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>> Just a warning to everybody. We're going

to get a little technical, but Maggie's

going to help us understand what

jailbreaking is and what's at stake when

it comes to anthropic, Fable 5, and

Mythos. Anthropic executives planning to

meet with Trump administration officials

on Monday to discuss an unprecedented US

government directive barring foreign

access to the company's most advanced AI

models. That's according to a person

familiar with the matter. For more,

we're joined by Maggie Eland, Bloomberg

News tech reporter. She's based in

Washington DC. It's where she joins us

from right now. So, Maggie, I said this

would get a little technical because I

think we should just start off by

explaining the Fable 5's relationship to

to mythos. Uh, and what has the

government right now so concerned and

why anthropic is pushing back on this?

>> Yeah, absolutely. It definitely helps to

sort of get some definitions down to

start. So, Mythos that was released in

April by Anthropic. It's their latest

model, but it was not released to the

public because the company was too

worried that it had a lot of cyber

capabilities and it could be used for

cyber attacks. So, it was only released

to a limited group of government and

business partners to sort of help those

partners shore up their own cyber

security efforts. What happened last

week was Anthropic actually released a

version of that model with some added

safeguards to the public. So that's what

we call fable 5 and that's sort of what

started this whole situation between the

government and anthropic. So a few days

after that public release, the

government sent an enthropic a letter

that was an export control directive

that essentially blocked anyone who was

a foreign national from even accessing

that fable 5 or that mythos 5 model. So

in effect, Anthropic was forced to

immediately disable those those models

uh especially since they have foreign

nationals who are employees. So this

affects their employees, it affects

their customers. All of a sudden they're

only able to provide these models to US

citizens and they don't even have a way

currently of sort of a know your

customer standard in terms of you know

where those people reside who are using

their models.

>> I'm glad you said that because I'm I'm

opening an Claude uh from Anthropic

right now on my phone. And I I don't pay

for it, but I but I have it. I can use

it. I I I I had the ability to use Fable

5 if I paid for it, but now it says

currently unavailable. It also

advertises that it's for your your

toughest challenges. But Claude has no

idea where I live in terms of like what

my nationality is. So it they just have

to disable it because they don't have

those know your customer guard rails in

place.

>> Exactly. Um it would definitely take

some time to develop those. there could

be some privacy concerns from folks in

Washington. It certainly wasn't

something that they could do on very

short notice. Um, and they were they

were sent this letter on at a pretty

quick turnaround. Um, so, you know, as

we've reported, anthropic executives are

now in Washington DC. They're meeting

with the Commerce Department today.

We'll see what comes of that. They're

they're trying to work through this. The

concern here, I should point out, and

Anthropic has said this in their

statement. They believe that the the

government is concerned about a

jailbreak. Now, there's not necessarily

one definition for what that is, but

typically it means that users who are

using Fable might be able to prompt it

in a certain way so that they're able to

access those cyber advanced capabilities

that they're not supposed to access. So

Microsoft was involved in surfacing this

vulnerability and that's certainly going

to be dominating the conversation uh in

terms of just trying to figure out if

this is something Enthropic could fix,

if they could potentially fix it with

more of these know your customer

standards. Uh so that's what's going on

right now and and we'll have to see if

if they're able to to work this out and

somehow remove that export control. So

on one hand, you know, Maggie, it seems

like the White House, the Trump

administration

is actually very keen to what could

possibly happen and is staying ahead of

the game. It almost sounds like um like

who is leading kind of the strategy and

the process when it comes to the White

House? And like it sounds like the

expertise is there. Is that correct?

because I feel like with social media,

we felt like maybe everybody didn't

quite understand everything that was

going on. Um, and so there's been some

consequences as a result, but it does

sound like the team at the White House

and the administration is kind of on top

of things. Is that fair?

>> Yeah, I think uh a few things like at

the principal level after Mythos was

released in April, you did kind of see

this full government response. You know,

Susie Wilds, Trump's chief of staff got

involved. Scott Besson, the the Treasury

Secretary, Sean Korncro, the the

director of the national cyber um

efforts. So, you saw a lot of actors

coming together very quickly to

essentially write an executive order to

make sure that the government could have

early access to these cyber capable

models, including Mythos. So, this cyber

use case kind of like scared everyone,

woke everyone up uh across the Trump

administration. Um uh but what we're

seeing now is a little bit more

confusion I guess and and it's unclear

exactly what the policy is because that

executive order in the process of

writing it there was some internal

policy debate over whether this should

be a mandatory regime or a voluntary

one. And ultimately what you saw in that

executive order in early June was a

completely voluntary uh situation where

AI model companies on you know on their

own terms would offer their models to

the government and the government would

sort of review them help them ensure

that everything was safe. At the same

time the government would be able to

make sure that critical infrastructure

and its own data was protected from

potential cyber attacks. And this was

all going to be sort of a kumbaya

voluntary thing. And I guess the lack of

clarity now is was what we're seeing is

it's really no longer voluntary for

Anthropic in this case. Um when push

came to shove, the company was was doing

something that the government didn't

like uh and then ultimately found a tool

to sort of compel it into paying more

attention to this jailbreak. So that's

definitely casting some uncertainty onto

the whole industry. Uh because Anthropic

is not the only one sort of operating

under this voluntary situation. And it

seems that potentially it's it's more uh

voluntary but with a looming threat of

you know you could be compelled to do

something if if the government decides

to do that.

>> Maggie I I'm curious the folks you talk

to who are observers of this type of

technology and understand tech policy.

Do any of them say that that we're

missing the mark here that because what

what I think about is the the constant

refrain which is like the wor you're

using right now the worst version of AI

that that will be available. You have

all these companies here in the US that

are working on this. You have all these

companies in China that are working on

this and here we are talking about some

model that a year from now is going to

look like pretty basic and simple if if

the last three years are you know any

indication of how quickly this

technology moves. Are we just missing

the mark here by focusing on this one

thing?

>> Yeah.

Yeah, I mean I think there's been a lot

of of criticism both like in the cyber

security community and in the AI policy

community to this decision. Um I think

the main criticism is is just that it's

a bit incoherent, right? Sort of like

this is probably the worst thing for AI

model companies is like regulatory

uncertainty because this was done

through essentially a letter so it's not

public. Um and andropic has said that it

wasn't even clear exactly why this was

done. They they only found out later um

that is their position. They found out

later that uh the government was worried

about this vulnerability. So certainly

some folks have said that the Trump

administration is missing the mark

because you know if they wanted to do a

more regulatory approach uh they should

make that clear right because that would

be the best thing for the markets is to

have um just a clear signal in terms of

what the regulation was going to be. um

or if they were going to take sort of

the pro-innovation lzair approach then

sort of doing something like this in a

lastm minute export control blocking all

foreign access is certainly not aligned

with that. So I think the main criticism

right now is just uh the lack of

coherence which is probably the the

worst thing for the market even compared

to a more clear uh regulatory policy.

>> Yeah. Yeah. And it does wonder, you

know, as you guys you and the team, um,

in your reporting, Maggie, say, after

decades of disseminating cutting edge US

technology around the world as a

diplomatic and economic tool, Washington

is now moving in the opposite direction.

And you do wonder uh is it not just a

Trump administration shift but maybe

something that on both sides of the

political aisle uh there's been a

pulling back because it's safe to say

there was certainly you know the

continuation of um Trump's first term

policies when it came to China on

certain things and technology in the

Biden administration. So you do wonder

if this is something more significant

going on.

>> Yeah, there there's definitely this

unique tension with artificial

intelligence in particular. um where

folks in Washington are concerned that

actually, you know, disseminating this

technology might be sort of at odds uh

with actually preventing foreign actors

like China and and Russia from from

accessing it. Um you know, the US

adversaries, the people that they don't

want to access it. So, this is kind of a

unique tension. Um, and it's been, you

know, currently as we're seeing, it's

it's sort of leaning in the direction of

of safety, which is certainly not what

we would have expected from the Trump

administration um, at the start of the

president's term. Uh, but I think it's,

you know, it's one thing to say that you

want to have, you know, a light touch

approach. It's another to actually be

sort of confronted with these cyber

vulnerabilities, um, as folks like Scott

Besson have been and then to sort of

figure it out on the fly,

>> right? And you have to wonder about

especially as a lot of these companies

are getting ready to do some maybe mega

cap um IPOs. What does it mean for their

business going forward? Uh some great

reporting. Maggie, thank you so much. We

really appreciate it. Maggie Eastland,

she's Bloomberg News tech reporter.

She's based in the nation's capital, our

Bloomberg News Bureau in Washington DC.

>> Stay with us. More from Bloomberg

Business Week Daily coming up after

this.

>> You're listening to the Bloomberg

Business Week Daily podcast. Catch us

live weekday afternoons from 2:00 to

5:00 Eastern.

>> Listen on Apple CarPlay and Android Auto

with the Bloomberg Business App

>> or watch us live on YouTube.

Um, it's interesting. We're obviously

watching the war and we just kind of

covered all of that in terms of the

market enthusiasm that's playing out.

Also playing out is again we're focusing

on what is the world's largest IPO.

We're talking about SpaceX successful

launch on Friday. We continue to see the

stock shooting higher today. shares

jumping in their second day of trading,

adding to gains following a blockbuster

debut that instantly vaulted this

company into the ranks of the world's

most valuable public companies. Now,

keep in mind the offering syndicate for

the IPO included several lead

underwriters including JP Morgan Chase.

The list to be fair though of all the

banks involved reads like a who's who of

Wall Street's biggest and best known

banks.

>> We got a great couple of voices joining

us with an inside look at how all of

this played out and continues to play

out at this point. All right, Billy Lip

Schulz is Bloomberg News IPO reporter.

David Bower joins us too, head of Equity

Capital Markets America's over at JP

Morgan Chase. They both join us here in

the Bloomberg Business Week studio. Uh

Dave, good to see you. Uh Bailey, I feel

like we

>> usual. Yeah, it's like I badge in, I

always seeing you and we're lucky. Uh

SpaceX, of course, the largest IPO ever.

I'm just curious from from your view how

you think market participants right now,

Dave, should be looking at at this in

the context not just of other potential

IPOs in the future, but really in the

context of everything we're seeing out

there right now, the talk of people

taking money from other assets, selling

that, getting into SpaceX. Just your

view.

>> Yeah, I think I mean, first of all, for

somebody in the ECM world, what a time

to be alive. Like these are these are

great times for the markets. And I think

unlike other cycles we've seen where IPO

issuance has been extremely active, you

have a real catalyst forming the

investment thesis behind this. This is

the reindustrialization of America.

We're creating new ecosystems, new

economies. I mean, you think about what

space could become, what AI could

become. These are these are investment

thesises that many people haven't been

able to invest behind before. And so, I

think seeing that this euphoria in the

IPO market is warranted and appropriate.

What's the signal to the market and

market participants specifically? I

>> I I think right now you're you're seeing

that the IPO worked and you saw Friday a

very strong trading with the stock, you

know, finishing up 19% from the IPO

price. And I think today you see, you

know, broader markets rallying on the on

the news with um uh with, you know, Iran

peace treaty and you're seeing just more

enthusiasm coming in. So I think

>> SpaceX up another 15% today.

>> Exactly. And so I think it's all it's

all systems go to make a you know a pun

intended for SpaceX. But I think if

there was any uh hesitancy of you know

should I continue to buy up 20% I think

the answer is yes. And if you look long

enough there's a you know this is a

business that could be generationally

transformational.

>> But thinking about the generational

transformation Dave when I look at the

pipeline or the kind of group of

companies that could be coming public

they don't look like SpaceX. When you're

meeting with people maybe at your former

employer KKR talking about something in

their portfolio, a number of other

private equity firms, what are they

looking at? Obviously, this is a big one

for IPO buyers, but does that translate

to someone who owns say software

companies or other companies in other

industries? Look, look, the the mega

IPOs are getting the headlines right

now, but there's been a very active and

very uh accommodative uh equity market

in general throughout this year. And

putting SpaceX aside,

uh, new issuance volumes are up almost

2x year this time from last year. And

the vast propoundonderance of that has

been other sectors and we've seen

healthcare coming back, we've seen

biotech issuance coming, we're seeing

uh, industrial, energy, all so the

markets are working at large.

>> Are all those themes still off of AI in

some capacity? If the bottleneck is

power and I'm a power company, then I at

least have an AI pitch because when I

look at air talk to folks, it's kind of

like your TAM is either infinite because

you have AI behind it or it's zero

because your software and the worry is

that your kind of total market could be

at risk. How do you think about kind of

other industries and how that fits into

that?

>> Yeah, I look I I don't think the market

is shut out for certain issuers. Um, I

think it does come down to price and

having the right starting point in the

public markets and I think there is a

bid for those other businesses. Um, you

know, you mentioned sponsor back

businesses. Um, it's a good time to, you

know, what I would say get the puck on

the ice. Start it. And, you know, we

always say when we're advising our

clients and our issuers,

>> proof points in the public market are

worth even more than in the private

market. And so, getting out there,

starting it, and you can see how, you

know, your valuation can expand you uh,

as you perform. um you can get your

share price to a level that you might be

more interested in selling at, but

getting, you know, getting started can

be helpful.

>> What is it about this moment right now,

Dave, that is compelling so many of

these companies not just to go public,

but also to look into going public? And

I'm I am going back to sort of the the

companies that when they do go public

will become mega cap companies.

>> And just to tag on to what Tim's saying,

opportunistic or fundamentally based? I

>> I think I think this is a more

fundamental based market. And you you

look back to 2021 which felt a little

bit more technical like rates were zero

and so therefore equities were

attractive and you had a very different

dynamic that drove that. I I think this

is much more of a fundamental. I think

the market is looking at what the next 3

to 5 years could be and you know

potentially looking past some of the

near-term volatility and it's not saying

they're ignoring downside risk but I

think saying there's certain businesses

right now that are very much worth um

investing in. There's a whole slate of

new issuance that is different than the

portfolio I've I've had in the past and

I'm going to take that opportunity to

invest in it.

>> I am thinking though about those mega

IPOs be it anthropic or open AI. Should

we make any assumptions about their

market reception just because of what

happened with SpaceX?

>> I I think I mean SpaceX is is is an end

of one of itself um from the fact that

no one else is doing space at this scale

at that this velocity. Um

>> but it's an AI play

>> but it is an AI play. where I was going

with that is I do think I mean this

bodess if you're anthropic and open AI

you're you're applauding that this type

of market reception happened and you

know the the size of the deal getting

done having a trade as well as it did uh

to me that that gives even more

confidence that the next wave uh could

get done in a very uh positive way.

Well, when we look at what the next few

months can look like, back to the

broadening out, is AI still the flavor

of the day? If we look at some of the

reports that are out there and SKHix or

other large companies in the AI space

looking to tap the market like Carol was

me mentioning

>> because of these tailwinds and kind of

what does that mean for this July, this

August class?

>> Yeah, I look I I think we're going to

have a very active summer. Um, even even

the SpaceX period of time, you know, a

lot of people thought coming in we'd

have a der of issuance and you'd have a

real quiet period. We did $10 billion of

equity capital outside of SpaceX last

week. And so, you know, the market was

still working. There were still a ton of

deals getting done. Um, I think this

capex cycle to your point of of AI,

people still want to invest on it. And

that's across equity, debt, um, you

know, all the facets of capital here and

so the public markets are are helping

that, but it's also the private capital

markets as well. You're we're seeing

capital formation in almost every corner

of of the capital markets.

>> You oversee ECM. I come back to the

point that Google, Alphabet, however you

want to call them, raised close to $90

billion across a suite of products. Is

that something we should expect from all

these hyperscalers who need capital the

t the equity market and is there any

risk that that gets oversaturated?

>> I think that the the speed at which

Google is able to raise in the public

markets shows the depth um and the

capacity, you know, for for the capital

markets. And I think as long as

companies are showing an ROI and a good

use of proceeds to raise that equity

capital, the markets will be there for

them.

>> How do we know when it becomes

uncomfortable, crazy, exuberant,

>> frothy,

>> frothy?

>> Well, think back to 20 and 21. What it's

easy now to say that these were

companies that were advantageous, but in

the moment, did it feel that way? I I go

back to when you look at fundamentals

and you look at valuations,

we're not terribly stretched and we're

not at a, you know, a a new point in

time. And you go back and you look at,

you know, for example, software

valuations in 2021, those were hitting

new highs and they were hitting kind of

new records of where the market was

trading at. We're not seeing that at

large in the public market.

>> Train isn't profitable.

>> No, it's not. But it's and it's being

valued on a sales multiple for 2025

sales and and that and I think that some

people have come and sat here and said,

you know, it's starting to feel like,

you know, when we're valuing IPOs on

sales multiples, it started to feel a

little bit like the dot boom. Why is

this time different?

>> I I well, one I think I I think that's a

unique one. SpaceX, I think, is its own

animal. And I think when you're thinking

about the space economy, you're you have

to look at that in a very different way.

I don't think you're seeing the rest of

the market being valued aggressively on

a sales m multiple or other metrics

where people are trying to extend and

get comfortable with it. I think these

are based more in fundamentals. It's

based on growth right now and people are

seeing where the capital being laid

today has a return in the future and I

think you can pull that forward and

that's what's going on.

>> But the circular financing doesn't worry

you guys or what are the what what's the

we have this conversation a lot. Are we

stupid to have that conversation about a

company that seems to buy from another

part of its properties or invests in a

chipmaker because they need to like you

know what I'm saying?

>> What's the conversation you guys have

about that circular financing?

>> Uh the the what keeps me sleeping well

at night about this is the fact that

we're having the conversation. And I

think if if people are acknowledging it,

we're talking about it, you're

dissecting it, you're diligencing it, I

think the cycle has room to continue and

and to grow. I think it's the unknown

risks, not less the the known risks that

um I think you know could could derail

the cycle.

>> And when we look at this market, is

there a risk and and kind of just

thinking about the difference between a

hyperscaler who is historically been the

best cash flow cows in the history of

mankind, they can at least turn off

spending. How do you think about

companies that are spending and need to

spend but don't have hundreds of

billions of dollars annually or by

annually in terms of free cash flow?

>> Yeah, I look I think you um you have to

look at the the the the fundamentals of

the contracts. What what is what is it

contract you know what is contracted

from the demand build that they have

today and get comfortable that what

they're investing in right now has the

right economics to yield a return in

three or five years. Um and I think

you're right like you know they might

not have the uh free cash flow spet

today but you look at um what is

contracted and what could be p you know

come to fruition in a high quality way

in the next two to three years um you

you can bridge to that free cash flow.

>> We got 30 seconds left here. You've been

covering this market. What do you want

to ask Dave?

>> Do we see more private equity IPOs in

the second half or is that still an area

broadly speaking that's touch and go?

>> I I I think definitively yes. Um I I

think the market um would be

accommodative uh for that and and our

backlog suggests that we will have uh a

number of those in the second half

>> in about 10 seconds. How much does debt

leverage or how much does leverage

ratios matter for those companies?

>> Uh it it matters I think um I think you

want to get it to a comfortable starting

point but I think for good free cash

flow stories with solid predictable

revenue and growth the market can get

comfortable.

>> So welcome to our regular weekly

segment. We'll see you both here back on

Monday. belly lip shelves of course

Bloomberg News IPO reporter Dave Bower

head of equity capital markets America's

over at JP Morgan Chase.

>> Stay with us more from Bloomberg

Business Week Daily coming up after

this.

>> You're listening to the Bloomberg

Business Week Daily podcast. Catch us

live weekday afternoons from 2:00 to

5:00 Eastern. Listen on Apple CarPlay

and Android Auto with the Bloomberg

Business App or watch us live on

YouTube.

Hey, speaking of sports, maybe that's

one of the reasons that Fox is buying

Roku at a $22 billion value in this push

for streaming video. As we just

mentioned, shares of Fox fell 17% on

this news. Shares of Roku for much of

the day were little changed. They ended

up closing today, just down by about 2%

on the day today, but a lot of this was

priced in earlier this week. Keep in

mind Roku on Friday when it started to

leak out on Friday um when we were on

air uh that stock was up 20% in the

trade. So um a lot of the news was

already I think it's safe to say

factored in.

>> I want to bring in Githa Ranganathan

Bloomberg Intelligence senior media

analyst. She joins us from Princeton,

New Jersey. Githa, what is Fox going to

do with Roku?

>> So uh Tim, they're promising that

they're going to keep Roku as is. Uh so

really what Fox is buying here is

distribution. They own the content. They

own some of the best live content in

terms of access to sports properties, in

terms of their uh news coverage with the

Fox News Channel. But what they really

don't have is that distribution network

and that is really hurting them because

they have huge exposure to the linear TV

ecosystem. Uh where really nobody is

really staying there anymore. everybody

has kind of migrated away from, you

know, the linear TV ecosystem and

continues to migrate migrate away from

there to to streaming. And so they want

to go where the action is and they want

to go where the money is and where the

eyeballs are. And that's really what

they're getting with Roku. Uh and so far

they're promising that they're going to

keep operating it just as it is right

now.

>> What about Fox one? What about 2B?

>> Again, we'll continue to operate as is.

Uh but you know, again, we we don't know

how things change. Obviously, they're

saying things that need to be said uh

because Roku does partner with everybody

in the ecosystem. And I think some

people are worried that maybe, you know,

Roku's always kind of been known as this

neutral platform, right? Uh

>> Switzerland, the Switzerland of the

streaming box, that was something they

sold to like me as a consumer tech

reporter like 15 years ago, you know, as

as Chrome was or as Google was coming

out with the chcast, as Amazon was

coming out with its streaming stick,

they were like, "Hey, we got no skin in

this game. We work equally well with

everybody.

>> Yeah, exactly. And so, uh, you know,

this is this is a little bit of a

headscratcher in terms of how all of

that neutrality is going to work. Uh,

but, you know, from what Fox Management

has said so far, uh, they said they're

going to keep operating the platform as

it is. Of course, we have to see how,

you know, the other content companies

feel about it. I mean, this is kind of

letting the the fox into the hen house,

if you will, pardon the pun, but that's

really what it feels like a little bit,

but we'll have to we'll have to see.

>> Um,

so does a deal like this mean somebody

else I always like wonder about that.

Does anybody else have to do something

or no? This is really Fox playing

catch-up to some extent.

>> So Fox Yes. Yes. Um, so Fox uh stayed

away from all of those expensive

streaming wars when everybody was going

crazy and launching, you know, a plus

channel, Disney Plus, Paramount Plus,

you know, uh, Peacock or all all of the

streaming platforms. Fox was the one

that kind of very famously stayed away

from all of that and said, and actually

in in in hindsight, that was the smart

move to make because all of those

companies lost billions uh if not tens

of billions of dollars on making those

very very expensive foray into

streaming. Um, and it all ultimately

came down to profits. And so at the end,

Fox actually ended up looking looking

like a winner in many ways because they

hadn't lost that much of money. But I

think the one thing that has kind of uh

definitely weighed on investors mind and

generally weighed on sentiment has been

that Fox has really heavy exposure to

the linear TV ecosystem. One that you

know they they really needed to kind of

reset their narrative. Um and the Roku

acquisition helps them do that. So right

now they get 90% of their revenue from

linear TV only about 10% from digital.

This move immediately helps them get

close to about 35% of their revenue from

from digital. But more importantly, it

really helps them kind of be there at

the center of it all, right? They

they're in on all types of action with

streaming, whether it's advertising and

whether it's subscriptions. So, anybody

who gets a subscription through a a Roku

uh box, you know, Fox is going to be

able to participate in those economics

and and that matters.

>> That was my family on Saturday night

when we wanted to watch this final game

of the Knicks and Spurs. We spent 30 or

35 bucks on ESPN and we bought it

through Roku. So yes, I don't know who

who knows. Um I I I I wonder what this

mean I mean what what's so this is

company like in the early days of

streaming Anthony Wood is the CEO the

founder of the company. He he like

invented the way to get streaming to the

biggest TV in your home. This guy's like

legendary when it comes to streaming.

This started out as like an experiment

at Netflix to try to get Netflix on on

the biggest screen. Are there any

antitrust issues here because it is such

a big gatekeeper?

Yeah, they are a huge gatekeeper and one

can argue that yes, this with this deal

that you know Fox does kind of become

this vertically integrated platform.

Remember they will get access to 100

million global streaming households and

you know we're talking almost close to

about 70 million you know US broadband

households. That's a pretty sizable

number. That's half of you know

basically US broadband households. But

you know the one thing that that we have

to keep in mind is the Murdochs are

really cozy with you know the current

administration with uh the President

Trump and you know in this environment

we've we've kind of seen those uh

friendships actually go a long way. So

maybe they get uh they they don't go

through so much of scrutiny but

obviously there is always that that that

chance that there might be some

regulatory uh watch as well.

>> Was Roku worth 22 billion? Mhm.

We actually think it might be worth more

um and and I say that because you know

um it just if you just look at the

growth profile of this company Carol

it's been amazing. So the way they have

been really honing in on some of their

undermonetized assets. So they've

refreshed their home screen and this is

the first time that they're doing this.

This is their biggest product refresh in

about 10 years. And what it really helps

them do is kind of become like this

Netflix landing page. So you know that

the Netflix landing page is very much

like how you can make or break careers,

right? You can make or break a show. You

can, you know, cotton just pops up there

and that's it. Everybody's talking about

that. That's that's the subject of all

the water cooler conversations. And so

Roku is very much now trying to be that

Netflix homepage. So you can really see

them uh they've rolled out the new

homepage to about 20% of their of their

base. uh it it's going to be rolled out

to to to the rest of their users. Uh but

it's all really about elevating the

content, right? And um and people are

willing to pay for this prime, you know,

inventory. Um and we're seeing that

actually in the numbers. So if you just

look at Fox or any traditional media

company, we're kind of, you know, if you

get flattish revenue growth, that's a

big deal. Roku's platform revenue is

expected to grow about 21% this year.

21%. Yeah. So that is that is a big

deal. That's impressive. Um, Gita, thank

you so much. Gita Rangan, she is

Bloomberg Intelligence senior media

analyst joining us uh from our BI

offices in Princeton, New Jersey.

>> Stay with us. More from Bloomberg

Business Week Daily coming up after

this.

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>> Carol, for for so long,

>> we've had people come into this studio,

the

>> also the other iteration of our

Bloomberg Interactive Broker Studio

where Charlie is.

>> Yes.

>> Holding down the fort. And one of their

main propositions was these were wealth

managers and one of their their main

things was like there fewer and fewer

companies are going public. There's less

public stock out there because companies

are buying back shares. We are

increasingly getting into alternatives

because there are fewer public companies

out there,

>> right? Because we need to put money to

work to invest

>> and that's been one of the most defining

mo like elements of the equity market

over the past couple of decades. So

writes Carmen Reinicki Bloomberg new

stocks reporter. She's among the authors

of today's big take. It is one of the

most read stories on the Bloomberg

terminal. She joins us here in the

Bloomberg Interactive Brokers Studio.

Suddenly,

there's a lot of value. Well, I don't

want to use the word value because I

don't want to get people, you know,

thinking value versus growth, but

there's a a lot out there for investors

to buy. What's what did your analysis

that you did along with Lu Wang find?

>> So, basically, there's been sort of a

switch in like expansion and contraction

of the market. So, over the last few

decades, we've seen companies really

aggressively buy back shares, right? So

sort of shrinking the overall pool of

stocks available and giving a lot of

support to investors along the way. This

year however with all of these new IPOs

that are coming down the pipe. I mean we

just saw record from SpaceX. Um we'll

hopefully see Anthropic and OpenAI by

the end of the year and we've seen

equity issuances from companies like

Alphabet. um the you know the number of

stocks or things available to trade in

the market is expanding to the tune I

think it's 1.5 trillion of stock added

to the US equity market over the next

two years that's from JP Morgan Chase

and Co.

>> Is this just cyclical though where you

know at at a certain point when when

these companies see value in buying back

their shares they're going to they're

going to gobble at them up again.

>> I think there are a lot of factors that

kind of go into it. One of it is yeah a

lot of these companies especially in the

technology space have these huge balance

sheets. There were you know not other

places I guess that they were wanting to

deploy capital. So buying back shares

was a great way to return some of that

that value to shareholders. Now they

have these huge spending needs because

of AI you know building out the data

centers and all the other technology

that they need to use it. And so they

want to be spending money and raising

money to spend on those things. So the

part of it is that and then I think on

the flip side, you know, this is

something that's sort of similar to what

we saw in the 1990s sort of around the

like the dot boom and bubble bursting.

So I think there is some cyclicality

there as well, although people are

obviously very very careful to, you

know, necessarily compare them too much

or say that this time isn't different if

we're talking about a bubble.

>> Is there any worry um that there won't

be enough investors to buy all all the

stock that's issued?

>> That's definitely a concern. So, I mean,

we had a really great sort of run out of

the gate with SpaceX, which definitely

assuaged some fears that there wouldn't

be enough investor demand or that the

market would have trouble sort of

digesting this large of an issue.

>> I was shocked how well it all went down

on Friday. I was shocked.

>> I was too. I mean, I think everyone was

sort of braced for a lot more issues and

it went very smoothly and even today we

had a second great day of trading.

There's clearly a lot of demand there.

Um but as we get through the summer, the

next couple of months of the year, uh

the lock lock lockups are going to start

to expire. So a lot more of SpaceX stock

is going to come into the market. Its

float right now is quite low. And at the

same time, you're going to be getting,

you know, these other IPOs, Enthropic,

OpenAI, and it I mean, we could see

other companies also issuing secondary

offerings or see just you know, this

pool of in the equity market grow even

more. So that is I think a concern

hanging over the market for the you know

the rest of the year probably if not

more.

>> I'm glad you just reminded everybody

that it's only the second day of trading

for for SpaceX because I mean even even

a company like Cerebrus right we you

know how much did we talk about this

company in the first few days of trading

and it did hit a high on May 14th so

exactly a month ago $311 a share. It's

down to $218 a share

>> right now. And and I don't know what the

lockup structure is and who was able to

sell and when they were able to sell but

you're right. I mean, two days of

trading for a new company doesn't

necessarily make the the history.

>> No, it doesn't. And it it's even hard to

necessarily call it a trend. Uh, so

obviously it's a stock that we're

watching very closely over the next few

days, weeks, months, years.

>> One one thing that I want to talk about

in your piece is this idea of companies

staying private for longer. And and

again, years we heard that companies

would stay private for longer because

for a few reasons. one uh quarterly

earnings. We love them as reporters and

getting to talk about this stuff,

>> but it makes it tricky for companies to

grow their business, right?

>> Yeah. I mean, they're, you know, they're

marking a market every second of every

trading day. It's it's not an easy thing

to have happen and it's great for

liquidity and if they want to raise

money, but often times you can raise a

lot of money in the private market and

stay look I mean SpaceX is from 2002. A

company is

>> old. That's an older company than

Facebook,

>> right? Exactly.

>> Yeah. So, it showed that it could be

private for a long period of time. Does

this get companies off the sidelines?

You mentioned Anthropic and and um Open

AI, but other than those,

>> I think we'll see. So, something I've

heard from a lot of investors is that

SpaceX kind of opened the IPO window. Um

we've definitely seen, you know, fewer

than normal, I think, IPOs since the

Spack craze of 2021. And so this

hopefully kicks off a period of a lot

more companies coming to the public

markets, not just these huge mega cap

technology companies, but um one sort of

across you know the wide range of

sectors and sizes um available in the

market and and that would be a really

good thing for investors. The other

thing that I I hear from sources is that

they worry a little bit about all of

this value being created in the private

market that I mean it really leaves the

public market out and in some cases some

argue that it can inflate these

valuations without sort of giving

everyone a chance to be weighing in

which is you know basically what the the

public stock market is doing. It's also

a reminder, you know, of how expensive

it is for this build, right, in terms of

AI. And it also is a reminder that when

you really need a ton of cash, right,

the capital markets or the or the public

market is really where you go

ultimately.

>> Yeah. And equ offering equity like doing

these offerings has become cheaper in

some aspects than debt. So, it makes

sense that these companies would be

looking to to go to the equity markets.

And I mean they're doing both, right?

But it makes sense that they'd be

specifically wanting to tap equity

markets.

>> I just think it's fascinating how

>> secondaries. Is that what you're going

to say?

>> Secondaries, but also just how it's

debt, it's equity. Like you're just

seeing

>> the all the throw everything at the wall

approach of raising capital.

>> Just reaching out to every bucket that's

there in terms of raising money and

capital for this build. And I guess it's

just something we'll watch really

carefully because you you look at um was

it the Nvidia, right?

today, right? And three times overs

subscribed like that.

>> And that was a debt raise.

>> That was a debt raise, but it's just you

see the investor interest

>> and and we certainly saw it with SpaceX

and we'll see what else. We're just

essentially an AI play, right?

>> It is and it isn't. This is something

I've been asking people a lot about as

well. And I think there's a little bit

of tension out there. I mean, certainly

the market seems to be valuing it as an

AI company as much as a space company,

but I I've definitely heard some sources

say, you know, their their AI offering

is so much behind the others.

>> Yeah, it's got to deliver right before

Kerman.

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