Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive from coast to coast with Caroline Hide in New York and ever Low in sentrances, go.
This is Bloomberg Tech coming up. Netflix gives a lackluster forecast for the second quarter, while chairman and co founder Red Hastings steps down after twenty nine years at the company.
Plus, the US government plans to make a version of anthropics Mythos model available to major federal agencies to tackle cyber risks, despite the ongoing legal feud with.
The Pentagon and Sequoia.
Capital raises seven billion for its latest expansion fund, targeting AI giants like Open Ai and Anthropic. We have details later in the hour.
Such a great scoop ed that you've got. Meanwhile, let's forget what the markets are doing. Extraordinary moves and once again it's because we get an extraordinary barrage of news when it comes to the Middle Eastern conflict, the straight of war moves promised to be open for commercial vessels at least. Oil absolutely tumbles down some twelve percent as hopes that suddenly we'll get supply chain eases coming. We're off by twelve percent. Now at one point it was
a record move for Brent. I'm looking at therefore still a record high for the NASDAK one hundred up one.
Point three percent.
This is another almost thirty we're seeing just trillions added over the course of the last few trading days. I want to look at what's happening in terms of the last thirteen days. This is the longest streak that we've seen in years. We're currently up some sixteen percent at the moment ed. It is notable the amount of games that we see in the Nasdaq, how long they have been for and even today despite one key drag on the market, that you're looking.
At thirteen days for the first time since twenty thirteen. The technology story is in the markets. Microsoft is up two and a half percent this Friday, but on the week, it's heading for its best week since two thousand and seven. There's no one single story or catalyst out there, but there's just momentum generally. Intel Similarly, we've been talking about Intel being an outperformer even in spite of the war
in Iran and how that's impacted chip supply chains. It's a stock trading at its highest level since two thousand. Where there is a story is in Netflix and Netflix's earnings essentially, the outlook for the current period. The second quarter not that good, and the stock is currently down eight and a half percent, its worst day as it stands since October. At one point in the session, we're even deeper declines. And then there's the overhang of the
Warner Brothers Discovery deal that didn't happen. And then Read Hastings, the co founder and now chairman who's been with this company for twenty nine years, is stepping down. Let's summarize Bloomberg's Lucas Shaw, who leads the screen Time team, is with us.
Let's start with that overhang.
I guess one of the reasons that the first quarter results look good is that they got to pay a breakup fee from Paramount, so factor that in, but I think that that is the story. There's just this hang of what life looked like after walking away from the Warner Brothers Discovery deal.
Well, walking away from the deal has been the short term up until earning has been really good for the stock. Right the stock was up quite a bit over the last few weeks. Investors did not like the Warner Brothers deal. They were worried about how much Netflix was paying. They were worried about what it would mean for the company.
But it also fed sort of, I think, expectations that the forecast this year would be revised in a positive way, and instead, even though Netflix had a better first quarter than they expected in terms of subscriber growth and revenue, they maintain the estimates, and they warned that actually profit and margin would be down a little bit in the second quarter because of increased spending on programming.
So maybe the market got ahead of itself. Where did they get impacted by Read Hastings? How much is that a concern that this looming large figure co founder is going to be stepping and looking more at philanthropy.
Yeah. Hard to quantify, of course, because it's not like the investors will saying, well, I sold for this reason and I sold for that reason. But look, it has to be a factor. On the one hand, Read Hastings has been telegraphing his departure for a long time. In twenty twenty he names ten surround Us as co CEO. In twenty twenty three, he steps down as CEO and becomes executive chairman. Then he becomes just chairman. He's been signaling that he's going to thraw from this business because
he feels like he's done his job. At the same time, this is the guy who led the company for most of its existence, did a tremendous job, and so his departure is going to worry people.
Just to point out that Read Hastings is also a board member of Bloomberg Inc. And Bloomberg LP, the parent company of Bloomberg Media, the parent company of this network, Lucas. There's a lot of choice right now. I watch Netflix. I'm watching The Night Agent. I think it's very good. You might watch HBO Max, you might be Disney Place or Hulu. Did we learn anything about Netflix's content slate strategy? You know, they've been pushing into live, pushing into games.
It's not really clear to me, like what what happens next on that front.
They're staying the course for the time being. At least they're sort of reiterating we're confident in what we're doing. We're yes, they are. They're moving into some new areas video podcasting, live programming, and gaming. Where the three that they signaled both in their letter to shareholders and in the call I don't think those have immediate or dramatic impacts on the business. Podcasting is not registering in a
big way yet. Live is probably the most significant, but they are being very selective about what live programming that they do. And video gaming they would acknowledge has has been amiss so far, but they feel like they're starting to develop a more comprehensive strategy for the most part. You look at the twenty billion dollars nineteen billion dollars they're going to spend this year, and it's on the same kind of scripted programming they've done for for a long time now.
Lucas sure as always brilliant to have you leaders screen time.
We appreciate it.
Let's get more on Netflix with Alicia Reese when we're Security Senior vice president of equity Research. You've actually got an outperform rating on the stock one hundred and eighteen dollars twelve month price target actually raised a little bit from one hundred and fifteen, So the confidence. Alicia talked to us about where the confidence comes from.
Yeah, I think the ads strategy is what is being underappreciated here domestically. I think they had to put a lot into content in the second quarter to offset or you know, just give the user reason to for resilience on the on the subscriber, subscriber the premium tiers, but those who are not convinced could easily go to the AD tier. And we've seen with our survey work over the years a lot of resilience around that since they
introduced the AD tier. I think there's a lot of reason for people to stay when they give, when they post all of that content. And you know, to lucas this point, you know, podcasting hasn't been a huge mark so far, but you know, Netflix did point out that a lot of their users are coming on during the day when they wouldn't normally come on, and so that is incremental engagement. I think it's useful to have as much incremental engagement as they possibly can as they raise price.
I do think it will be incremental here in with the price increases domestically, perhaps not in Europe. There is some legal pushback right now on the price increases in a few countries and could potentially be in the continent. I think, you know, the AD tier is really you
know that the piece that is underappreciated here. There's so much opportunity for them to expand, and as they increase price, some people and quite a few people tend to get pushed over to the ad tier, and with Netflix's low ad load and higher CPMs and potentially growing CPMs, they can benefit pretty handsomely in the back half of the year, Ansia.
Can you go through geographically for US a little bit, because perhaps we're underwhelmed in terms of first or pushing forward first go to US. Canada was actually a slightly slower growth and anticipated, but Asia doing well, Europe doing well, that in America doing well.
Is there's still the growth there.
Yeah, I think it's really important to note that, you know, because of the geographic diversity, their results are you know, pretty steady overall. The World Baseball Classic was a huge hit in Japan, but it didn't seem like there is a lot of churn. Soon after, there was a lot of content that people in the region found really favorable
and so they kept on the service. And Netflix noted their AD tier being, you know, having a little bit more heft in the region because of that increased subscriber growth. So that's something that we had not factored in. The average revenue per member is quite low in APAC, and I think advertising in Japan and elsewhere in the region could really boost results. You can wasn't as strong as we had expected it to be in the first quarter, but you know, there was a range, and it was
really within the range. Our survey work, you know, just suggested that it was pretty standard part for the course. Nothing you know, huge, a miss or a beat, but you know, you do have some decent trends in Europe, you know, absent the price increases as well. So I think, you know, overall regionally they're quite healthy and they'll continue to be. But there is you know, nothing domestically that helped them hit it out of the park this quarter.
There's a line in the Bloomberg story Alicia wall Street is looking for signs Netflix can keep subscribers engaged, and Netflix has not disclosed subscribers since the first quarter of twenty twenty five. It focuses on engagement time spent. And so you've gone over a number of interesting telltale signs of how you assess the health of the company going forward.
What is the metric that proves definitively that Netflix is taking time and eyeballs in a world where you have a lot of choice, and it's not just about streaming platforms in that battle.
Well, it doesn't matter whether they're on the premium tier or the ad tier, so long as you know, Netflix is extracting increasing revenue off of these users, and engagement is clearly an important sign. But so you're looking at a combination of revenue whether they're getting, you know, the highest subscription price, or whether they're on the ad tier and engaging significantly with the content and providing a lot
more value to advertisers and therefore revenue to Netflix. And if they're able to do that at a reasonable cost of content, the profitability will continue to climb and free cash fow will continue to climb, and that's what we've been seeing, and so for us, that's a huge positive.
In the second quarter, surely there's going to be a lot of content memorization, a lot more content on the service, but in the back half that's going to even out and they'll be able to hit those full year targets and probably exceed them.
Netflix ask Wall Street judge us on traditional financial metrics. The stocks down nine percent, on track for its bigges stroops since October, but at one point down twelve percent, biggest drop since twenty twenty two Wall Streets judging on the financial metrics. Alisha Reesa Webersh, thank you very much. Now coming up in the program, and thropics Mythos model was among the top concerns for global leaders at the IMF Spring meeting. We're going to get the latest on
the cyber concerns buzzing around DC at s NEPs. This is bloombog Tech Andthropic CEO Dario m. O'Day is set to meet with White House Chief of Staff Susie Wilds today.
That's according to reports.
The meeting comes as the company's powerful AI model Mythos continues to raise concerns with public and private leaders over its cybersecurity capabilities. And let's not forget and Thropic is still feuding with the Pentagon over how the military uses its AI tools. Let's get the latest with Bloomberg's Mike Shephard, who's in Washington. I think we start with the reported meeting, but right now there is constant headlines about anthrop relationship with the federal government.
Ed.
This is a little bit of a twist in the whole saga. You know, since the beginning of the year, we've seen this increasing few between Anthropic, the developer of Claude, and now Mythos over what degree of safeguard should be included in its product, and it culminated in that Pentagon declaration of the company and its systems as a supply chain risk and prompting a company lawsuit to get that
designation overturned. Really an extraordinary turn of events, and yet now the technology has forced another and this is the prospect that its newest product, Mythos, could be so powerful and so good at identifying cyber vulnerabilities that it can't be released widely beyond a handful of technology firms and Wall Street banks that really have that kind of trust and also would need to be able to vet their
own systems. In a way, this really kind of brings us closer to the remote possibility that has been talked about by policy makers and others for years that there could be a devastating cyber attack that takes out critical infrastructure or disrupts the financial system.
Mike, what have those in Washington?
What are those close to the administration made of this sort of contradictory relationship going on at the moment. The fact that they're trying to freeze them out from a supply chain headache risk in one sense, I mean an extraordinary step taken. And on the flip side, outside of the Pentagon, they seem to be working with a Treasury department, and we understand would eventually be working with other federal agencies.
Well, this really is the question of the moment, and it seems to be that they are looking past the conflict that they're having between the company and the Pentagon for the moment, simply because they need to.
The urgency of it.
Requires that the Treasury Department not only engage and test the system on its own networks to make sure that there are no vulnerabilities. Ever, remember the Treasury handles all manner of payments to US citizens, social Security, you name it, and then also performs critical market functions that could be disrupted if hackers were able to penetrate those networks. So they really have an agenda, and so do many other agencies.
So for the White House to line up access which it currently does not have to METHOS for all these agencies is something seen as important and it is putting in the backseat. This whole question of whether the Pentagon should be insisting their anthropic drop its demands for safeguards on its products and military use.
Bloomberg's Mike Shepherd and DC with the reporting. Thank you.
Carra just point out that over the last seven days a number of Anthropic executives have gone on stage or done interviews and they've basically explained that they want to have it both ways. They're saying, yeah, we are standing with these principles against the Pentagon because we believe in it, but we know that the government needs to have access to and understand the most powerful model. That's basically the
lineally pragmatic. They're trying to be pragmatic, and at the end of the day they are now based on our reporting, taking action on that and saying to government, have had it.
And isn't it interesting.
At the same time, we've got the UK and Europe desperate to get their hands on this technology as well and calling for steps to be taking. We learned, of course in that interview with Tom McKenzie and the Anthropic UK lead or North of Europe lead, the UK will be getting it soon.
Look, you've got to learn more. There's plenty to discuss. Let's talk about how.
We've got a Bloomberg Live Q and a coming up a little bit later today on Anthropics Mythos coming up, We're now going to be speaking to the AVEX CEO, Roger Wells. So the company makes its public market debut. This is a Bloomberg Tech.
Madison Air made a strong debut on the public market's pulling off the largest US industrial ip since nineteen ninety nine. I spoke with CEO Jill Wyant about the company's strategy and how is data center business took shape.
Listen to this.
So we've been at this for a while.
You know, the data center business was born out of our customer handling business, which has done this for a combined three hundred and fifty years. So we did not start doing this last week or last quarter. We've had a triple source supply chain. We've had ninety nine to one hundred percent delivery rates for the hyperscalers and the co locators we've been serving for years, and we are there to care for and optimize and ensure those assets
perform at their best. We are differentiated, we are winning, and I think the best part of that story and it's all within a very balanced set of end markets. We are not a data center peer play. We give investors great exposure to the obvious opportunity there while at the same time growing nicely in other advanced high performance environments in the macroeconomy where air impacts customer outcomes.
Away from the stock market.
You know, a focus of the Bloomberg Tech audience is the role of debt in all of these projects. Let's call it the reindustrialization of America. I think, correct me if I'm wrong. You know, coming out of this IPO, the debtloads, I think it looks like about three billion dollars for you. What's the strategy do you see with time paying that down? That coming down quickly? Or your sanguine on the load and how you work it?
Well, about a one hundred one hundred percent of the IPO proceeds we were used to retire debt. So now I don't know the exact calculation. I've been talking to a lot of folks today about green shoe execution. But really we should come out of that IPO about three and a half times trailing on a leverage basis, and then we continue to do what we do, which is grow our business and generate cash flow and expand our EBITA, which should allow us to exit twenty twenty six below
three times levered on a trailing basis. Again, we run that play into next year, and we should be south of two point five times levered, as I say, before New Year's eve, well before New Year's Eve in twenty twenty seven. And really then it just comes back to the same play we've always been running. Grade sales, higher margins are EBITDA margins enterprise wide at twenty six and a half percent or eight hundred to one thousand basis points better than the most of the competition we see
out there. Our team is very focused and robust around converting that to free cash flow. We have an asset light model where we whereby we can make our growth investments while remaining at a low single digit capex, and we have an owner's mindset across the company, so good discipline use of cash. So we feel good about that, you know, getting that balance sheet to the point where investors consistently told us they wanted to be, and then that just opens up more optionality and flexibility.
For us going forward.
Madisoneo to Yan sticking with IPOs Shares, a military drone maker AVEX. I'll have to begin trading today. The companies raised three hundred and twenty million dollars. The shares pricing twenty dollars each, near the top of its projected range, has beat now with Roger Wells, he's AVEX CEO, and a big day for the business. What's interesting is what you use the money for. Therefore, what will three hundred and twenty million dollars by.
Yeah, so our primary use of proceeds is going to be to buy down debt and create networking capital that we can really use to scale the business and accelerate growth.
Just so you know, Roger Bloomberg's reporting that these shares are indicated to open somewhere twenty three to twenty five dollars apiece. You priced at twenty it was twelve times over subscribed. So I don't know how that makes you makes you feel. But the basics of it are, you're a drone company, and you're a company that, in line with the rest of industry, is looking at the battlefield you might move deeper into warfare.
Explain the strategy.
Yeah, So, first off, we couldn't be more excited with where we landed. A lot of investor excitement and interest in the products, technologies, and solutions that AVX is moving into the market. We are a company that builds autonomous, multi mission, multi domain systems that are battlefield proven. By the time we get to the end of fiscal year twenty six, we will have delivered over nine thousand system to Ukraine and really proven the capabilities that we bring.
We will continue to focus in on bringing kinetic solutions that are designed to meet the needs of our customers long range precision strike voider ammunitions and launched effects.
More broadly, when you say that these are being used, how do we see the scale rampop and how dependent do you remain on government contracts from the United States.
Yeah. Look, I think the.
Activities we've seen in Ukraine and more recently in Oran just validate the fact that autonomous unmanned systems are going to be a part of modern warfare now and long into the future. We feel like we're well positioned with significant backlog over eight billion dollars as it stands today, and really also validated by the fact that the fiscal year twenty seven budget request came in over fifty billion dollars for exactly the same types of systems that we
bring to the market into our customers. So we see a lot of growth in this area of the market and a broad adoption of this type of technology.
Have you done the math on that, Roja?
So when the full year twenty seven defense budget gets done, how much of that you could capture?
Yeah, I think we're well positioned and well aligned with evolving requirements. Obviously, we're working very closely with our customers to ensure that we are able to bring scaled systems that are affordable and on the timeline that's operationally relevant. So we're constantly working with them to make sure that we're meeting their demand.
Roger, There's been a lot of exuberance, shall I say, hype around defense tech names, and a lot of them make drones, and I'm interested as to how you continue to build a USP narrative here. What makes you different than the other drone companies?
Yeah, Look, I think we really focus in on a differentiated technology stack that allows our systems to be highly competitive on the modern battlefield. We're able to execute in highly contested environments where GPS is denied, communications jammed, electronic warfare is being pervasively devoid quite technical sophisticated adversaries, and that technology differentiation is really how we distinguish ourselves and how we continue to bring top talent.
To the AVX team.
Avex indicated it's open twenty three to twenty five dollars, priced at twenty dollars in an IPO that Bloomberg reports was more than twelve times oversubscribed. Roger Wells is Avex's CEO, Thank you very much. Coming up on the program. Shares of Netflix dropped pretty sharply as well, after posting disappointing second quarter earnings forecast. There's also a big departure. Someone with a long history of that company will have it next.
It's halftime. This is Bloomberg Tech.
Welcome back to Bloomberg Tech.
We are checking in on these markets because it's an extraordinary day. From geopolitics, it looks as though the straight ofform moves is open according to Iran courses as we move towards closer end to conflict of the world hopes. But we're down by nine point six percent if you're looking at oil, we've jumped a head a little bit.
So let's go back to the Nasdaq one hundred record high. Yeah, down ten percent on Brent.
Tech is unstoppable in spite of the war in Iran, so many headlines, so Iran's foreign minister confirms the straightform Moves is open. By the way, the straightfor Moves is a body of water in the Gulf and lots of ships carrying oil pass through it.
More than oil, more than oil.
Everything's need for check.
But that's why you see that that big drop in Brent. You know that the oil, I guess will start flowing a little bit more. And then you know, broadly speaking, you know tech is the focus for a lot of investors right now. And within that, you know that bucket of the Nasdaq one hundred for the first time, a thirteen day streak since twenty thirteen.
I think, yeah, twenty thirteen.
To go back that long.
The sentiment risk on sentiment to remain just by all the jupilitical headlines. But let's go to the AI headlines that continue to drive this market and look for some.
It's positive, for others it's negative.
Figment down off by six point four percent as we get well reality check, that's still AI might be disrupting the world of software this time. Claude Design is what's coming out and topic just relentless with the amount of announcements.
Yeah.
So look at that chart, the squiggly line. But the drop just after eleven Eastern is because the headline hit Anthropic, confirming that Claude Design is being launched and released. It had been reported in the press earlier in the week, which also had hit Figma. But that's a pretty sharp reaction of AI displacing a platform that does design.
Create polish visual work like designs, prototype slides, one pages and more.
Lanodobe as well for example.
Yeah, storry is not going to go away. Let's get back to Netflix. And Netflix is under pressure and the stockdown almost ten percent, on track for its biggest drop since October. I believe at one point on track for its biggest drop since twenty twenty two. The reactions to the numbers and a big departure. Keitha rang A, then a Bloomberg intelligent intelligence, says in her React research. Netflix maintaining its full year outlook despite avoiding M and A
costs may concern investors, but reflects a cautious approach. Peter joins us, Now you know a lot of your colleagues and peers in the markets on the street pointed out that they kind of wanted to see Netflix raise the full year guidance. You know, was there an expectation of that, Like, why were we going into to the print thinking maybe they'll tell us things are better than they are.
Yeah, there was definitely a lot of you know, elevated expectations going into the print ed. So you know that they just hiked prices in the US, and I think that definitely fed into that optimism.
There was also the.
Thing of you know, the M and A integration cost basically going away after they dropped the Warner bid, and so you know, I think investors just naturally assumed that they would take up their operating margin, which they did not do. So, you know, this was just your classic case of when results were definitely good, but that's just not good enough, given that the street was expecting a whole lot more case it.
Therefore, what holds back margin growth revenue still looking regive good, perhaps a little more tepid than the street had anticipated, is consumer sentiment.
The one being hit is it, Well, they.
Still have to deploy cash within their content because look, they're not getting Warner Brothers discovery content anymore.
Yeah, No, that's a great point, Caroline, and it's exactly that. So it is elevated content spending this year. So historically what we've seen for Netflix is content amortization in about the six to seven percent growth range. This year, it is actually jumping pretty significantly, so it's going to be
up ten percent. They've guided to cash content costs of roughly twenty billion dollars, so that's you know, a pretty significant step up from prior years, and that's what is really kind of working its way into that kind the tepid operating margin guidance. We're going to see the biggest
step up happen in the second quarter. And this is really just Netflix kind of as you just pointed out, Caroline, this is just them diversifying their content portfolio, kind of making all of these new investments into live content, into you know, some of these sports games, if you will, video podcasts, all of that, and that is really casting them. But it's you know, it's them just playing both offense and defense.
Rangon Avan, it's so good to have you on. Thank you from Boomberg Intelligence Ed.
What have we got?
Yeah, many more news stories in the world of tech, and it's time for talking Tech first Up. Chinese regulators have find leading delivery platforms in the country, including those from Ali, Barba, Pinduo Duo, and May Twan. For failing to screen unqualified merchants, authorities imposed five hundred and twenty eight million dollars in fines and seizures, the largest since China's twenty fifteen food safety law update. Plus TV shopping
network QVC has filed for bankruptcy. It's part of a plan of the Struggle multimedia retailer to cut more than five billion dollars of debt. In a statement, the company said it had more than a billion dollars in cash at the end of twenty twenty five to fund ongoing operations.
And Open AI is rolling out an early version of a new AI model designed to accelerate drug discovery to chat tob tea maker says it's gpt Rosalin model targets life sciences research that will initially be offered as a limited preview to select business customers.
CORCT the promise of healthcare is big when it comes to AI. Meanwhile, you're coming up with a big set of investment towards AI, potentially SEQUOIA capital raising seven billion dollars for its latest expansion fund under this new leadership.
Were on that next, this is Bloomberg Tech.
Bloomberg reporting that Sequoia Capital, one of the largest and most prominent venture capital firms, has raised seven billion dollars for its latest expansion fund. It will target AI giants like AI an Anthropic and the Dasher Mascarain has break the story joins us now. So like Sequoia raises funds relatively often, I would say, but what we're hearing is like that, this is a big raise seven billion. It's very clear focus later stage mature companies.
What else do we need to know? Yeah?
Absolutely, I mean, listen, this is the first fund raise we've seen since there's been a leadership change and at Sequoia, So this is something that we've been tracking very closely. What is it going to look like under a new leadership with Pat Grady and Alfred Lynn at the top of the firm they came in at the end of last year. Right now, it looks like a lot more investing.
This is about double the size of the last expansion fund that Sequoya raised in twenty twenty two and comes in addition to two point five billion raised for its seed through growth investing last year.
So just a lot more capital.
And we're sort of seeing that written Nage, aren't we, Clenn Perkins Thrive. We know that others are in the market potentially raising you highlight capital, potentially general catalysts as well, and all of them having to raise bigger and bigger funds because they need to write bigger and bigger checks to the bigger and bigger startups.
Absolutely, I think right now there's a dynamic in venture capital where if you're a platform fund, you can't just be able to play in one stage. And so with this new capital with Sequoia, it's fur their latest stage investments and it remarks back to some of their most successful investments with which closed last month and a thirty two billion sale to Alphabet was something that Sequoia backed at the earlier stages but continue to double down on.
We've said that about Thrive, we're seeing that now about Iconic, a firm that I profiled today, backing Anthropic again and again. And so it's the new normal for funds to be having to add billions to their balance sheet.
Okay, so Natasha, let's let's show our audience who's leading this firm right the co stewards they're called not co CEOs, not co managing partners, co stewards. There they are on the left of your screen that read yeah, and they clearly have sartorial direction and synergy as well. But Alfred Lynn on the left Pat Grady on the right, just give the backstory of when they came in, the changes Sequoia made and set the scene for this new era at what is a very important and big bench affirm.
Yeah.
Absolutely so last year roll Off both handed the reins over to Alfred Lynn and Pat Grady. Now, Alfred Lynn was known as someone that was helping lead Sequoia's early stage practice. Pat Grady is someone that was known as leading Sequoya's later stage practice. Now we're seeing them both really be hand in hand and co lead the firm together.
And there's a few more changes.
So we've reported on some shake ups on the early stage side of the house. We've also seen some people come back to Sequoias fold. So most prominently we saw Douglioni, the former senior stewart, so former top leader of the firm,
come back into an active investing world. And we've also seen them beep out their growth stage investing ranks, so a lot of changes and that's why really the New Capital Hall is something we were so desperate to get to the bottom up because we have just been wondering if we're going to see Sequoia refocus or we're using them expand. And for now you definitely can tell that what Alfred and pats top priority will be will be expansion.
And to the bottom of it you got within.
Natasha Mascarona is always great reporting on the benure space.
We appreciate it.
Let's stick with that benure space because well, we just posted actually for VC record chattering two hundred and sixty seven billion dollars in the quarter.
But the data shows that.
The landscape is almost entirely consumed by the aiarms race. We don't want to call it that in this scenario, it's a race. Well, the rest of the ecosystem is effectively frozen because of geopolitical uncertainties. Joining us now is one of the architects of the support. Carl Stamford, director of Venture Capital Research, over at pitchbook KYL, It's extraordinary how much money is being raised, but how much money is being spent on just a few companies.
Yeah, it really is right, and to your point of the data looking really great, and it does, but it really depends on where you're at. Nine percent out of the capital went to deals of one hundred million ar larger, so about one hundred and eighty five you had seventy three percent of that go to five companies, all AI. And if you include data bricks in there, you have investors that want exposure and LPs that want exposure to AI.
And so what's getting left behind is the non AI companies, whether it be your traditional enterprise SaaS it was hot in twenty twenty one, or you know, different business models that are just not harnessing or not AIAI native like everyone.
Wants, everyone wants. So what happens is a tale of totally two cities.
Are there an awful lot of people out there who are receiving no funds, who are still languishing in down rounds or not even to raise funds at all?
Is that?
Are there these zombie companies out that car.
Definitely?
I mean there's twenty five percent of the unicorns, you know about nine hundred unicorns now in the US. Twenty five percent of those haven't raised since twenty twenty two in a market that's really fast and really hot like we're seeing right now. If you were a strong company and were leveraged for raising another around, you would do that. And so those companies are still trying to find a way to you know, maybe they are going to take a lower exit or you know, find some way to
go through us back and reorganize themselves. But there's a lot of those companies that were strong and hot in the next big company in twenty twenty one and twenty two and have not raised sense and those are the companies that are really struggling in this market.
We are we're just reflecting Kyle that the data we're showing, the data you guys published is from the first quarter, right, and activity has been heavy more recently. You heard the reporting from from Natasha and I last night.
Right.
Our understanding from sources is Sequoias doing seven billion dollars in an expansion to fund but to go after that late stage, you know, the AI companies, What do you infer from that? You know, the necessity to have capital at those levels, I guess, because otherwise you're not buying in to the names that we're talking about.
Yeah, there's a few things that tells me. Right, One, companies will continue are going to continue to stay private longer, right, And so those vcs that have I have access and exposure to companies that are then fifteen years old and raising another private round, are going to want to get into those companies again and continue to keep their stakes high.
It also tells me that LPs want that exposure. They know these companies are not going to go public in the timely fashion that we might have seen five years ago or a decade ago, Right, So they want to make sure that they have exposure to the anthropics and the SpaceX is and the data breaks of the world. Maybe not, but in the.
Future, those companies they're going to probably go public this year, right, Yeah, Yes, that's.
What I'm saying everything.
I think that impacts a lot, right. I think One, we're looking at those companies as the kind of market indicators if the IPO market window is going to be fully open this year. We have seen obviously SpaceX confidentially FI. We have seen discord filed in January, but hasn't gone any movement. There's not really a backlog or a pipeline of VC backed IPOs because everyone's waiting for these big companies to go public to see what the public investors
want to support. You see how Figure has traded today after Anthropic announced their design studio. That's the world. A lot of these VCPAG companies, they're going to go public and they're going to not find the support from their high valuations and then have to contend with the Anthropic and Open AI launching something that's very competitive to their space.
Carl Stanford, director of Venged Capital Research at pitchbook back on Bloomberg Tech, Thank you very much.
We've just talked about it.
Private markets are bracing for IPO soon to be public markets ahead of what's expected to be the biggest IPO ever, SpaceX has moved up a scheduled vesting date for shares awarded to employees. According to sources, it may be accelerated to assume as next week. Let's get the details with
Bloomberg Deals. Brian gord I think the point here is that an accelerated vesting kind of makes those employees feel a little bit better about the mechanics of an IPO for them, what they might be able to sell, and of course lock up periods, et cetera.
I think it gives them the comfort I suppose that they're part of the journey. And I think, you know, given what's going on with Elon generally, I think his view is that the employees, the shareholders are all in unison.
You know, this is very much part of their success.
So I think, you know, having giving this sort of reassurance and confidence to SpaceX employees that they're going to be you know, made whole if you will, in terms of what they're able to buy or sell, I think is you know, massively important just for unity morale around what is clearly a massive mega milestone, not just for Space Expert for the world or CAVAMOD.
But I mean, not to put it lightly, this is going to be the most extraordinary IPO, the most in terms of scale, in terms of what the company itself has achieved. But will there be this moment where we're starting to worry about how much the current employees can can lock in the money. What doesn't mean about the time frame how quickly are we going to there for b IPO.
I mean it's crazy to think that, you know, you're looking at a day now where the nastack is up one point six, one point seven. Everything is falling into place.
But if you also put you know, this employee, you know vesting schedule in the same light that you put the thirty percent retail allocation in, I mean, it's all kind of I mean, I don't think people fully understand the gravity of like this deal in particular, right, I mean, thirty percent you know, retail allocation and an IPO as large as large as this, they're looking to seventy five billion dollars. I mean, that's a significant chunk walking.
So there's there's a there's a timeline here. So what we're reporting is that SpaceX told employees that the vesting date would take place in April rather than May.
But what we're working.
Toward is June to set out the timeline and the mechanics of how we think this IPO is going to work.
Right, so this next week, as soon as next week, we could see this resting eight moved up of public filing, because they've already confidentially filed. The public filing could come we hear as soon as maybe the third week of May, which would then put them on track for that fifteen day minimum cooling off perio at the SEC mandates, which are then then for put them in line for the June listing that could come in sort of the second week of June, so that's like a matter of weeks.
So you know, by this time, in a couple of weeks, we could be at this thinking like the whole global capital market looks entirely different, like not to mention the trimming in some of the stocks that's already gone on to make way.
For this, And what the extraordinary is how much money has been made in the private markets and how much might therefore be made or not in the public markets.
Bloomberg's Ryan called across this IPO, we thank you.
Coming up, Apple's longtime marketing executive retires, marking.
A change of the guard for a series of key product lines.
As a Bloomberg Tech, Iran has agreed to suspend its nuclear program indefinitely, according to President Trump. In a phone conversation with our own Bloomberg reporter, he said that Iran will not receive any frozen funds from the United States. This is breaking news from our own Kate Sullivan over a Bloomberg. We'll keep you abreast of the latest, but He says that the deal between to end the conflict Iran, US and Israel, most of their main points are finalized.
It'll go pretty quickly.
According to the President of the United States, A S and PID a record and Nazak one hundred at a record.
Brank crude off by ten percent.
Yeah, the stocks route record and session highs anyway, but pushed even a little bit higher on those headlines. Another big story we're tracking, Apple's longtime marketing executive Stan Ung is retiring after thirty one years with the company. He'd been in charge of a series of key product lines for the iPhone maker, like the Apple Watch, airpod's health
and smart home initiatives. Bloomberg Senior Tech editor Dana Warman's here with us on set another name leaving the world of Apple one maybe people weren't familiar with, but important.
Nonetheless, Yes, and it.
Appears to be a friendly departure. But as you said, it's of a piece. There have been there's been a big changing of the guard across both the Steve Jobs era and even to some extent, the Tim Cook era. And this is not to say that Tim Cook is retiring anytime soon. But Bloomberg has reported really extensively that the company is really deeply into its succession planning and
is preparing a successor. And this feels like just another drum beat in a path that is going to culminate in Tim Cook himself leaving at some point, again not necessarily soon, but at some point not soon.
Stan is soon. What did he achieve? I mean, he's so closely known with the watch but also the iPod.
The og of at all.
Yes, absolutely goes back way that way back. And even in his LinkedIn post announcing his departure, he said that one of the last things he did at Apple on the Apple campus was do a workout in the gym using his original iPod Classic that he said was still working on a pretty good battery. But one thing that Mark German did note in his report is that at Apple, at least, marketing executives aren't just in charge of the advertising of these products, but they have a hand in
steering the product development itself. So that was interesting to me, And that is that's not to say that there won't be future airpod's, future Apple watches, and I'm sure that there are products in the pipeline for years ahead, but that just speaks to the influence that marketing executives at that level have at the company.
Well said in a woman, it's great to have you on all things Apple. We thank you.
There's another story we've got to get to over an Intel they're actually hiring Samsung executive Sean hun is about to join Intel next month to become general manager of the company's foundry services in a bid to help win over customers for the foundry business. And it course comes as a company is trying to break into the outsourced chip manufacturing business currently dominated by TSMC, and with Samsung coming in as a second it's important with the reporting you've done on the TERRAFAB.
Yeah, so Intel announced that it's joining must terrafab right, and generally the stock story is amazing. Intel is back at its highest level since two thousand, extraordinary, and it's up for a third straight week, and it's just like has momentum. But that is the unproven part customers using its chip manufacturing technology. And of course next week we'll find out because they have earnings. You know how much progress they've made.
Towards that two thousand to twenty and twenty six.
What a it has been to be with Intel and the fact that basically you're back at where we were in twenty twenty, that January high before, of course the world came to a standstill, is where Intel was out. But what a pummeling the stock got in previous years, and then just last year extraordinary up eighty percent, this year already up ninety.
Yeah.
Look, it's not just about capacity either, you know the volume of chips available. It's about what they've always said is technology leadership and having the latest processes that can produce the best chips at the highest year. The economics are brutal, but they just got to come out and say, oh, by the way, this is our customer. I'm not going to name one for them, but that's the story that we're looking for.
I need the proof points. Meanwhile, that does it for this edition of BlueBag Tech.
ED.
You're sticking here in New York.
I do a little New York weekend and we'll be back next week here on set. Check out the pod. You know exactly where to find it. Iheartspotify and Apple and on Bloomberg. This is Bloomberg Tech