Why SpaceX Stock Just Surged 40% | EasyJet’s Private Equity Deal Explained

Hello and welcome back to the market maker podcast. And today we are going to do a double header covering three stories on today's show and then doing a special summer bonus episode which is going to drop a few days after where we'll deep dive into all things about Boeing and drones. But today we're covering some familiar territory. We're going to do some deep dive into some technical stuff around SpaceX who I'm sure you've all read because it was very much even in you know when it starts to cross over from financial media into the mainstream outlets about a 40% rise in a share price like SpaceX then obviously the media can't get enough of it. But what we wanted to explain was this concept of staggered lockups cuz it's something you're going to read about consistently for SpaceX. And then as an update following a lot of positive comments we got for the EasyJet episode. Who would have thought Stephen? EasyJet one of the most popular episodes we've done of late. Argus closely following suit though I must say. But EasyJet and the dark arts of PE financing and then going to bring it a little bit closer to home. Third story we'll cover today about the announcement of Cambridge Aerospace's $300 million series C fundraising valuing the UK tech company at over $3 billion US. Not bad for a company that's only 2 years old. And who who thought that you know or who said that the UK can't produce worldbeating technology firms Steven? Well, absolutely. And you know, it's Cambridge, so it's going to do it's going to do some good stuff. There was a interesting report that came out that said that startups coming out of Oxford receive 20 times more funding than any other university, which put my neck out a little bit, but Cambridge Aerospace 300 300 million. Here we go. All right. Well, before we begin, two questions for you that I have nonrelated to everything I've just said. One, solar eclipse. Where were you? What did you think? Were you able to look at it properly, safely? Um, and then two, what what's happened to the rest of your head? Where's your hair kind of run off to? Where's your [laughter] bofong gone? >> Yeah. So, they're not inter they're not interconnected, these two stories, but you know, hopefully if you were based in, I think, the northern hemisphere, you would have got to see some of the partial or full solar eclipse. And that's why we're talking about being up in the air in this double header. We're doing everything up in the air, whether it's SpaceX or EasyJet or Cambridge Aerospace or Boeing in the second part of our double header. I wanted to kind of reference the fact that there's a lot going on up there. Uh I obviously being very unprepared and not particularly dextrous, I didn't create any kind of pin pinhole colander thingy bob. I just looked at it. Um, burned my retinas a bit. Uh, and then and then couldn't really see for the rest of the evening. What about you? >> Well, I've got a nextoor neighbor who's a an older guy, so just very sensible, very well planned, doesn't really have a great else things to do with his day, I think. So, he was basically sharing his glasses across about five five households of the children. So, yeah, managed to get a good look at it. >> Oh, that's very nice. That's very nice. And yeah, to your second question, um it's just too hot to have long hair. You know, it's it's obviously right in the 30s this week and it was just getting me really really annoyed having to dry it, having to wash it, having to, you know, all of that stuff, right? I was sweating when I was taking the dog for a walk. So, I just went into the hairdressers and said, "Just lop it off. Get rid of it." They were a little bit concerned because like Samson, it's my power. Uh, let's see if this podcast is terrible, right? It could be awful. >> I thought you were just doing some research looking at like the Cambridge Aerospace website and started seeing some cool military hardware and thought, do you know what? For this episode, I'm going to commit. I'm going to going to shave the head. I tell you what, if there's one I've I've done quite a few things in my past. If there's one profession I've never been interested in is going into the military. But anyway, despite my cool military haircut. All right. All right. Well, look, let's talk about SpaceX because obviously when we last spoke, I remember it was you and I or myself and peers and the earnings came out and the share price kind of dumped at the time and you're thinking, "Wow, there's a lot of people that got ironed out in that buying the IPO particularly in the retail space and we're claiming happy days when we're up at 220 and then we got got hammered. But since that low, we've had a rally of I just double checked it because I wanted to get the latest. It's almost 40% now. So, it's gone above its IPO price of 135. We we clocked yesterday at around $141. So, we're back to just a whisker off the two trillion valuation. So yeah, I mean a lot of people were and this is what really the crux of our conversation on this this story. A lot of people were worried though particularly around people having access to sell. So what do we mean by this and this concept of a staggered lockup period? >> Yeah. So this is a really really good opportunity to do a little bit of learning about equity capital markets key concepts. Right. As we've discussed previously on the podcast, if you do an initial public offering, the institutional investors, the founders, the existing shareholders tend to have a lockup period of usually 180 days fixed lockup period and before that they cannot sell or dump their shares. So in the case of SpaceX, they uh they created new shares to sell and raised about $86 billion and then at certain periods there is an opportunity for existing investors and founders and management to sell their shares. Now SpaceX has done it very very differently to the typical vanilla 180 days and you you and all of the institutional investors all the existing investors can can sell. They have pursued what's called a staggered lockup period. This means that there are periods of time, there are deadlines and time frames and criteria by which more shares that are held by existing shareholders have the opportunity to be sold to be part of the free float. So if you remember they originally had 4.9% public float which is extremely low right compared to Microsoft 99.98% and that potentially artificially distorted the valuation of SpaceX and made it much more volatile because small trading volumes were affecting a much larger total share base. Now, after the release of the Q2 uh results, which we've covered previously, that was a mark in the sand whereby investors, existing shareholders could sell a lot more of their shares. So, the public float went from 4.9% to 11.8%. That's 911.5 million class A shares that have the potential to be sold that weren't able to be sold before. So in the kind of simple logic of supply and demand, you suddenly got the potential of a heck of a lot more supply, i.e. existing shareholders wanting to sell, maybe cashing out some of their gains, maybe they were venture investors back series B, series C, series D, and this is their opportunity to sell some of their shares. So the fear leading up to the first of these staggered lockup periods, the fear was that this would just release a glut of supply onto the market, which obviously when there's a lot of supply and not enough demand to hoover it up, that pushes the share price down. So if you were looking at the share price 3 or 4 weeks ago before this lock up period, you would see the share price right down in the doldrums, right? I don't know what it was down at. What low did it hit? >> I think it got close to 100 at the time cuz even I was sniffing about then >> even you were sniffing. That's interesting. You heard it here first. That is very interesting. Um so yeah, so it was it was way down in the doldrums. So the theory was you know SpaceX share price was going to get totally hammered post this staggered lock up. What happened? Yeah. So when like I say I think there's thinking retrospectively of when pre this company being listed I mean there is just crazy amount of demand for this particularly on the retail and a and a a classic retail investment strategy is buy the dip. I mean, that's kind of the same principle for the index level on the S&P whenever there's a big pullback and we get these kind of uh opportunities to re-enter a long position. And I just think like a lot of retail people would have got involved at that around 100 level of which evidently um would have been the case. But it's interesting as well. I wonder whether um I don't know the if it hadn't been for this the stock price drop. It was almost like the the sharp drop of almost what was it 20% or whatever post earnings was almost the best thing that could have happened prior to there being then a recalibration of well what's fair value for this in terms of it was trading at 220 it's now discounted to 100 basically so I think you just had a lot of demand just come in at at that point hoover things up and yeah such a phenomenal rally nearly 40% as he said at the top of the show but I guess my question is when you hear the word staggered I mean my my psychology goes to like you said about these these equity capital market kind of bankers surely you stagger cuz you're worried so the psychology being is it not just a negative thing like understand the mechanics of it Um, >> it's a really interesting one. >> You explain that. >> It's a really interesting one. There's a couple of explanations and I think you're right to the extent that there is a bit of a concern that if all of these shares became available at once after 180 days, that would be that would potentially be the moment in the market for that particular year, right? Because it's such a large company. But, and I like the the FT's analysis of this, a conventional lockup is akin to ripping off a band-aid in one go. That's what the market knows. It prices it in a couple of months before we all know that this thing is going to come. Whereas this stag up, a staggered lock up, it results in a great deal of uncertainty as we've seen in the last few weeks. share price drops maybe in anticipation then it rises again because no one actually wanted to sell their shares because the share price had dropped. So it's this kind of a little bit of obiscation little bit of smoke and mirrors just bleeding these shares out into the market very very slowly and I think the biggest reason for this staggered staggered lockup quite frankly is the fact that the free float was only 4.9% on IPO. So they've got 90 well they've got a lot of percentage to get back into that free float over the next couple of years right just thinking about from a trading and investing perspective what you tend to see is the markets become desensitized the more it sees something so the greatest cliff of uncertainty is the one that just happened. So even though the lock up amount of shares that might come to market might even get bigger. The idea here is that the biggest unknown was how was the market going to receive the first tranch if you like we now know that. So the level of uncertainty has narrowed meaning you know less uncertainty equals more confidence in that sense. So that's what we tend to see from a trading perspective with these types of things. >> Yeah. And it's really interesting. So why wasn't there a slump? Well, the first reason is that yes, more shares are available to be sold, but that does not mean that existing shareholders are selling. They don't dump automatically. And if the share price is down, and if these institutional shareholders, institutional investors are still bullish on on SpaceX, they're going to hold. They're not going to want to sell at $120, $110 a share, which is such a strong signal to the rest of the market that this thing has, you know, this thing is well priced. >> So, reason number one, the supply never came on board, right? >> Totally agree in the sense of institutional money is not day trading like they they they're in this company. They're not going to get out of it at the first possible moment. Like they're tied to it at this point. So, if anything, that would give the retail buy the dip army even more confidence that this thing, you know, they're not going to dump it in in such an aggressive fashion. >> Yeah. So, number two, buy the dip. You're absolutely right. [laughter] And then there's a there's a couple investment advice, by the way. >> This is not investment advice. Yeah. I'm well well out of my pay grade here. Number three and number four, my my reasons for why this thing actually bounced instead of dropped, bearing in mind that there's potential supply flooding into the market. Number three, the simple mechanics of index funds. So index funds buy a company based on its relative free float as a percentage of the overall index. So the fact that SpaceX has gone from 4.9% free float to 11 plus% means that NASDAQ needs to put in needs to buy more shares to have the appropriate representation or waiting of SpaceX in their index. So that's a kind of that's a counterbalancing buying signal. And then the fourth one, what happened to the shorts? And this is where this is where I need your markets markets head. So I know that there was a load of short interest in SpaceX leading up to this staggered lockup. There was a I think something something ridiculous like 34% of the shares available for public trading were shorts. So what's what's going on there? And tell me about a short squeeze. What happened? >> Yeah. So I I think what this is alluding to is that there's a lot of people in the market thinking like we've we've done all these SpaceX deep dives and you're going this this business model this valuation is farical. So I'm going to only short this stock. So you might have these hedge funds who have these open short contracts looking that ultimately push the price and that it's going to to move lower. What happens though is then old retail Bob Army and his mates get hold of this which is what which is a dangerous game like what we saw with GameStop which has a similar type of demographic you could say from a retail orientated perspective given what Elon's engineered and then the stock price starts to go up and as it starts to go up their short is getting more and more offside to the point where there's too much pain or like we saw with our dear friend Leopold at situational awareness. The the broker calls you and goes, "Right, you need to stump up some more margin here because you're so offside. If you want to hold that position, we need some more money." Some can hold, many can't. In order to get out of your short, you need to buy back to to net neutralize your position. So you add to the buying pressure or the buying move higher and the market starts to then this kind of gap up launch higher like what we saw with GameStop. Obviously it's a much bigger stock so lesser degree and that just further gives conviction to the retail buyer that absolutely I was right this thing is going up and then it compounds gains momentum. Another added point I'd add though that I think is interesting that I didn't see in your list. Did you see Elon did that interview with the economist, the editor of The Economist? It's all over social media. >> No. No. Tell me about it. >> So, basically, it's an it's an hour plus long conversation where it's a very confrontational conversation, particularly at the end. It's obviously the economist, so they're talking about kind of liberal type ideas, and he's he's going against that, and she's holding his feet to the fire. And it's a good it's a good watch. Elon's a genius, though. He dropped that right in the midst of all of this action going on. I looked at the comments cuz there's a couple of points where, look, I'm a I'm a fairly rational person. And some of the things Elon was saying, I was a little bit like, you know, it's pretty punchy things he's coming out with. I looked at the comments thinking people surely must be criticizing some of the things he's saying. There was thousands of comments and people love lapping up what Elon was saying. Like it reminds me of Brexit where there's me sitting there in the city going why would you leave the EU? That's economic suicide. And then you go in the comments section, hang about, everyone wants to leave the EU. It was kind of felt like that when I looked at this Elon thing, but Elon, like I said, another another stroke of marketing genius. I think he did that whilst all of this is going on that you've explained to galvanize the troops. It's like a classic um what was it? Wall Street bet kind of call to the army. It almost felt like and they would have loved that and I'm sure that would have converted you would have had a conversion to SpaceX share sales based on that. >> And I think again that that anecdote is very instructive. I think if you've signed up to the FT or the Economist, you tend to get a relatively smart readership. So the comments the comments are something that I go to sometimes before the actual article cuz you there'll be some there'll be some article and then one of the comments is like I'm a hedge fund manager based in dot dot dot and this is my opinion. you know, actually this is, you know, this isn't just dross. This is isn't slop coming out of you. There's not trolling. It's actually really, really good. And it gives you that flavor, the mood music, right? Okay. So, going further forward though, this is not the first or last time this is going to happen. So, how much visibility do we have as market participants of knowing the structure of the staggered nature of this? Yeah. So, it's relatively clear. It's all set out in the prospectus. So, we know that over the next few months, there are going to be staggered releases. And we can potentially share a chart that the FT Alphavville did that shows the free float that's going to become available post August 2026, post where we're talking about now. And it comes out little stagger, little stagger, little stagger, stagger. And then in June 2027, it's Elon Day. So this was this was a year after uh the IPO and this is when Elon can effectively get rid of all of his shares, you know, and the free float can be up to 99 100%. So not that he will, but that's the big cliff that is quite in, you know, quite interesting in in this chart. Do we have any marker of success on how well as a strategy staggering this has been for other firms? >> Any? >> Yeah. So, the one that keeps getting referenced is Cerebrus. And I don't know if you guys covered it in the markets podcast, but Cerebrus was a a blockbuster IPO earlier on this year in May. Uh I think they raised $5.5 billion and the share price skyrocketed after the first day. I don't really understand what Cerebras does, but reading the article, it says that Cerebras technology uses entire sheets of silicon to make a chip the size of the dinner plate or 58 times larger than Nvidia GPUs. Doesn't mean much to me, but sounds pretty cool. Um, so anyway, so the this was a classic staggered lock up. 7.5% of eligible shares on the first trading day to non-executive employees. Then if the stock pops above 33% after the first day, which it did, they can release another 7.5%. Directors can sell 15% of their shares after the company reports first quarter. And more things go on and on and on. And obviously, Cerebra's share price has dipped over the last few weeks. But I think it's, you know, I think it might become the new normal, especially with really, really wellhyped, quite frothy valuation companies that need to kind of uh maybe need to stagger some of that release of of supply into the market. with you saying that then so what like anthropic for example I mean I know we'll probably pass a comment on that shortly but one of the things for them you know will they won't they do a staggered sort of thing but run rates is something that we've talked about before with anthropic I saw some headlines about run rates at SpaceX so maybe to conclude this segment what's the actual you know under the hood performance or at least information that we're aware of at this point of how SpaceX is performing as a business. >> Uh it's really interesting and again I listened to your fantastic podcast with peers uh on the world of coreweave and Neo clouds and all of this stuff and just and thought about that order book of 130 billion offer quarterly revenue of 2.85 85 billion and I thought wow this is this is this is either the best thing in the world or it's a total disaster which I think is what a lot of people are thinking but SpaceX say that they are going to get to 100 billion of annual recurring revenue by the end of this year bearing in mind that their annual run rate revenue is 30 billion that is a more than 3x jump in 4 months I think maybe 6 months because that 30 billion was back in June So there has to a lot of things have to fall into place and what I love is I'm again just reading a a a comment from Deutsche Bank who are just team SpaceX. They call it the apex of civilizational ambition oftent times expressed in steel and fire bending the arc of history to make humans multilanetary by building foundational infrastructure across trans. I mean Deutsche you just want you just want some fees. Come on. Um, so there's all of this, you know, and again the FT alphabet is wonderful express expressing this in memes, but there's all of this hype, you know, are they going to get to 100 million of ARR? By the way, ARR only means you take one month and extrapolate it for the whole year, so it's not 100 mill 100 billion of confirmed revenue. Who knows? It keeps us in a job, ant. That's all I'm saying. >> Yeah, certainly does. And let's move on then and let's talk about the EasyJet one. And I did mention at the top of the show that this is something that, you know, surprisingly uh it was interesting to us, but other people found it interesting too. So perhaps a little bit of an update because I believe we have a winner. Yes. So, I think when we last did a deep dive into EasyJet three or four weeks ago, we spoke about we actually had the whole episode prepped for Castle Lake, the private equity firm, uh, having a agreed successful acquisition of EasyJet or offer accepted of EasyJet. But the morning of the recording of the podcast, Apollo sweeped in and offered £5.7 billion to buy the company. And that was accepted by all of the shareholders, including most importantly Arman Stellios, the founder of EasyJet, who was really put his weight, not physically, his shareholding weight behind behind the Apollo bid. And it looks to all intents and purposes like this thing is going to get through. But what I want to talk about specifically as an update because loads and loads of offer documents and financing commitments have come out in the last couple of weeks. And for someone like me who likes financing and likes private equity and kind of gets interested by this stuff, it's worth just revisiting EasyJet and just diving into what is the structure of this thing going to be. So just as a reminder, there were some regulatory issues that Apollo faced because EasyJet is an EU airline registered in Switzerland, Austria, and the UK. There you are not allowed to majority own a EU airline if you're not an EU citizen or an EU company. Apollo obviously is not. So what Apollo's done is it's created an acquisition vehicle like this. This always happens in private equity called the Eagle Bidco registered in Jersey and Apollo is going to own 49.9%. Right? So under the majority threshold there is going to be a separate vehicle that is owned by the existing shareholders of EasyJet rolling over their ownership stake into this new vehicle of which Stios who owns 15% of EJ at the moment has said I'm going to roll over my entire amount Okay. So, I'm going to be the cornerstone of this other entity or this other part of the equity stack. Now, existing investors can just cash out if they want or they can roll into this new entity. And this new entity is going to own between 45.1 and 49.9% of EasyJet. So you've got Apollo 49.9. This locally based Europeanbased ownership structure is going to own 45 to 49. And then there's going to be this this kind of trust that sits in the middle that is owned by employees and EU employees and managers that can own up to 5% of the company. So at no point in time will Apollo own over 50%. And that 50.1% will be structured between the existing shareholders rolling over EU nationals and the employee benefit pool that is up to 5%. So it's a super sneak well it's not sneaky, it's just very very clever. And to get Stios on board is absolutely key, right? He's not cashing out. He's rolling into this new entity. uh which obviously gives credibility and a bit of heft to this 45 to 49%. So so I understand it's Barclay's PJT partner city are advising Apollo fee structure wise then the banker charging Apollo for this process given this sounds like it's not an unusual setup but probably fairly complex. So does this get accounted for I'm assuming in the fees structure? >> Yeah, absolutely. And quite frankly, any private equity deal has got levels of complexity, right? Uh there are lots of SPVS, special purpose vehicles that are created, it is not as if Apollo that has a 15 billion pound fund, it they don't own these companies directly. They create vehicles, acquisition vehicles, uh, that sit in between the fund which funds the acquisition vehicle and EasyJet the entity. So there's always levels of complexity. This one will have more complexity and it will be a combination of maybe the bankers getting paid a little bit more, but also my gosh, Apollo full of sophisticated people. They will be, you know, grinding their brains to figure out how to do this, speaking to the right people, maybe even doing a little bit of soft lobbying as well to make sure that this thing gets over the line. >> I did read something in regards to the banks and the financing about bridge to bond facilities. >> Mhm. >> I've not heard of that before. So, what is that? >> Yeah, I really want to get into the financing structure. Uh it's so so interesting and it's so representative of a private equity buyout that it's worth spending a little bit of time on. So remember this is a 5.7 billion pound acquisition. Let's start with the debt. So private equity firms buy companies with a mixture of equity and debt. Equity coming out of their big private equity fund raised from big institutional investors like pension funds and endowments and things like that. and debt that comes in lots and lots of different shapes and sizes. So, the debt structure as has been announced and we're still learning about this as as we get more information. The debt structure is that £3.5 billion have been committed by Barclays who's committing over a billion pounds and we'll go back to that in a second. City Standard Chartered Lloyds Credit Agricult. They've committed to providing3.5 billion pounds bridgetobond facilities. So this is a bridge financing facility. So a short-term up to 12 month financing facility that often costs quite a lot uh for the uh for the acquirer and is relatively yeah relatively expensive but it provides committed financing. So, when I'm putting a 5.7 billion pound offer on the table, I need committed financing. I need a letter from the bank saying, "We're going to we're going to basically underwrite this." >> Like like getting your mortgage approval to how much you can borrow from the bank before you can put a bid in on a house. Similar thing. >> Exactly. Exactly. You need committed funds cuz otherwise you won't be taken seriously. So these guys Barclays, Credit Agricult City, Sand Chartered and Lloyds have said we are going to bridge to a series of different bonds that are going to get out into the market over the next 12 months. So you've got and I'm there's a 250 page commitment letter document that I wouldn't recommend that you read through. Thankfully have the likes of Claude to to summarize it nicely for you. Um, but you've got the commitments of all of these different banks. So, you've got uh $900 million of commitments from the five banks to bridge to a floating rate note and then three different other bridge facilities to structure to bridge to a eurodenominated, pound denominated and US denominated bond that they're going to get out in the next 12 months. And then on top of the 3.5 billion, they the five banks are providing a $1.3 billion revolving credit facility, which is basically your working capital day-to-day facility, which is at a 3.25% interest margin. So you put that all together and you've got effectively 4.8 8 billion pounds of committed finance, which in the context of a 5.7 billion pound acquisition is upwards of 75 80%. So you're thinking to yourself, oof, this is typical private equity. Load the company full of debt. And in fact, Moody's came out and downgraded EasyJet on the back of this financing structure >> to BA2 citing a material deterioration of EasyJet's credit profile. Is there um some sort of agreement in the contract where the underwriters so Barclays are saying you can't get downgraded too much because then it's compromised as an asset as whether you can repay the debt. >> Well, absolutely. Absolutely. And remember these bridge loans they they carry a decent amount of risk, right? But the intention of defy banks is not to hold these loans for the duration of Apollo's ownership of easyjet. So they just want to make sure that this thing doesn't deteriorate so quickly that easyjet gets downgraded to subinvestment grade. And I'm sure by the way there will be conversations going on with Moody's and S&P going how high can we flex this leverage to maintain an investment grade rating, right? because you wouldn't want to go higher than that. But they still have 1.3 billion pounds of revolving credit facility commitment which are risk. That's, you know, that's on their balance sheet. So, of course, they don't want to they don't want to saddle the company with so much debt that they can't repay they can't pay interest on the RCF. Um, and there's lots of different ways that you can structure that, but yeah, absolutely. >> I just had a quick look. So someone like Barclays isn't so much competing. I don't think they're even in the top 10 for M&A advisory, but they are in the top 10 for debt capital markets, for example. Absolutely. I mean, Baries have had a brilliant payday with this, right? They're advisers on the M&A. So, I think they're they're up 43% this year from a M&A perspective on the league tables. So, they they're getting there. They've had a few years in the doldr drums, but yeah, I mean, they've got a big balance sheet putting out, you know, almost I think £800 million at the bridge facility. And bearing in mind, by the way, in the in the world of debt, you get paid an arrangement fee, which is kind of a fee for doing business, which is usually, you know, 20 basis points or 50 basis points or whatever it might be on the total amount. And then you get the interest income. So you've got that on the bridge and then they're committing 300 million of the revolving credit facility which has a 3.25% interest margin. So Barclay's my gosh all in. This is tens of millions. So saddle the company with some debt and then strip it back max maximize its profitability. What what's Apollo's plan here? When I think about EasyJet, how much more can we uh skin this cat in order to juice it for some more money? Surely, I thought Stios was has already done that to like the second bird order. >> Yeah, it's an interesting one. I just very very quickly want to touch upon the equity part of this capital structure as well, just to kind of uh to round that off. So, obviously a load of debts going into this company, but Apollo is obviously providing some equity as well. What tends to happen in the world of private equity is the majority or a significant chunk of the equity that a private equity firm puts in is in the form of preference shares. And preference shares for anyone that hasn't explored that concept before feel kind of like a hybrid debt equity instrument because they carry in this case in the case of EasyJet a mandatory 14% cash dividend rising to 15% if it goes unpaid and gets um gets piled up in a payment in kind note with redemption right structured to deliver a minimum of 1.5 multiple of invested capital. So what Apollo is basically saying is you've got all this debt that has to get paid out first. It has to get repaid. You know, they're always senior. Then underneath the debt, you've got this thing called the preference shares which have to get paid out a minimum amount before the common shareholders, the likes of Stellios and all of the other investors that have rolled into this vehicle are going to get anything. Right? So it basically guarantees a billion quid or 750 to a billion quid of Apollo's equity ticket a 14 to 15% cash coupon which saddled on top of all of the interest payments on a debt is going to weigh pretty heavily on EasyJet. So they need to perform really well. any any quick um quick wins that you think that Apollo will be doing in order to get the business firing? >> Well, so they say they're going to update the tech platform, so that's cool. Uh whatever that means. Um they're talking a lot about premium seats and interlining. So again, we did this deep dive into airlines. We didn't quite cover interlin lining, but this is the collaborations with other uh carriers so that you can offer easyJet flight to Hong Kong in partnership with Emirates and EasyJet will do the first leg and Emirates will do the second leg. But in order to be able to do that, you need to offer a minimum standard of comfort for a partner carrier to go, "Yeah, we can get on board with this." So there's a lot, you know, this is interesting, but it's just not been part of EasyJet strategy. It feels like to me there are probably some operational organizational gains to be had, but I wouldn't mess with the I wouldn't mess with the strategy too much. Quite frankly, if they get the financing play right, this company's very profitable. If they get the financing play right, they'll still make a lot of money without having to do anything too transformational from a strategic perspective. All right, final story then is Cambridge Aerospace and soon as I saw this name pop up as a talking point, I went on their website and [laughter] their website I was like, it's just literally nothing. I was like, how have you how have you got the research for this? I mean, I didn't spend a great deal of time doing it, but I was just like, "Go to the website, have a look, cuz I want to see some of this cool tech and gear that they've got." And I was I was met with uh literally it's like a hedge fund website. [laughter] Yeah. I mean, it's a bit of a blow to any any marketing and brand agency that these guys have just raised 300 million at a $3.4 billion valuation and they have spent one cent on their marketing to show the world of geopolitically that we live in that there's just so much tangible demand for this stuff that why waste your time with the market that's just just not needed. >> Yeah, they're not going to be faffing around with marketing and the website is so interesting. It's such a power play to have nothing on your website. It's again it's very hedge fund thing to do. But anyway, the story is Cambridge Aerospace obviously launched out of CA Cambridge a couple of years ago uh raising $300 million series C led by this growth equity company, US growth equity company called DFJ Growth, founded by Randy Glin. There you go. Great American name. But they've invested in the likes of Aneril, Stripe, SpaceX, Tesla, Seronic, anything controlled by Elon basically. And, you know, they're, you know, they're a true American firm. I was reading what type of companies they're interested in. Not that I've got a company that could fit their bill, but they give this lovely little spiel about how they're really interested in outliers and Frontier Technology. And the little letter on their website ends with, "We hope this helps you understand a bit more about what we're all about. Feel free to give us a shout. We're easy to find. We're the ones looking around the corner and hoping to run into you." Randy, what are you on about? I was just having a quick look at Ry's background. I was just interested like, who's who's this geyser then? and he's a he was an engineer uh at Hughes Aircraft Company originally. So he's electric electrical engineer from the University of Florida. Um then went to UCLA, but yeah, he invested in SpaceX in 2009. Oh, well, good for him. Good. Well, Randy, take us out for some drinks. Come on. Um I'm going to I'm going to conclude this story very quickly. Um, so this company, Cambridge Aerospace, raised 630 million since founding. In April 2026, 4 months ago, they raised 200 million at a $1.3 billion valuation. 4 months later, they're raising 300 million at a $3.4 billion valuation, $2.5x valuation increase. It's not I mean this story just goes to show that it's not all about AI and data centers and all of that hyperscalers and things like that. There's another world that's going on and the key product that Cambridge Aerospace has is a lowcost interceptor drone built to counter these I don't know if you've heard of them the shahed type attack drones. So super cheap drones developed by Russia and Iran that cost hardly anything but until Cambridge Aerospace came along cost a lot of money to shoot down. So there was this kind of economic imbalance that you launch a drone for 40k but it would cost $10 million to k to to to intercept it. So the demand for this stuff in this geopolitical climate is unbelievable and they're just right place right time, right? And so what they raised the money now, but ultimately this company's going to get bought imminently, you would have thought by one of the big military players in the market, USbased surely. >> I just I just don't think it will. I don't I think in this current climate, in the in a Trumpian anti-NATO climate, I think that the UK will do whatever it can to protect this company. Uh and West Streetings, who's the new defense secretary, is all over this company. He thinks it's one of the greatest things that we've ever done. So, who knows? Your your intuition is probably sound, but I think there'll be a lot of push back just in this current climate. >> Cool. Well, look, that wraps up, as we said, part one. Maybe just a a quick finish from you, Stephen. What can we expect in the deep dive into Boeing? Because Boeing is not someone who, you know, would make the average man hot under the collar. So, what do we what can we expect? I wanted to do a deep dive onto Boeing. A because there's some interesting stuff about their taxi drone units being sold to Archer Aviation. So, if anyone's interested in flying taxis, definitely tune in on Wednesday. Love a flying taxi. But also, the history of Bearing is so interesting. It's one of those classic stories of being run first and foremost by aircraft engineers, then getting run by beam counters effectively, and the quality control going out the window and all of the errors that we've seen over the last few years. So, we'll do a little bit of a deep dive into Boeing, the concept of a duopoly with Boeing and Airbus being the two main players, and also some flying taxis. >> All right, so stay tuned, subscribe. That episode will drop in the coming days and new episodes coming out of course on a weekly basis. So, thank you Stephen. Thanks everyone for listening. See you next time.