| | | | | By Jeff Brown, Editor, The Bleeding Edge | | |
It's been a busy week between my travel and filming schedules as well as staying on top of all the market action. | | Trump's long-anticipated tariffs and subsequent pause have had markets swinging hard. | | | | If you missed it, I encourage you to give it a read. Nick gives great context to the situation and what we can expect depending on how the negotiations shake out. | | And as he points out, the long-term results are all down to how those negotiations shake out… | | | It all comes down to this… | | If these tariffs remain in place and no new trade deals materialize, the market will likely head lower […] | | If the Trump administration's negotiations soon result in meaningful trade deals and tariff rollbacks, I'd expect a sharp market recovery. In that scenario, we could see a 10% rally within days. And that could mark the beginning of the next bull market. | | We are still optimistic about our original thesis that the latter will play out in the days and weeks ahead and that the current response is a temporary market hiccup, not the beginnings of a long-term downturn. | | But it all hinges on how the tariff negotiations shake out. | | | | President Trump has since enacted a 90-day pause on the tariffs – excepting China – while new regulations are established with the countries willing to negotiate fair trade deals. | | The markets have, as expected, bounced a bit on that announcement… but the reality is that until we see a few major deals come through, the fear that tariffs will come back in a few months – however irrational – will continue to impact markets. | | We aren't free of this volatility just yet. In fact, I expect we'll be seeing a good bit more of it leading up to the 90-day deadline. | | We do believe the market will eventually rally as cooler heads prevail and trade deals are finalized. We just have to be patient, stay disciplined, and remember that selling into panic seldom does us any good in the long term. | | So, in the meantime, we recommend a levelheaded approach to adjusting anything in your portfolio. We tend to look back on moments like this and realize they were, at the time, actually excellent buying opportunities. | | Of course, we always encourage everyone to consult with their financial advisor before making any major allocation decisions… particularly when volatility is rampant, and emotions are high. | | But consider taking this opportunity to snag some high-quality stocks before markets head higher. And as always, my team and I are closely monitoring the situation and will keep you informed and updated as it plays out. | | Now, on to the AMA… | | | | | | Elon Musk's created a whole group of "Teslanaires"… His companies are worth more than $2 trillion combined… And the small companies connected to his breakthroughs have soared. Now, as early as June 1, Tesla is set to launch its initial fleet of self-driving robotaxis – and Elon believes what's coming could create "the biggest asset value appreciation in history." Jeff's sharing all the details – including the name of one of his top picks completely FREE. Click Here to Watch >>> | | | | Will the Rest of Musk's Companies Go Public? | | | Hello! | | I am curious to know when you think Elon Musk would ever take his various companies public. He obviously would prefer to keep them private and not deal with the hassle of stockholders. He gets enough of that at Tesla. So what would motivate him to do so? | | Thanks for all your hard work! | | – Steven M. | | | | Hi Steven, | | This is such an interesting question because there are many dimensions to this dilemma that Musk and so many other executives of promising private companies have to deal with. Most tend to oversimplify this dilemma, but that's a mistake. | | There are actually some things that can be done to satisfy both the investors' and the executive team's long-term goals. | | For everyone's benefit, Musk and many other investors with long-term visions for their businesses have a strong preference for keeping their companies private. | | The reasons are simple… It is very operationally inefficient to be a publicly traded company. It adds millions in additional expenses every year to support the filings and compliance of being a public company. | | Worse than that, institutional capital now has expectations about quarterly results. And if quarterly results aren't good, the executive team has to deal with the institutional investors. And if the company doesn't prioritize quarterly performance over long-term goals, then the institutional investors will sell shares and move on, driving the stock price down. | | Given this conflict between long-term goals and short-term demands of being a publicly traded company, why would anyone go public? | | As usual, the answer is money. | | Musk no longer has any problem raising capital for any business that he has. But that's not the case for most companies. They can raise private capital for a number of years, but, eventually, there are demands from private investors to either sell the company or take it public (i.e. a liquidity event so that early investors can take profits off the table). | | But even Musk is subject to some of these pressures for investor liquidity. | | So, to your question, what would motivate him to do so? | | Well, again, the answer is money. | | More specifically, the answer is capital to achieve his long-term goals. Even Musk, the richest person on Earth, has capital constraints. He didn't use only his own capital to acquire Twitter, now X. He pulled in other investors and also raised a bunch of debt. He didn't have to, but he wanted to. | | Why? Because the vast majority of his wealth is tied up in the equity in the companies that he owns. He would have had to sell a bunch of Tesla and SpaceX stock to other investors – reducing his ownership and control in those companies – to fund the transaction entirely with his own capital. Bringing in outside capital negates the need to do that. | | Musk has also been quoted as saying, "I don't think it's worth going public until you have an extremely stable and predictable revenue stream." | | This is an interesting quote in the context of SpaceX. SpaceX as a whole has actually become profitable with about $13 billion in revenue in 2024 and an estimated $4.5 billion in profit. Sounds like a great time to go public, right? | | The challenge, however, is that SpaceX's long-term goal is to make the human race a multi-planetary species – which would require the establishment of a Martian outpost – and make a business out of doing so. | | Current plans are to launch two Starships at the end of 2026 to send materials and Optimus robots in advance. Then, there would potentially be a crewed mission as early as late 2028 but probably during the next Mars/Earth alignment window in late 2030. | | It's unlikely SpaceX would go public before proving demonstrable success with its Mars ambitions. | | But, with that said, Starlink itself has been the key to SpaceX's profitability. Of the $13 billion in revenue, about $8.2 billion is Starlink which has become a cash cow. | | In 2022, Musk stated that a Starlink IPO might happen in the 2025 timeframe. There is still a chance, but only when the IPO market returns to strength. I predict this will happen in the second half of this year, specifically September to early December. | | SpaceX has a lot of research and development costs that it needs to fund to both commercialize Starship and send Starships to Mars. The motivation for spinning out a very stable business like Starlink is two-fold: | - Provides liquidity for all investors in SpaceX
- Raises additional capital to fund SpaceX's long-term goals
| | Given the health of Starlink and the stable cash flows, if the Starlink IPO doesn't happen this year, then it will happen in 2026. | | As for The Boring Company and Neuralink, it will be years before these companies get to the stage of stable and predictable revenues. It's worth noting that both SpaceX and Tesla are more than 20 years old. | | The more interesting speculation is around xAI, which has now acquired X – merging the AI company and the social media platform. It's not stable yet but will quickly become so. X had already reached breakeven last year, has more than 600 million monthly active users, and is dominating the news category of apps. | | And I am steadfast in my prediction that xAI will be the first to achieve artificial general intelligence (AGI), within the next 12 months. What's that worth? | | My speculation and belief is that xAI's ultimate goal is to create a maximum truth-seeking artificial super intelligence (ASI) that acts as the operating system for society. | | Musk deeply understands that the majority of the population will blindly follow and trust the output of artificial intelligence without any critical thinking. And he also knows the inherent risks of artificial intelligence being intentionally programmed with bias. | | The best way to defend against that risk is to create an AI programmed with an evidence-based approach, proven facts, scientific reasoning, and not trained on factually incorrect or misleading information. | | This is a long way of saying I don't believe xAI would be taken public before achieving ASI. So that would put a potential xAI IPO in the 2031–2032 timeframe, given my prediction that ASI will be achieved in 2030. | | Now, with all that said, Musk has provided opportunities for investors and employees for liquidity despite staying private. This can be accomplished through: | - Secondary offerings that allow one shareholder to sell all or part of their shares to a new investor.
- Allowing employees to sell a portion of their shares to new or existing investors who want shares.
- While I don't believe Musk has done this before, private companies can issue dividends if the private company is generating an excess of free cash flow.
| | So, in summary, if I had to speculate: | - SpaceX – IPO around 2032
- SpaceX Starlink – IPO between September 2025 and December 2026
- xAI – IPO in 2031 to 2032 after ASI achieved
- The Boring Company – 2035 to 2038 (the caveat is that Musk could sell this to a construction tech firm before then)
- Neuralink – IPO in 2035 to 2037 (caveat that this could be absorbed by xAI)
| | Why even consider these future IPOs? Who knows what incredible visions Musk will have in five or 10 years after becoming the world's first trillionaire and accomplishing AGI, ASI, humanoid robots, and an outpost on Mars? | | If I had to guess, he'll be spending hundreds of billions on building new propulsion technology that can allow humans to travel to other solar systems in a reasonable amount of time. | | And naturally, that's going to take a whole lot of money… | | In the meantime, though, I've found a way for everyday investors to profit from Musk's work at xAI ahead of its potential future IPO. | | It's an opportunity I discovered while exploring the South Memphis site of his xAI supercomputer – Colossus. | | | | Progress on Fusion | | | Hello Jeff, | | Thanks to you, I started learning about nuclear fusion several years ago. I read with interest the results achieved by the stellarator prototype of the Max Planck Institute in Germany. | | Do you have an update on the current situation? And, for instance, what is happening with the work performed by the following companies: | | – Paul B. | | | | Hi Paul, | | That's fantastic, and thanks for checking in. Obviously, I've been researching and writing a lot about artificial intelligence and autonomous technology recently given the timeliness of the topics and how rapidly the advancements are happening. | | But believe it or not, the advancements in AI are tightly linked to nuclear fusion. | | I've long maintained that AI will be necessary to enable the management of the magnetitic fields used to confine a nuclear fusion plasma. | | Almost no one has been talking about this. We have the fusion hardware and it works. There will be a major breakthrough at several companies when they implement AI for their fusion reactors. This is what will allow fusion reactors to run for hours and days on end rather than seconds or minutes. | | If you like the stellarator design, there are two other U.S.-based companies to put on your radar: | | | | I'll be writing a lot more about nuclear fusion in the weeks and months to come, so please hang around with us. But very briefly to your questions about the listed companies: | - TAE has been heads down working on its fifth-generation nuclear fusion reactor Norman. Copernicus and Da Vinci models are to follow.
- Commonwealth Fusion Systems has been making great progress on its magnets for its fusion reactor, and it has also announced that it is building the " World's First Commercial Fusion Power Plant " in Chesterfield County, Virginia in cooperation with Dominion Energy.
- Helion Energy raised $425 million recently which is the capital it needs to meet its obligations to deliver Microsoft 50 MW of fusion power by 2028.
- General Fusion recently had a big win demonstrating magnetized plasmas that achieved energy confinement times exceeding 10 milliseconds. It may not sound like much, but this is a major step towards an operational fusion reactor.
| | In short, the entire industry is thriving right now. Private capital for investment in U.S. and European fusion companies is abundant, and the technology is now on an accelerated path toward commercialization. | | A future of abundant, cheap, clean energy from nuclear fusion is a near-future event. | | | | Every Time The Government Releases Jobs, Inflation, GDP, and Other Economic Reports… Use The Zero Day Loophole for a Chance to Collect HUGE Overnight Profits! (Target up to 253%… 327%… Even 383% gains… OVERNIGHT!) Don’t Miss Our LIVE Trade >> | | | | Hi Jeff, | | I love reading your work. One question that came up for me regarding Tesla's FSD mode was – how does it handle situations where a car behind is tail-gating & flashing their lights aggressively (a human driver would know they want you to pull over so they can pass)? | | Kind regards. | | – Daniel P. | | | | Hi Daniel, | | Unfortunately, this is definitely one of those odd, real-life situations that we have to deal with as drivers. Unless you're a first responder – and as long as a car is driving at or above the speed limit – no one should tailgate or flash their lights at the car in front. It's an obnoxious thing to do, it's uncivil, and it's potentially unsafe. | | So what would a Tesla on full self-driving (FSD) do? And while I haven't yet experienced this myself, I do know the answer… | | Absolutely nothing. | | Tesla has not pre-programmed FSD for this kind of situation. It is not designed to mirror aggressive behavior or retaliate. It is designed, at its core, for safety. So Tesla on FSD will maintain its speed, maintain a safe distance from the vehicle in front of it (if there is one), and drive on. | | The best thing we can do in this situation when we're being driven by a Tesla on FSD is to engage our turn signal in the direction of the lane that we'd like to switch to, if possible. FSD understands the command and will change lanes when safe to do so. | | Bringing Transparency to the Traditional Financial System | | | Ben, You are certainly an expert in the crypto field. | | Please explain how, if crypto is a reserve asset and buying U.S. treasuries to buy U.S. debt, isn't it then part of the fiat currency, just like any bank that buys U.S. Treasuries? | | Wasn't the whole idea behind (at least Bitcoin… in Satoshi's mind) to make crypto independent of fiat currency? So if it becomes inextricably tied to and a backer of fiat currency, what's the purpose of owning it? Shouldn't its value go to zero, just like the dollar when inflation rips? | | – Franklin M. | | | | Thanks for writing in, Franklin. I'll hand things over to Ben to answer your question… | | | Hi, Franklin. Ben Lilly, here. Thanks for your question. | | It definitely does seem odd… blockchains are extending the capabilities of fiat currency. But we need to keep in mind some differences here between various existing blockchain solutions. | | Bitcoin was the first. It solved an incredible problem – one based on coordination. | | The way I like to present the solution Bitcoin gave the world is by asking a question… How do you create a currency where there is no central bank, nation-state, or trusted individual issuing it? How do you track how much exists and who owns what at any given time? How does today's financial system translate in a fully digital environment? | | The modern-day system, when it comes to fiat currencies, places a lot of trust in treasuries, nations, and central banks. We trust that they won't misappropriate funds, will manage the supply judiciously, and continue to honor the currency itself. | | History is littered with failed attempts at dollars in the U.S., especially through the late 17thand early 18thcenturies. | | Economist Murray Rothbard's book, "A History of Money and Banking in the United States," is a great read if you want to read more about these failures. | | These failures are proof that trust and coordination efforts around a currency took centuries to come together. And even so, it's still not foolproof today. A simple understanding of just how many dollars sit across the globe and the misappropriation of funds by government officials are playing out right now. | | Bitcoin removed the need for a centralized entity and removed the need to trust or rely on a middleman like a bank or treasury. It's quite fascinating. Further, its transparency created a consensus on who owns what at any moment in time. | | The latter part is pretty remarkable. We can view where all Bitcoin in circulation sits at any given time. It has an entire historical record baked into its very nature of existence. | | Right now, we are unable to audit many government institutions. It's a situation that likely compounds if we were to look at other banks and government entities. | | Public, permissionless blockchains solve a lot of the issues that exist when it comes to fiat currencies today. There's nowhere to hide. | | Then there's Ethereum. Ethereum expanded the capabilities of all that Bitcoin initially made possible. It leaned into that transparency and coordination but extended it to smart contracts. This feature was monumental. | | Smart contracts allow for anybody to build applications or even issue new assets on its blockchain. This includes things like stablecoins. | | Meaning, Ethereum and other smart contract-based layer-one networks are bringing decentralized coordination and full historical ledgers to our current financial system. | | And we should be excited by this. | | Yes, fiat currencies coming onchain in the form of stablecoins doesn't seem that inspirational at first glance. Especially when we appreciate how great Bitcoin is with its hard-coded money supply. | | But stablecoins are something to be excited about. Their existence means all our modern Web2 applications will be more likely to come into this public, transparent layer of the internet. | | What's more exciting is when we see liquidity and capital in the form of stablecoins grow in size, businesses and developers will see more reason to build solutions in the Web3 realm. | | This means these stablecoins will help spark the development of what makes Web3 so enticing… Applications and solutions that better serve you. | | It becomes less about Google owning all your data and selling it to the highest bidder… And more about you allowing an entity to sell whatever data you allow and earning on what is yours. It's a future that we should be very excited about. | | | That's it for this week's AMA. Thank you to everyone who wrote in. As always, you can reach my team and me through our feedback file right here. | | Have a great weekend, everyone. | | Jeff | | | | | | | Here's why winning the race to build millions of humanoid robots has become a national priority for China… | | | | | | With the media's gleeful and persistent use of images of Teslas and Tesla dealerships on fire, damaged, and defaced,... | | | | | | Senior crypto analyst Ben Lilly gets into all the details about the ace up President Trump's sleeve that is... | | | | | | | | | | | | | | | To ensure our emails continue reaching your inbox, please add our email address to your address book. This editorial email containing advertisements was sent to riku221199@gmail.com because you subscribed to this service. To stop receiving these emails, click here. Brownstone Research welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. 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