the uh initial like slug of insiders, their IPO lockup typically ends six months after they IPO and that they can of course start selling um, you know, a portion of the shares and do not not uh they certainly don't sell everything, but they, you know, if you're an insider the way you were at Yahoo, you know, you get all all these options usually given to you along the way and you accumulate them and, you know, what's the point of just accumulating ating paper wealth eventually like you want to turn that into actual cash and and use it to for stuff and paying down debts and stuff like this or just diversify if that's where all your wealth is concentrated.

>> Yeah,

>> exactly. So, um, anyway, because of all those different kinds of forces at the beginning, you know, stages, usually there's a there's a choppiness. Sometimes, you know, stocks can they can be mispriced and they can drop initially after their IPO price. Usually like when a company IPOs they never IPO unless they feel like uh uh, you know, there's there's a certain amount of froth, you know, froth is one word like, you know, another a nicer way of saying that is like confidence that exists in the market and they they will they'll generally not come to come to IPO if there's excessive pessimism uh because they feel like they're not going to get be rewarded with like, you know, as high a price as they would want. So um, there was a a sense of bullishness out there. There was Elon Musk obviously attached to it. Um, they did end up getting this sort of, you know, 200 plus uh price. Uh, but for me like I I just think like for the next couple of years probably that's sort of like the high end of where I see it trading. Um, although I am a fan of of Elon Musk's uh and he certainly um surprised all of us like with, you know, in many different ways along the way. So, uh, with his different companies. So, and he might do that again here and and there might be this other like whole avenue of of growth that he has planned that we're just not, you know, uh, taking into account right now. But, uh, I I think uh, 200 plus was was was rich. Uh, maybe that's been reflected now in the in the stock price pulling back. Uh, even buying it though at 150, you know, you're still there's a it's not the ultra bullish end of the right tail of the curve, but you're you're not in the middle. You're not in the fat part of the curve. I'd say you're still, you know, uh, in the more optimistic uh grouping. I think I think at 100 bucks, you'd be more in that fat part of the bell curve. And below that, you're sort of like, you know, in in the more pessimistic uh, you know, uh, probabilities for for what they're going to do in the next couple of years. So, uh, I even even here at one at 150 or something like that, like maybe if things everything goes right, the thing goes back to 200. So, you know, I mean, that's that's a good return. That's a solid return over like a two-year period or something like that. But for me personally, like I get more excited trying to find the Carvanas of the world or the open doors of the world where, you know, it's a generally like a much smaller market cap type company and hopefully like I'm buying in at a very um low low price, you know, relative to its upside over the next couple of years. And that's that's what gets me and my juices flowing. Uh, so for for me like buying into a, you know, this like ultra high like mega cap uh market cap company now to go from 150 to like 175 over a two-year period like that doesn't get my juices flowing.

>> Got it. Yeah. You you you tend to like to buy when it's more of a distressed out of favor situation uh where you think that there's good future potential and you're kind of taking advantage of the arbitrage. Here you think like it's pretty richly priced. uh to to the perfect price. Uh, so there's not a lot of meat on the bone left to get even if you're right and and maybe some real potential downside. So, you mentioned um the the current float versus the lockup of insider shares and I think SpaceX has both a pretty thin float right now um and and folks float is the um number of shares of total shares of the company that are made available to the public versus what's being retained privately. So, in the case of SpaceX, as I understand it, but you're nodding here, Eric, as I'm saying this, relatively small percentage of the company has been issued in the float, and they've got a a pretty hefty uh amount of inside ownership. Um, so the the supply that is expected to come on as those lockups uh expire is pretty substantial. And so I think um, you know, laws supply and demand, a lot of people are thinking like well I mean the price is going to have some real downside pressure on it when the the insiders get through their lockups um, not cuz they're going to sell every share but if they sell half or 40% just to diversify and whatever that could lot a lot of shares in the market and loss supply and demand more shares lower price.

>> Yes. Uh, for sure. I would just caution that um again like um when when I interact online with you know new investors who start following me because they heard about me getting into Carvana or Open Door whatever I find that, you know, uh a lot of investors like to hang their hats on, you know, one core metric like oh this company has a high P or a low P therefore it's bad or good, you know, depending on what or um this has this company has a lot of insider selling or this company has a high short float therefore I'm gonna, you know, I'm gonna buy it because there's going to be a short covering type rally or something like this and I would just say it I've never made good investments just relying like on one single metric like that.

>> it's rarely that one thing you thought that determines the destiny of the stock.

>> yeah, it's it's I mean uh stock markets and stocks are complex and you It's multiffactor and so um, you know, I of course I have seen those scenarios where you like a a quote unquote bad company IPOs um, and I'm trying to think of one example like maybe maybe CLA and I look back on this like uh, you remember CLA so the the buy now pay later.

>> buy now pay later yeah.

>> you know became popular and I think you know usually the first companies in a category that IPO are generally are the best companies in that category they're the strongest ones and you want to steer clear of like the third or fourth, you know, follow on companies to come public in those categories. So a firm was like I think the first one uh if memory serves and um and Clara was like one of the last ones that came public and um it, you know, they basically when you look back on their stock chart like they had a series of like, you know, fall in their face type earnings calls immediately after, you know, coming public and so the stock just got kind of obliterated and you know, so I think it was more of like a fundamentals coming coming unraveling for for them rather rather than like the thin float kind of uh story playing out. But there, you know, there certainly have been cases where, you know, oh, this company has a thin float and they're going to overwhelm the market with all this insider selling. And you could you could put point to a company like SpaceX and you could say, man, you know, like they've been private like I I remember I was working for some, you know, activist hedge fund in New York in like I don't know like 2015 or 16 or something like that, Adam. And uh at the time I remember the the guy that was the head of the that shop that I was working at, you know, he's like, I think I can get access to some SpaceX private shares. And I I I think the valuation was like I don't know, few hundred million anyway, which at the time seemed like, well, wow, this is like one of the most expensive private companies I've ever heard of. Um, and and my point is though that there have been a lot of people in addition to just the insiders working at SpaceX for 20 plus years who have shares that they want to monetize. There have been a lot of insiders, you know, separate from just the regular gang of VCs that have put money into into this thing that, you know, probably are looking to to tap out and and they're sitting on some like a lot of, you know, multiples of their original investment in terms of the current valuation. Uh, but I I just think like for every case like that where I've seen like a rush to the exits, there are smart smart entrepreneurs uh who like, you know, they won't say and give the green light to the underwriters that hey, we want to go public unless they have a pretty good confidence level of like what the first, you know, three to four quarters are going to look like for them as a public company. In in other words, like they don't know for sure, but they have some ideas about, you know, contracts and revenue that's that's should land, you know, in that first year that they know are going to, you know, put put them in a good light with investors. And so, uh, the whole like insiders selling out becomes a moot point if the fundamentals are like much better than what the market is currently, you know, sort of pricing when they first look at the company.

Got it. Um, first off, those private investors, not the employees, but the private investors you're referring to, do they have any lockup provisions as well or are they able to sell now that it's a publicly traded vehicle?

>> Uh, some some do. Like so um in addition so this is a disclosure for me like uh in addition to like my hedge fund capital and that event horizon IQ uh, you know, like predictions, AI company that that you mentioned I also have another company which just got acquired by it's called EMJX that just got acquired by uh a public company called SRXH uh trades on the New York Stock Exchange and SRXH uh the the people there were able to get um uh private investment into a vehicle that made an investment into SpaceX that I think was like the last private deal that they did before the IPO and they got in at a certain price that was less than the IPO price it turned out. But they did have to, you know, sign to certain conditions uh to be a part of that round that, you know, uh locked them up for a period of time. I I don't recall like exactly how much it's it wasn't I I don't think it was uh 6 months or anything like that. Uh, but it wasn't like oh day two of trading.

>> but but they couldn't dump at the open.

>> Okay.

>> So uh so that I I suspect that there's you know uh going to be different tanches of people that you know can start monetizing, you know, whenever they want over the next few over the next six months at different points in time.

>> Okay. Um, that's really just useful to >> know how things kind of work on the private side of things. And by the way, congratulations on selling that company.

>> Thank you.

>> Every founder's uh goal is some nice uh liquidity event at the end of it all.

>> It's not the end, it's just the beginning, but uh thank you. Every every you know, it would took a lot of work to get to this point. So you got to celebrate the wins along the way.

>> Yeah. Well, congratulations. Okay, so we've kind of been talking about the the the stock aspects of SpaceX. Um, but when it comes to just the operating vehicle itself, um, you know, what is your general assessment? Uh, and I know a lot of it is sort of pinned on the greatness of Elon and, you know, how high is high? I don't know. We'll find out in the next 20 30 years I suppose. Uh, but right now it's a company that um, you know, has a quite profitable um, you know, satellite internet delivery uh network. But then it's got a lot of losses so far on the the actual reusable rocket part. Um, presumably that'll become profitable at some point but right now SpaceX as an overarching company is is not making money. Um, you know, when somebody asks you, hey, you know, should I invest in this thing? I know you're going to say well it depends on the price, but I mean just the company itself, what do you think about its its operating um groups and and and the prospects for the company as you see it as a potential investor?

>> Yes, so um, there's uh so in addition to like the price that you're getting in at, I mean I think the other question that any investor has to consider is like how long do you want to hold the stock? Um, some some people want to regularly turn over their portfolio and their traders and so forth. And so they're looking, you know, they might hold it a few days. Other some people might go into it thinking that I'm going to hold this for two years. Some people might say, I'm going to lock this away and hold it for 10 years. So I think the, you know, your answer to do you want to buy into SpaceX now? I think it it depends on on that time horizon. you know, that's just as important, not more important, uh, as the question of like what price am I getting into, you know, right now into into SpaceX? Is it 200? Is it 100? Is it 150? Um, but when you look at the operating businesses, I'd say the one that, you know, most people that I chat with casually are most excited about and they they talk uh as as though this is a huge opportunity is probably Starlink. that, you know, that's a great business, so they say it throws off all this cash. It's very profitable. It's, they don't seem to have any competitors. Um, people really love to talk about that business. Then there's the sort of, you know, it was the most exciting part like 10 years ago, but now it's kind of seen as like, you know, a boring part of SpaceX. It's it's the part that, you know, it's the core like history of the company, the rocket launching business. um, you know, it's uh and and interestingly, you know, um, Elon has gotten a lot of criticism about his pay package that's a part of this company and he's he's sort of had this criticism before tied to to Tesla where he has uh, you know, if you do X Y and Z, we will give you Elon a lot of, you know, slugs of shares in in the company for reaching these various milestones and, you know, In 2019, the Tesla board gave him this like contract that said he'd make an enormous amount of money um, if he 10xed the stock and and they had all these sort of conditions. And I remember I watched on CNBC like the morning that that got announced and it happened to coincide with the Davos conference in Switzerland. So they were all in Davos and beautiful sort of backdrop, but all the all the hosts on the show were laughing at this contract saying it was like impossible. No, who who had ever heard of like some large cap stock 10xing, you know? It's it just it seemed impossible. And yet uh over the next few years like actually I think it only took him like another three years probably because of COVID uh and the drop of interest rates and stuff. But he did, you know, he did 10x the stock. Um, there was good operating performance to as well and he got the he got the big unlock of the competition and then there was a whole fight about that and Delaware court who said, you know, tried to claw it back and all this kind of stuff. Anyway, uh, now he's got another he's got an even bigger comp package and and one and he's got all these different conditions and one of the conditions is that uh if he, you know, establishes a colony on Mars by a certain date and a certain number of people, you know, it's going to unlock a big amount of stock for for him and SpaceX. So um, so uh people have a harder time valuing the space business. I mean, space is hot right now. I think every, you know, people talk about launching data centers that, you know, just are up in space and rely on solar energy because they can always tap into the sun up there, all the time. They talk about, you know, minerals that they might discover on various planets or and so forth. And, you know, obviously, um, you know, setting up a colony on Mars, you know, that that could be a money-making opportunity, you know, shuttling people back and forth. You know, SpaceX has obviously been at this for 20 plus years. Um, there are competitors out there, including from China and other foreign countries, but they're well situated as to really kind of dominate, you know, space exploration and, you know, to accrue all the all the revenue opportunities that could come from that. That's difficult for Wall Street to kind of value. So, um, and it's a slower growing business. So, the the one that I think Wall Street's most excited about right now is the the quote unquote AI business that they've sort of built along the way. And it's gotten bigger in in recent years. So, they they like a lot of other people are building data data centers and, you know, selling that capacity to to people like Anthropic and OpenAI and others like to to allow those companies to kind of power their their different LLM. So um

>> and doesn't Nexi have its own LLM and Grock too?

>> Yes. Yeah, they do as well. So they have that business and now they have, you know, a cursor which is a great tool uh that uh makes it easier to kind of um, you know, develop um uh different applications uh in this sort of new AI centric world that we're all in as well. So, uh, Elon's hoping that that, you know, ties people into his ecosystem and Grock and over time like makes people more interested in using his his, uh, his stuff rather than anthropics or or open AAI. So, it's the fastest growing part of the business and that's what Wall Street always loves the most. That's why, you know, like uh, Wall Street, you know, one they they they were never in love with Yahoo. If I go back to our Yahoo days, Adam, uh, because the US business that like most of us, you know, remember and use every day, it was a big business, but it was a slower growing business. And then Yahoo kind of missed the boat on Google, which was going to be a fast growing business.

>> on everything. It missed the boat on absolutely had a chance to catch every boat and all of them.

>> They had a deal to buy Facebook, but then Facebook, you know, backed out of it. You know, that would have been a faster growing business. And may maybe you can help me with this. I I remember Terry Suml famously saying when he walked away from the negotiations because Yahoo walked away um said, "I don't know what this company's worth, but I can tell you for sure it's not worth I can't remember what he said like four billion $4 million or 5 million. I mean it was such a laughably small fraction of Meta's market value today."

>> Yeah. No, I I mean I I remember like back uh I think they had a deal to buy it for a billion and then and then

>> was it a billion? Oh, okay. I thought it was a lot smaller than that.

>> but but then Zuckerberg kind of backed out and he said, "No, I don't I want to keep kind of running it and and at the time people were like shocked and then I think it wasn't far. It wasn't that u

>> Oh, I'm sorry. I'm sorry. I'm right. Yeah, you're right. Billion because it's a trillion dollar company now.

>> Yeah. It was it was maybe maybe a billion. Yeah. But then like ve you know very soon after um YouTube got acquired for I think it was 1.65 billion and uh that was seen as like crazy, you know, like couldn't understand that and then uh Instagram a few years later got acquired for a billion and stuff so uh and people couldn't believe that and then all the you know all these companies subsequently like they became like worth so much more. Um, so it's it's it's but anyway, like, you know, back to Yahoo and sort of like fast growth, people love fast growth. Fast growth is what gets you like the high price to sales multiples and >> everything like that. So the AI business for SpaceX, uh, the fastest growing part is is the AI business, but it's alo it's also the part I I forget the numbers, but like every day they're losing a ton of money, you know, supporting this business through this high growth uh period. So, uh, the that's when the value investor guys, the ones that have been trying to dump on Tesla for 15 plus years, saying it's laughable and it's crazy, that it's demented, that Wall Street uh, is awarding this charlatan, they call him like Elon Musk, uh, these high valuations because it's just a car company and, you know, how can they, you know, no other car company trades at such and such. multiple but you know like so in Elon's defense now uh he's always been good or smart whatever you know your point of view is at really kind of selling the future and kind of how that the business that he has today and the knowhow that he's building at that company how that can you know evolve and grow into new categories so the biggest part that of Tesla that people get excited about is is robotics and how you know he's, you know, if if he truly pulls it off that he'll be able to deliver um human robots that we all want to buy for our houses, you know, and and have them as our as our personal assistant. That's a huge market, huge team, call it

>> and corporations that want to have armies of huge of robots replacing humans.

>> Yeah.

>> Their in their facilities, right? So anyway, um, there's always something new that he's sort of dangling out there as the future. And so back to SpaceX, um, even though the value guys like to say like today, right at this moment, there are these huge losses from the AI business, uh, you know, if if he does, you know, if he turns it over the next few years and the growth continues and eventually like the costs are going to kind of tail off and the growth continues and then you start, you know, you're back in the black and you're making a, you know, a ton of money assuming the growth rate holds holds. So that's the that's what the Bulls would argue is that um Elon's going to be a big player here. You know, why not Grock? You know, h having just as you know, big a seat at the table as an anthropic or an open AI and body else and if anyone's going to pull it off, it'll be Elon Musk.

So that's what they are pinning their hopes to. So I don't I don't think they're wrong. Um, and I never would short any of Elon Musk's companies. I I think what's really um, you know, there there was an interesting uh interview this week, I don't know if you caught it, Adam, with Alex Karp of Palunteer on CNBC and he's he's quite critical.

>> He's in the Yeah, he was critical of the LLMs, but he um he's definitely uh a truthteller kind of like Elon Musk. He's not afraid to kind of he's like a fire brand, you know? He's not not not afraid to say controversial things. But one of the things he said that I agree with him on is that Wall Street uh people uh and the people that work at these hedge funds, institutional investors that make these decisions on whether they should put money into a SpaceX or a Palanteer like like Karp's company. Uh, they're not tech techn technologically that smart. This is what Karp said,

>> you know. So they don't understand all the shifting forces and in tech and ex they don't see as far down the road as an Elon Musk does or as an Alex Karp does about how how all these various AI pieces are going to potentially like play out over the next few years. So they they they are very good at saying, you know, here's the spreadsheet, you know, here's how much money they're making today and here's how that compares to all these other companies on my spreadsheet. And so they see the big losses. They say that's, you know, unsustainable and uh, they they say like, why would I ever buy into this company at such and such price. That's a perspective like and, you know, and sometimes they're right about certain companies like that. I just think like in the high growth tech area where Elon Musk plays um, you know, like it can it can easily, you know, you can see a scenario that right tail scenario where, you know, the I I don't think I'm going to be using AI any less, you know, next year or two years from now or three years from now and if anything, there's going to be more people like in my extended family that are probably going to start paying for the 25 buck a month or 100, you know, 200 buck a month, you know, Claude plan or whatever it is. And so s suddenly, like there's a much bigger market of people out there using it. And so the question that I always like to think of is like, okay, if if AI 100x's over the next few years, five years, let's say, you know, what are the things around it that are going to a thousandx in terms of importance or whatever. And um, like what what is the market not appreciating today and how can I make money there? You see the memory stocks going crazy right now. Um, because like people have realized over these last six months and or even before that that wow, you know, the it's kind of frustrating to use claw code or grock or whatever and like I I tell it something today and he gives me all this great advice and then next week I'm talking, hey, remember when I told you, you know, about such and such and he's like, I have no memory of that. And oh man, like I gotta go back to square one and like explain it all again to you. You know, people saw that and they're like, "Oh, I I like I should buy memory stocks because this experience sucks today and it's got to get a heck of a lot better and it will get better in the next couple years." So, um, the dangerous thing about SpaceX right now is that it, because it's such a high-profile name, like a lot of people, you know, have opinions about it, are following it, are interested in it. And I found like I make the, you know, the the most money that I've made in my, you know, 30-year stock investment career comes when I find something that is non-consensus, you know, and

I'm right about it. Like I, I think like, oh, you know, you know, this stock people aren't appreciating. They think it's X, but it's actually Y. I'm going to buy it today at this price because I think over time they're going to start valuing it at this other price.

And uh, when everybody, the spotlight's on SpaceX and everyone's like looking at it, it's just, um, and it's a larger, much larger cap stock. Certainly a lot larger cap than Tesla was when it first came public. Um, it's just, uh, I, there's just more risk and like, you know, if there was a pullback in the markets, if there was a lot, you know, Nvidia had a bad quarter or something, a name like SpaceX is going to really feel that and and could potentially, you know, trade down a lot. So, and then a lot of people that were sort of the last in the boat, um, because they were got all excited about the IPO and everything, they're they're going to be the first ones out and then they sort of contribute to the selling. So, that's that's the risk with the with the SpaceX playing in a hot space.

Definitely have as great a chance of being successful, uh, as anybody else out there over the next five to to 10 years in that space, but it's a big cap stock and there's this potential that somebody coughs, they could SpaceX could catch a cold and then, you know, a lot of people are jumping out of the stock very quickly.

Okay. Um, I appreciate you acknowledging that risk and, um, as you said, SpaceX is is considered an AI stock right now. And last I heard, which was recent, um, the AI and kind of AI adjacent companies now make up like 45% of the S&P market cap. That's I'm not even saying the NASDAQ, the S&P, right? Um, and so if there were to be a correction in the AI complex, um, you know, you're basically saying that, hey, you know, if, um, let's say there's something out there that just that just challenges the current um, forecast of of um, AI capex buildout where the analysts say, you know what, we were a little too rosy. We got to ratchet that down by 20%, 30%, whatever. Um, even though that's not fully in square in in SpaceX's like total bullseye of operations, you're you're you're thinking, okay, if that AI complex gets taken down for a reason like I just mentioned, SpaceX is going to catch a cold during that as well.

Yeah. I, I right right now if if it's a, you know, $150 stock, 75 to 85 of that price is tagged to their AI business. I believe it's, you know, the the rocket launching, the Starlink business, it's that's, uh, less than half, I think, of the current valuation in the company. So yes, if there was a, if, uh, you know, there was a a disruption or something like that, or, you know, just a bad quarter like Nvidia delivered a bad quarter, or, um, I don't know, like somebody like a Microsoft or an AWS or, uh, a Google, you know, said on a on a quarterly call that, um, demand was slow or something like this, or, you know, Meta made some announcement saying they've, uh, they're significantly reducing their capex. That would probably be seen as a negative. Just like it's it's no different from like everybody like on the Fed associated with the Fed recently was talking tough on inflation and the Iran war and now the latest, you know, present day or not not even present day but lagging indicators are showing that inflation is on the rise again and Kevin War wanted to appear like tuck talking tough and, you know, suddenly like the market sort of freaked out and and suddenly you saw these predictions that there were actually going to be not only one but pro possibly a couple of Fed rate hikes this year. All it took was a Friday, you know, um, just a couple of days ago, there was this bad jobs report, uh, that just surprised the market. All of a sudden, you know, the the 10-year dropped, the expectations of a Fed hike dropped, the total repricing like in the moment, all based on that one jobs report. So if the same thing can happen in the AI space, like just one one comment, one throwaway comment on one of these calls, whether it's Nvidia or AMD or, you know, one of these, uh, companies over in China, uh, you know, saying something could just totally, um, you know, re, you know, make the the market reassess at least for a for a week or two. You know, it's no different from that whole like, do you remember the deep seek moment like absolutely plus ago? Like it it just, I think it maybe it lasted a month or two, but for that month or two, like it was, oh well, you know, who can't believe in AI anymore because >> guys in China just out of the out of the blue, you know, you know, why would anybody pay for Nvidia chips? You can just get it from, uh, on the cheap from from China. So, and then it turned out not to be true. But for that month or two, if you sold your shares, you know, and, um, you know, it's, uh, you sort of you bought into that, uh, that present day kind of crisis. Um, that was turned out to be wrong. But, you know, it, you know, you saw you see the paper gains that you have in your portfolio sort of suddenly like dwindling down. Like a lot of people say, I can't take it anymore. I assume well, especially if it happens soon, just because you said SpaceX says a bunch of >> you know, people that jumped in, certainly retail, a lot of retail jumped in right at the end here with a lot of hype. And it's sort of like, wait a minute, I I thought this thing was going to like triple given how excited everybody was. You're telling me that I just lost 30%. Oh my god, I'm out. Right. Yeah.

Yeah. Um, okay, back to the company's operations for a sec. Um, so right now, SpaceX is a different entity than Tesla. Um, there's a lot of speculation about this, but I'm curious to your thoughts. Do you think that they will eventually merge?

I don't think so. Um, because I, if I was Elon, um, I'd say, um, right now, the way I've set it up, uh, I'm getting a pretty, I'm pretty positive favorable valuation from Tesla and from SpaceX. I'm being rewarded.

Meaning they're worth more together separately than they are as one entity?

Well, uh, no. Meaning that, uh, like right now, like if you think about that bell curve that I was talking about before, >> and am I am I being valued on that that right tail of like the the more optimistic uh assessment of like, you know, where is SpaceX going in the future? Both Tesla and SpaceX are are in that kind of optimistic, you know, tail right now in terms of their current, you know, relative to the current performance. So people are are you know, uh bidding up Tesla because they are buying into this idea of either well optimist or a lot of people are going to upgrade to full, you know, FSD, you know, full private, >> or both, you know, and and they're building that into their price for for for Tesla shares. >> Where where Elon has taken his public companies and folded it into, uh, to to doing like a SpaceX Tesla merger. you know, the the last time he did that, uh, was really, um, if you, if you don't, you put aside Twitter and X and all that. Uh, it's it's was Solar City. Solar City was not, you know, doing well as a company. A lot of people had questions about it. Is it a, you know, viable standalone entity? Um, are is going to have big losses forever? And the valuation was like, uh, you know, more on the left side of the bell curve in terms of what what the market was valuing in. So, so Elon made the made the judgment that, hey, um, why let this thing kind of sit out there as sort of like an orphan as a public company with with a kind of a lower valuation? Makes it more difficult to kind of raise capital for it. When I have this other, uh, you know, entity that I control trading publicly that is being favorably valued, why not I just roll the Solar City into Tesla? It'll just make it easier to continue to, you know, I can continue to invest in in Solar City as part of Tesla by talking about this, you know, bigger, you know, ecosystem now that I that and we can offer people who buy our cars and are putting in the power, you know, their the the chargers into their home. Why, if you're doing that anyway, why don't you do a whole power wall, you know, do the so, you know, buy the solar city part of it as well? Becomes an easier sale, uh, easier to kind of raise money. uh, you know, and selling equity or debt for for Tesla with that consolidated story, um, and let's just kind of go forward from there. So I mean, he could just say, I could do that with Tesla and SpaceX too, but, um, you know, you might go through a period where I don't know, AI is in the it's sort of like in the decline, you know, it has one of these deepseek type moments and suddenly it drops in in terms of perceptions about it and being all all positive to more mixed, whereas you might have optimist taking off and Tesla being rewarded for that, you know, as a as a sort of a standalone. So, I think as long as the markets continue to re reward them with favorable multiples for both businesses, I would I I think he'll keep them separate. I think that would be the wiser thing for him.

Okay. And that's kind of from like the share valuation game. I'm just curious. I was thinking more from like an operating standpoint that if if SpaceX is really creating the smartest brain and Tesla is trying to create the physical manifestation of what that brain can do in the real world, wouldn't you eventually want to tie them together in the same company?

Yeah, I mean, you for sure. Although I I would think like there's going to be a lot of like sharing of information or kind of best practices, uh, between companies that are Elon companies anyway. Uh, but yes, you're right. And you know, you can, I mean, Elon said like, "Hey, we're rolling out, um, new versions of Grock internally at our companies right now at SpaceX, uh, for employees to use first before we, you know, roll them out to the public and stuff like that." So, uh, there's, yeah, there there are lots of ways that there can be knowledge sharing across the company. If if everything's under one roof, you know, in theory, that that, you know, he's able to do that. I just think Elon's a very, very smart, uh, technologically. And so if he, if he sees something working in one company, uh, I'm sure he's going to, you know, have discussions with, you know, members of the other company, make sure that they're doing the right things, too. Uh, it's pretty pretty easy for him him to do that. And but again, like it, it's just a question of like, am I getting kind of maximum, uh, you know, pixie dust multiple value, like on the on the businesses themselves as as standalones? And as long as he is, I I just think economically, like he's better off like keeping them separate.

Okay. All right. Um, well, I'm looking at the time. We're almost here at the end of the hour, but this is such a fascinating discussion. Um, what I'm taking away from you, Eric, is, um, SpaceX, uh, has a ton of potential. It's got, you know, one of the greatest entrepreneurial minds, uh, in our history running it. Um, I know some folks in the comments are probably not going to agree with that comment, but, um, I'm with you, Eric. It's just, I I think he's a guy who has accomplished amazing things, and he's a guy you don't want to um, underestimate. Um, all that being said, um, jury is still out obviously on how successful it's going to be. And, you know, there's a lot of other companies right now that are running for, uh, the the prize of who's going to be the best, smartest AI platform. And obviously, if if Grock doesn't win that, you said that's kind of like half the value of the company right now. So, that's going to be a big haircut. Um, but, uh, even if it's if it's on its way to greatness, um, sort of the difference between price and value, right? It's like, you know, is it is it trading at a price right now that's worth your your best estimation of its current value? And from what I get from you is, uh, it's kind of priced for near perfection. It's on that far side of the right part of the tail. And as an investor, you're going to you're going to largely wait to see if time brings that price into a greater alignment with what you think the the existing value is, or at least a more, um, uh, probable value, we'll put it that way, probable expected value on your bell curve. Did I summarize it correctly?

Yeah. Yeah, for sure. Um, like selfishly, like I, I wish, um, the public markets today were more similar to the private, uh, the public markets of the dotcom era, actually, in one in one important way. Back then, um, everybody's dream was to become a public company. And somewhere along and so you had lots of companies back then because the valuations, uh, were seen as favorable, that were IPOing, like you said, with no revenue in some in some cases. It was basically a business plan, and they were still able to go out and become like a publicly traded company. Uh, which was is kind of remarkable. And so, you know, people say, oh, that was irresponsible, but, uh, but, you know, when once we had the dotcom, you know, nuclear winter that followed that, uh, period of of excess, um, another thing happened started happening to founders of companies, and they started to say, hey, I don't want the, you know, being a public company CEO means, uh, >> total hassle. >> That's a total hassle. And you got to focus on the short term. Hey, how do I please everybody next quarter? Where you can look out years if you're private.

Yeah. Right. And so, hey, why don't I just stay private forever, you know, because like I have all these VCs lined up. They're telling me how smart I am, how great I am, you know, uh, I can just keep doing my thing, kind of. I don't have the quarter-to-quarter responsibilities. And so, hey, I'm just going to stay public until whenever, you know, like, and now it's become like, uh, in the case of like OpenAI and Anthropic, like until I'm a trillion dollars, like I'm going to stay private, and then now finally they're going public. Um, but so selfishly, as a as a public market investor, like I really wish that more that that mentality would go away, you know, a a because obviously, like I, I, I want to do the research on these companies and get into them early when it's not such a crescendo of attention like we've seen around the SpaceX IPO because I think if you do your home as a retail investor, you can find, you know, more uncovered gems that way. Uh, but

You can also get much greater returns, right, when you get into the company when it's small. But if it's if it's in the private market and you're a public market investor, you can't play in that.

Yeah. Yeah, exactly. Like the the dream is to find that Carvana situation where you Carvana at its lowest point, uh, after like the crisis in confidence, uh, when they started raising interest rates and people started to say, hey, I don't think, uh, people are going to, you know, get cars from Carvana anymore when, uh, auto loan rates are so high and this company has $6 billion of debt, maybe it's not going to survive. Suddenly stock went from $400 to $3.50 50 in December of 2022, and then last January, uh, it got back to $487. So it's a $129x return from the bottom to the top. I didn't get in right at the bottom, unfortunately. I got in at like $15 a share, but, you know, from $15 on, it was

That's still pretty good, Eric. I'd take that return.

Yeah. Yeah. So I mean, my dream is to find those, you know, it's tough, you know, it's really tough in the public markets to find, you know, a 10x return, let alone like whatever a 50x or 100x. So, um, and it's because of this mentality where a lot of the the most exciting companies are staying private longer, and so when they finally do go public, they get a lot of attention. There it's all on CNBC, you know, uh, for days and days, uh, leading up to the IPO. But, you know, as a retail investor, you, you know, you want to be careful, like, am I am I the the dumb the dumb guy or girl at the table, you know, that is being taken advantage of here? I'm I'm someone's exit liquidity here. Um, you know, or is there is there another leg to the growth story in this company that I'm buying into now? And I'll look back and I'll say it's more like a getting into Facebook when it IPOed in 2012, you know, at some people said, "Oh, this is a crazy valuation, and they're morphing to mobile from desktop. I don't think they'll make any money in mobile ads like they did in desktop." Uh, and so there was like a crisis of confidence in in Facebook stock. But now 5, 10, you know, 15 years on, we see obviously that that was a great entry point, uh, for it. But that's much smaller in terms of the valuation than what SpaceX is today. So you just got to be got to keep keep the perspective in mind and just understand like where where is the next leg of growth here and how's how quickly is it going to come, uh, and will I be rewarded as being an investor in it, uh, if I want to buy in right now?

So I think that's great perspective. Um, I'm just going to ask you to kind of guesstimate here. Um, don't expect you to really know the answer, obviously. Um, a couple years ago, I interviewed, um, a private market fund, uh, manager, and, um, he was basically making the point you did, which is he said companies, the best companies don't need to go public anymore, or at least not until they get a lot bigger, right, than they used to. And so he's like, the most exciting opportunities are happening in the private market. And, um, you know, it's, it's, it, it's sad for the viewers watching this video because we're all largely, I mean, I've got some institutional viewers, but it's mostly just regular retail folks, right, who don't have access to most of those deals. Um, certainly not like the great deals, uh, in the private markets. Um, do you see this trend just continuing from here? Because obviously, as you said earlier, like if you're running the company, you'd much rather stay private for as long as you can, as long as you're getting the capital you need, because you can run the show the way that you want. You don't have to deal with, uh, the short-term earning quarterly earnings pressures. You don't have to deal with all the regulatory hassles. So, I, is is just the opportunity moving away from the average retail investor here?

Well, I hope not. I mean, I, I do think that there's a chance that, um, it's like fashion, and all you need is somebody to come along to become like the next Steve Jobs, let's say, to become the the poster child for maybe going public early and then talking about how the benefits, uh, of doing that. So, like, I, I think I've always believed that, um, being a public company CEO, it brings a certain amount of discipline and rigor to to that, you know, not just the CEO, but the rest of the management team, because you can't hide, you know, as the, and you can't just say, ah, well, you know, I won't push the sales team as hard this quarter, you know, even though they're they don't seem to be doing a great job and we're lagging our numbers and stuff like that. You know, being a public company CEO, you wouldn't let that slide. You'd like, >> you, you'd get on it more quickly. So, uh, we've had so many people like Zuckerberg was where he was sort of he became the fashion, he became like, oh, yeah, it's who needs to go public and all this kind of stuff. And, um, other people started to copycat him. If we had somebody who, you know, become became seen as like the modern, you know, modern day Steve Jobs, um, and Elon, I guess, sort of did this as as the CEO for Tesla. I think that could change opinions and change, you know, become it starts to become more fashionable again, you know, uh, to, uh, go public early and, you know, and then maybe, you know, you would help convince the, uh, the current crop of founder CEOs that, uh, that was the more advantageous path for them rather than just staying private for longer. So, uh, it, it could happen. So I, I hope so. But there's just a lot more money in the world slloshing around today than there was like I remember during that like.com nuclear winter where, um, you know, like I was talking with, uh, Brad Garlinghouse about this, he's now the CEO of, >> of Ripple, >> uh, but he was a Yahoo, as you know, >> Yeah. No, I knew Brad at Yahoo. Yeah. And and he, I remember him him saying like, um, after that, uh, the bubble burst, like if you were interested in technology and you were looking for a a raft to kind of clutch onto to survive during that, you know, cold, you know, winter period, >> um, there were only certain, there was there was no VC, you know, landscape like there is today. You couldn't just become like one of these, uh, what do they call them, like entrepreneur reneur and res, >> entrepreneur in residence. Yeah, >> this is just code for like, you know, don't do anything, just go to some meetings and play golf and all this kind of stuff. Um, you couldn't do that back then. Uh, so if you really wanted to stay in the game and stay sharp, you either had to join Yahoo, eBay, um, I think that that was like maybe, I don't know. I think there's one other company I'm missing, but Google hadn't really emerged yet. So it was really like one of those two key companies that, >> PayPal was probably one, which you worked, >> PayPal probably is the third, uh, but then PayPal got acquired by eBay, >> right? >> So it was like really like eBay and Yahoo for for a while there if you wanted to work in consumer tech in Silicon Valley. So, uh, but today, like there's just like a million opportunities. There's a lot more, there's PE firms that are trying to invest in tech. There's the the Tama Braavos of the world and all this kind of stuff. Uh, there's all the VC firms. So there's like tons of startups. There's startups in China as much as there are in in the US. So it's just a much bigger world with a lot more money slloshing around. And so that means that there are always going to be yes men and yes women telling these founder CEOs, "Ah, just don't worry about it. Take my money and you stay private as long as you want because you're the best." And I, you know, I'll keep, you know, write writing checks to allow you to pay for your burn rate and all this kind of stuff. So, um, we'll, we'll, we'll just have to see.

Yeah. Listening to you, because I'm trying to think, why would somebody really want to go public, um, versus stay private? And, you know, you mentioned, well, it gives you kind of a discipline, right? A transparency and a discipline. I'm like, okay, who would really want that? Like, when does that become a real advantage? And my mind goes to there's probably going to have to be some blowups, um, with some or big disappointments with some private companies where they are, you know, some big companies get badly mismanaged and the private investors really get burned, and then it's then there's the advantage of, okay, well, look, I'm going to be a public company now, and you can see my books anytime, and it's much more transparent. We're being held to all these regulations, and that may be able to to be the convincing differentiator, but that would probably mean we'd have to go through some rough period, at least in the private markets, of some pretty big blowups.

Yeah, I agree.

All right. Well, we'll see. Um, all right. So, um, we'll wrap it up here. Your bread and butter, as we've mentioned, Eric, is, um, at least on your hedge fund, um, is kind of finding these out of favor, uh, companies where you think the true value is is substantially higher than what the market's currently valuing it at. Be fun to have you back on at some point and talk about your process and sort of how you find those. Um, and obviously any that are on your radar. Um, you probably want to keep those close to your vest, but I'm just curious, is there any company or two right now that you're you have publicly mentioned or ones that you, uh, you think are good candidates to look at from like a, you know, zero to hero standpoint?

Well, yeah. No, sure. I'm happy to. I'll name a couple quick. I mean, Open Door last year, uh, was one I got in at 73 cents. I think I, I publicly announced it around 87 cents, and, uh, it's around five bucks today or five, five, ten or something like that. Uh, it got as high as like $11 bucks like, >> Yeah, I remember when it crossed $10. Yeah. >> Uh, September, but it's pulled back. So, um, you know, I'm, but I'm still a holder and believer. And I mean, I said last year, and I still believe this, that I think it's going to $82 bucks by 2028. So I still got another couple years there for them to to play for that.

So that's a 10x in two and a half years?

Yeah. Well, yeah. Yeah. A little bit more. Uh, if I'm right about $82. Um, but they have a great CEO in Cass Nadian. He was the COO of of Shopify. He left that job. He, he could have done nothing, just like, you know, continued to mail it in type type of performance, and probably the current CEO would have, you know, bumped up to executive chair or something, and then Cass would have been promoted to CEO and just gotten a bunch of stock options. He, he left the $200 billion company to become a CEO of a $3 billion company. Doesn't happen usually very often, but he's a real believer, uh, in Open Door's mission and what they're doing. So I, I still like them a lot. Uh, my other two favorites right now, though, one is called Dave, D-A-V-E, the ticker. Uh, they were a kind of left for dead spa, uh, or DSpack, uh, a couple years ago. Was got as low as like five bucks a share. Um, but basically what they do is, uh, there's a whole bunch of Americans out there who, uh, need, um, basically payday loans. You know, they, they basically need a couple hundred bucks to get them through the next few days before they get their next paycheck, for gas money or whatever, you know, you know, food or whatever. And so, um, uh, it used to be like you had to go to the, I don't know, the like the MoneyGram's of the world or whatever to kind of get get an advance, or or you had to go to your family, your mom or dad or brother and sister, >> or your loan shark down in the corner, but that comes with its own risks. Yeah. >> Right. So Dave, uh, allows you to kind of connect via Plaid, so they can see the last six months of your bank account and like how much cash is actually coming into your bank account. So they never, they never look at your credit score. They look cash in your bank account the last six, >> and if they judge you to be a a safe risk, they'll advance you. Their average loan is $200 bucks, just over $200 bucks, lasts for eight days. And, um, they actually don't take any credit risk. They have a a bank, uh, partner that they kind of get it immediately off their balance sheet when they make it.

Oh, wow.

But they have a microscopic kind of default rate. Uh, so I got in at $1.65 bucks, um, in April, which is, I wish I'd gotten in at five bucks like a couple years ago. Uh, but now the stock is, uh, right around $400 bucks a share. But I think they're just again scratching the surface of their, you know, their potential market. They don't, you don't hear about it a lot, you know, you know, on CNBC or whatever. Uh, there's still a relatively small kind of market cap, uh, with a great growth profile. So that's one I really like a lot. Second one is is a company called Next Door. Um, uh, which was popular, I don't know, it's been around a long time.

Yeah.

Basically, like if you live in a certain neighborhood of Austin or Toronto or San Francisco, you have to prove that you're you actually own a home in that neighborhood to to to join Next Door. So it's sort of verified, you know, real people. So there's no, there's no spam on Next Door. There's no like bots or anything like that. And then the the idea is it's kind of like a Reddit. If you think of like Reddit has all these subreddits of topics, the subreddits for Next Door are the communities. And so if you're, if I'm in a certain neighborhood in Toronto, you know, it, you know, people will say, "Hey, I use this such and such dog walker, you know, and useful for me or, you know, um, but now with the advent of AI, what's, you know, when I I mentioned before this idea, like, well, if AI 100x is over the next little while, what's going to be important and potentially thousandx? I think it's going to be a company like Nextdoor where it has this sort of proprietary bot-free data on all these neighborhoods. And if, uh, you know, if I'm joined my version of Next Door in Toronto, um, AI unlocks so many new kind of kinds of services. So I'm always like scratching my head looking for like, like my AC unit broke down a couple of days ago, and I don't know what AC, you know, service to call in my neighborhood. I don't know who's good, who's not good, who's a who's crappy, who's who's telling me that I need to buy this when it's not true and they're just trying to get, you know, get me on the hook to buy an extra $2,000 for a part that I don't need or anything like that. If, uh, but if, uh, next, if I, you know, Next Door will be able to say, "Oh, oh, hey, Eric, you know, like, you know, I know you're looking for an AC unit. Here are the, you know, most popular ones that have been used by your neighbors, like Terra down the street from you, who used this vendor, you know, like last year or something like that, you know, oh, and by the way, you know, this this AC service is going to be in your, you know, on your street, you know, next Tuesday. And if you want to use them, we'll we'll offer you a deal where they don't have to, you know, travel, you know, extra to get to your house, we'll give you a 30% discount on this, uh, on this, uh, on their fee. You know, that's that's a win-win for the the local vendor, for Next Door, for the the user like me. Uh, so there's all these kinds of like interesting little services that only a Next Door kind of unlocks. Now, the the they had a CEO who's now the CFO of OpenAI, if you can believe it, Sarah Frier. She she turned out to be a terrible CEO. She kind of drove the company, uh, almost to the point of death. They got rid of her and they brought back their founder CEO, this guy named Nurav Tolia, who's running it. And >> Oh my gosh, I remember that name. >> He he ran, you might remember Einions. >> Einions. My god, I used to work for my Simon, which was a one of the first comparison shopping engines. >> And Nurav's team was trying to find partnerships to do with us. Wow, that's a that's a blast from the past. So he's, uh, he's back at Next Door and he's doing a lot of cleanup, but the opportunity is like, you know, company like Reddit trades at something like 16 times revenues, and, you know, some people might say, oh, that's crazy, and you shouldn't trade for that much, but, you know, whatever. For a long time, Reddit was not growing, and then all of a sudden it started taking off and growing, and then growth brings in these high multiples. Right now, I think Next Door still trades at something like 2x price to revenue and has like an enormous amount of cash on their balance sheet. And so, um, there's some early signs that there now Nurav is turning the corner there. And so, I'm not saying it's going to trade at a 16x multiple next week or next, you know, six months from now. But, you know, if everything goes right and you get to that right end of the tail, um, you know, that's how you get a 16x multiple on this kind of business that people are not paying any attention to. So, for me, like it's, it's totally the other end of this spectrum of a of a of a, uh, SpaceX, right? It's sort of nobody's talking about it. Lowly valued. People probably thought it went out of business a few years ago, yet they're doing all these things from an operating perspective that make sense. And if everything kind of clicks, it's, uh, you know, it goes from that kind of left tail of the bell curve over to the right tail. That would be an enormous return, a 10, 10x plus type type of return. So that's why I own it.

That's super fascinating. I'm so glad I asked you to to share some of this stuff because it's the way your approach is just really interesting and, um, certainly makes a lot of sense, and you've given people a couple of companies to go research. Uh, it's, yeah, it's funny, like, I mean, I, I moved to Nevada last year from California. And where we lived in California, you know, I, I'd been on Next Door. Um, and I got to say, I, it, it didn't strike me to have the opportunity that now that I hear you explain it, I'm like, "Yeah, if they actually do that well and they basically become the clearing house for everything local, then yeah, all the AI LLMs want to plug into that. So, you can just ask your preferred LLM, Chat, GPT, Claude, whatever. Hey, my AC thing just broke. Can you find somebody to the best guy to repair it for me? And then they can go into Next Door's APIs and pull everything out and give you the right answer. That's really cool. All right. Um, Eric, this has been, uh, so fantastic, and now we've gone way over time. I apologize for that, but it's been a great discussion. Thanks so much. Be really fun to have you back on again soon. For folks that would like to follow you and your work between now and then, where should they go?

Um, so I'm EricJack on Instagram and and and and X. Um, and, uh, I, uh, you know, EMJ Capital.ltd is the website for my hedge fund. Uh, event horizon.com is the website for, uh, for that predictions AI product that I talked about. And, um, and the the EMJX, which is sort of like a, it's, it's basically I'm trying to build a Gen 2 digital asset treasury. So we, we have some Bitcoin, we have some Ethereum, we have, uh, other stocks and and, uh, altcoins that we manage, but we hedge, unlike the Micro Strategies of the world and Bitmine inversions and stuff. And so we've had some some great performance, uh, this year. Uh, we've been able to call that Bitcoin was heading into a bare market at the end of May, May 26th, I publicly called it, um, when Bitcoin was $77,000. As of today, when we're recording this, it's around $60K. So it's, uh, we were able to kind of, uh, you know, get properly hedged before that happened, and we're pretty excited about, um, you know, what, what a what a hedged version of a DAT will look like that's multi-asset rather than just the the Micro Strategy version, which is sort of like when Bitcoin is doing great, Micro Strategy is like a 3x CTF on on Bitcoin. When it's not doing great, though, it sort of gives back those gains and then some. So, um, that's emjx.ai is the website for that.

All right, great. And Eric, when I, um, edit this, uh, I will put those links up on the screen so folks know where to go. Folks, the links will also be in the description below this video. Um, folks, please join me in thanking Eric for his inaugural appearance here on the channel and everything that he shared with us. Um, let him know how much you appreciated him by hitting the like button and then clicking on the subscribe button below as well as that little bell icon right next to it. And if you would like to get some help in taking action on anything that Eric had talked about here today, you know, maybe trying to figure out, um, what role, if any, SpaceX should play in your portfolio now, or what price you might want to be waiting for before you get in, um, or maybe you want to, you know, potentially open up a position in some of the, uh, the companies he mentioned there at the end. Um, I highly recommend that you, uh, get some help in doing that from a good professional financial advisor. If you've got a great one already who's can counsel you that way, fine, great. Stick with them. Don't mess with success. But if you don't, um, I highly recommend you consider talking to one of the financial advisors that Thoughtful Money endorses. These are the firms you see with me on this channel every week. To schedule one of those conversations, just fill out the very short form at thoughtfulmoney.com. Only takes you a couple seconds to fill out the form. These consultations are totally free. There's no commitments involved. It's just a service these firms offer to be as helpful to as many investors as possible. Um, Eric, very much enjoyed it. So great to see you again after so many years. Uh, congratulations on all your success, and, uh, I hope and expect, uh, that that's only going to continue to build from here.

Likewise, too. I mean, you're, you're the, you're the big YouTube celebrity here. So, it's congrats to you, Adam. Great.

I don't know about that. But anyways, so great to see you, and I hope to have you back on again soon. Really fun. Everybody else, thanks so much for watching.