No, We Do Not Have An Iran Deal

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Today's number 16.

That's a total number of goals, Lionel Messi scored in all his world cup appearances.

Now tied for the competition's record. So I'm going to say, "Who gives a shit?" The tartan army's coming for all you bitches, including you, Lionel Messi. A haggest. That's a real deal.

Watch out, Maroco. Here we come. We have to have a sounding defeat of that world-class Haitian team. We're top of the table right now. We're literally leading our flight, our group.

That's right. I'm just now learning you're a massive Scotland fan. I have a question for you. Can you name one player? Oh, I don't know.

McChamony. We go. Well done. I don't know.

He's the only one who really matters.

That's a great. I'm so glad to hear that. Now, the other guy, the midfielder, is incredibly, incredibly, incredibly good. What's his name? McGinnis.

Fuck. I'm getting John McGinn. John McGinn. That's right. Yeah.

He's great player. He's supposed to be absolutely outstanding. Unfortunately, my favorite Scottish player, Billy Gilmore, who is a previous in my Chelsea legend, is injured at the moment. But it's great to see you doing well.

You know who else is doing well? Oh, you saw a team in England, right? That's right. Four two. No, that was resounding.

That was, and against a good team, too, right? It's right. Exactly. Croatia is a very good team, very strong, lukewarm drips, still in good form and good shape.

I heard it's a great grandson. It's going to be in the next World Cup. No, no, no. Don't do that. I don't like that.

By the way, it's Leonardo Messi. Not Lionel Messi.

“Lion, he always been Lionel to me, what's your favorite player on a team in England?”

Res James. I mean, you know, I'm a lifelong Chelsea fan, so I've got to support all the Chelsea boys. It's very sad to see Cole Palmer is not included. He's been posting some Instagram photos of him and like more bare or a biso or something. Um, so he's living his best life and we wish him well.

That guy's going to need that guy's going to need a Belanda or whatever the car to get laid. He's not an attractive man. He's not an attractive man. You better splash the cash and the beef.

He's looking to have a little world cupping a bizzone, so it's big. You left out Andrew Robertson, the captain of Team Scotland. I'm so embarrassed. I got what's his name, John, against wrong name wrong. Yeah, Scotland does a decent squad.

They're very, they have, they have one of the best left, left backs of his generation and Andrew Robertson. Are you reading off of AI right now? No, I'm not. I've been totally, I got this in my notes, actually, because I'm so excited about

I'm, but I'm not reading off of AI.

“But I think I'm curious, I don't know if I'm hoping this is McDonald's Cup, we'll see.”

I don't know. I'm putting a carpet for the horse, but tomorrow night, I'm joining the tartan army here in London and we're marching to a pub and I bought my kids. I bought my kids, all these awesome jerseys, and we all have kills, but they're refusing

So I'm going to shut off their phone and tell them I'm not turning it on until they put on their kills. Good. It's the only leverage I have, but if they, if they make it, I'm definitely, have

“you heard what's going on in Boston that they're out of beer?”

Out of beer. Out of beer. I'm listening to that. How awesome is that? It's amazing.

It really is. I'm seriously excited. So I am all in on Scotland until they're out and then I'm going for teaming. Go for teaming. Over team USA.

Yeah. Because I got to say USA looked pretty good too. I was impressed. USA, USA was outstanding. They say this is the best team they've ever assembled.

Sure. Incredible athleticism. I don't know. There's just something. I hate to say it, but I feel like the rest of the world needs it more than the US.

It's just so strange though, it's so much about team vibe. I used to go. So we're a house divided. I think I told you this. I like arsenal.

My youngest likes Chelsea, my oldest likes Tottenham. And we go to a lot of Tottenham games and Harry Kane and Son were the strikers of the forwards. Two of the greatest of the game.

And the team never jailed.

It's just never jailed. It's so much. And they say that's the difference between the American club and the European ones. Is it I guess the Americans don't have a lot of opportunities to play together? And they just never quite jail in an elite level.

Yeah. It's been the problem for England, too, that we've always been so... You went to the... They were outstanding. No, I mean, we've always had many of the best players in the world.

The story of team England has not been a very good one, at least over the last few decades. But apparently, what really got everyone going was Thomas Tukle, the manager's speech at halftime. Thomas Tukle basically said to them, he said, "If we lose, we lose."

And that's fine. But we're going to do it our way.

“And that's what we're going to be happy about.”

We'll lose our way. So that is my message to you as we begin this podcast. If we have a shitty podcast, we're doing it our way. What we're talking about. It'll be our way.

Dig Jokes of planning. Okay. That's what you're saying. Dig Jokes of planning. My man, let's do it.

Let's do it our way. United States and Iran have signed a memorandum of understanding that pauses the conflict and reopens the straightable moves to commercial shipping for the next 60 days. In exchange, the US will lift its naval blockade of Iranian ports, but the agreement leaves some of the toughest issues unresolved, key negotiations, including the future of Iran's

nuclear program, have been deferred to a second round of talk scheduled over the next two

months. Let me just go through quickly what this memorandum of understanding actually says. And then we can get into what it means. It's a 14 point plan.

“I've collected some of the most important takeaways here, which I'm just going to go through”

right now. First off, both sides declare an immediate end to military operations on all fronts, including Lebanon. US lifts its naval blockade on the straight immediately. Okay.

Iran will reopen the straight free of charge within 30 days. That's good. But importantly, that no charge clause ends after the 60 days, meaning we can go back to normal for 60 days, and then Iran has the right to basically jack up costs and charge a fee for any ship that goes through it.

That's not great. Okay. Iran reaffirms it won't develop nuclear weapons. Both parties agree to discuss the issue of enrichment, but Iran will quote, "maintain the current status quo of its nuclear program."

So what I take away from that is nothing has changed there.

The US will undertake with regional partners a $300 billion reconstruction fund to rebuild

Iran. The US will also undertake, that's the word they use, undertake, to unfreeze all of the currently frozen Iranian assets, and the US will terminate all sanctions on Iran. So that's basically the deal. If I could summarize what it gets us, it basically gets us nothing, because the nuclear

program will basically continue as is, and lots more to negotiate there, and the straight which was opened before the war will be reopened. And then in exchange, we paid in 14 American lives, $100 billion in taxpayer funds to fund this war, also a 4 percentage point of inflation, which will amount to billions of dollars in household expenses, and then potentially we're going to pay another $300 billion for this

reconstruction fund, although there isn't agreement on that. I mean, this to me, if it's even a deal, and that's questionable, might be the worst deal ever, and I don't think I'm

So I don't know if you heard, but this morning, Mexico presented the US with a memo of understanding

“where we're going to give them Phoenix back. I told my kids if they kept misbehaving,”

I was going to bomb them, and they presented me with a memo of understanding where I've agreed to buy them a new iPhone. This is, okay, so to be serious for a moment, the perfect reflection here was the signing at Barisai, where they, nobody in the Trump administration clearly took a history course and realized that Barisai is known for elaborate signings that don't mean a fucking thing. It just, it just shocks me. No one said, oh, that's a bad

look to sign this at Versai. So let's go through this in, in more detail, in terms of documentation and seriousness. I've said for a while, a memo of understanding is meaningless. It outlines

that you're interested in getting to a deal. I've never even heard memo of understanding

in the context of geopolitics. The JCPOA was 159-page agreement. The MOU is less than two pages. This is not a serious document. The core issue that everyone around the world, in Trump, agrion, is that nuclear constraints with a core problem. The JCPOA required around to reduce its enriched uranium stockpile by 98%, which they complied with. In dismantle two-thirds of its centrifuges and cap enrichment at 3.7%. And, except unannounced, IAEA monitoring.

The memo contains no nuclear constraints at all. Just a pledge. Okay, the urgency is pledging never to build a weapon, which, by the way, around made the same pledge in 1970 when it signed a non-proliferation treaty. Verification and inspection, which is kind of the meat and potatoes of this. The JCPOA had IAEA inspectors, continuous monitoring, 24-hour-a-day access provisions, the MOU, the memo, differs all of this to a 60-day negotiating window, with no guarantees.

This is paying more for a worse product. The memo comes with a $25 billion price tag,

and another $300 billion in, quote unquote, "reconstruction framework," exceeding the JCPOA's cost while delivering fewer nuclear concessions. They're at 60% enriched uranium, which is way above what it was at the, when they tore up the JCPOA at 3.7%. So Iran enters these talks in a much stronger position than it was when Trump decided to tear up the agreement. We're giving away military leverage. The memo commits the U.S. to not increasing its regional forces with Washington withdrawing

extra forces within 30 days of the final agreement. And the reason we spend one and a half trillion dollars on a military, so we can have one of our 11 aircraft carriers anywhere to tell people when they get out of line to sit the fuck down. And we're taking that away. In addition,

“something that hasn't gotten any coverage and is really important in my view is the JCPOA”

was a multi-lateral agreement. Its signatories included the U.S., Iran, the EU, UK, France, Germany, and get this. China and Russia, meaning that if Iran went back on its word and started enriching uranium, China and Russia had an incentive to economically punish Iran. And at this point, their incentives are probably to see a stronger Iran if it keeps sticking its finger in the eye of the Western world in the, in, in, in U.S. geopolitical power abroad. So there's, there's

no enforcement mechanisms, no monitoring mechanisms. We have reduced our credibility globally. We have given up leverage of our military. We have alienated European allies. We have sent the world into economic disarray. We have shown the Gulf States and every other nation around the world that when you put a U.S. military base on your territory, it's not protection. It's a bull's eye.

And basically, the political outfall from this or the political amongst an incredible

neutering and weakening of the United States for the next several decades is Trump knows what a shitty deal this is and is already throwing his vice president under the bus, the political equivalent of sending a mob with a news after J.D. van saying, "Oh, well, the parts I negotiated are strong, but this is J.D. sing." And by the way, even Secretary Hexeth and Secretary Rubio, no, this is a giant steaming pile of shit and are nowhere to be found. And they've said,

"J.D. you go on the view. You go talk about this deal. This is, in a word, disastrous." You're thought to it. I didn't get addition to that. I agree with everything you said.

“I think there are so many reasons to believe that whatever quote unquote deal we have isn't”

actually a deal. And that doesn't seem to be what the markets are believing right now, at least when you look at oil prices, which have come down in the stock market, which has gone up, because there's

think that this is actually a deal. So number one, since the MOU was signed, Iran has already fired multiple drones at commercial ships. And those drones were intercepted by the U.S. military. So already it doesn't seem real, because Iran is still firing missiles. And of course, the U.S. doesn't want to talk about that, because if they talk about that, and recognize that we don't seem to have an actual ceasefire agreement or a peace deal here, then suddenly Trump looks bad.

So that's a big problem. There's also this $300 billion reconstruction fund thing that everyone's

bickering about and arguing over, which again is the signal to me that we don't actually have a deal. It is in the MOU. It is one of the points, one of the 14 points in that agreement that the U.S. is going to quote undertake to construct this $300 billion reconstruction fund. The question is what does undertake actually mean? Does that mean that they're in charge of getting other quote unquote regional partners to pay for this thing? Does it mean that the U.S. is going to pay

for this thing? I don't know. But what I do know is that Iran is expecting $300 billion. And if they don't get it, then the deal is off. Well, Trump has gone out and said, quote, "The story that the U.S. is paying around $300 billion is fake news put out by the Domo Crats." He also reiterated in an interview that we're not investing and that we don't have a fund. So clearly there is disagreement over what are we going to do about that. That's a huge deal. Also, it's only a 60-day agreement.

So, by definition, it isn't really a deal because it's going to expire. So it's really more of a

“pause. But then finally, and this is the most important in my view, based on what Trump has said,”

I don't think even he takes this seriously. And this goes back to what you said about how he's blaming it on JD. And we will get to that in a moment. I have an interesting clip to play for you. But I just want to read you some of the quotes that he said about this deal. The signal to me that he himself doesn't think that it's a real deal. So he said, quote, "It's a memorandum of understanding." And if I don't like it, we'll go back to shooting it them dropping bombs on their

head and quote. He also said, quote, "We have an understanding of certain things without writing it." And if they don't, honor that, we'll probably go back to bombing them and quote. So he's already

talking about how this isn't that real. This isn't that strong. And we can just always go back and

shoot them again. Then he was asked how long the military will stay in the golf. He said, quote, probably a while. That's not good. And then when he was asked if he saw this deadline of 60 days as a hard deadline, he said, quote, "No, I don't." Just as long as they're behaving, I really don't care that much. So everyone seems to be like collecting around this idea that this one's real,

“this one means something. I think it probably means something more than the previous fake”

frameworks of deals. But I don't think that we can take this that seriously. If the president himself isn't seeming to take it that seriously. I have a clip of this JD Vance situation, which I think is interesting. But I just want to get your views on whether you think that this deal is actually a deal or if it's like bullshit, like the rest of it. Well, let's play the clip and I'll comment. Okay. So this is the clip of when Trump is asked about how JD Vance is handling it.

Let's see what you think of this. There's some element to this where you send the vice president. If it works out great, you'll look like a genius for sending him. And if it doesn't work out, it's the vice president. I like that idea, shit. Well, this way of the work said, I'm going to take the credit. If it doesn't work out, I'm blaming JD, you better be careful JD. So he's basically just said it. Got to appreciate his authenticity. Yeah. Yeah. Look, this isn't, I just be clear,

this isn't an agreement. It's a memo of understanding. It's a business document and

“memos of understanding less than half the time advanced to an agreement. I think this agreement”

or this understanding never gets to an agreement. First off, I talk about the cessation of all

hostilities in Lebanon yet has below nor Israel or signatories to this thing. There's no incentive for Iran to actually come to any sort of agreement. All they, they have accomplished what they needed. They have basically given the president his symbolic out so he can try to clear victory and leave his left, his gone. And the notion that they're going to go back if they miss behavior in 36 to your 90 days with military action is just not realistic, given the absolute lack of support

gold posts. And that is they are still going to try and exert enough pressure to show the world.

“They have their boot on the crowded artery of the global economy and they control the”

state of hormones and leverage that for political and financial advantage. That to me is clear. At the same time, they won't be so aggressive that we have no choice, but to go in again, which is that gives them a huge birth. But this is Iran emerges from this much stronger than we went in. We have given them a nuclear weapon in the form of their ability to control and influence the straight of hormones. And the political takeaway domestically is the following.

J.D. Vance will not be president. There is going to be no way he can escape this. The president is

hanging this anchor around him. It's as if he sent a mob and a news for him politically. And I've

said all along that neither vans nor rubio are going to be the nominees from the Republican party because what history tells us about Donald Trump is that he is the equivalent of political Chernobyl and that anyone close to him dies of leukemia. He doesn't give a shit about J.D. Vance. He gives a shit about having a fall guy when he knows this is a disastrous agreement.

“And I think J.D. Vance shows a total lack of political savvy. Anyone here from Secretary”

Hegseth, he's like, oh no, no, J.D. you take it. You take it. I don't want to anywhere near this. This is, I mean, there's just it's is comical that they're even calling this some sort of agreement. It no one already. All ready. No one appears to be living up to it. Also, just

the 300 billion reconstruction fund. The way I read that, I'm curious to get your take,

is that essentially Kushner and Whitcloth have said, they see everything as a transactional business opportunity. They said, you know what? Or around the huge economy, 80 million people, we want to build the next St. Regis there. We'll go in. We'll raise money. This is a huge opportunity to go in and invest alongside of Halburton or Exxon or Chevron. This is an opportunity to make money. Oh, my frame of thinking is like hotels and reservoirs. Yeah, how do they make money?

So I would imagine at some point they said, you know, we're going to raise money out of the golf and investors and and and Jared and Whitcloth are going to raise a fund to invest in Iran. And guys, Link, Link, let's get a lot. Let's make money together. Guys, you're reasonable people. Have you said what he said about the artist? I urge you to see that some of them are rational people. I mean, this is, he sees everything. It's like he's the buyer in the seller. And he thinks if

he wills the car dealership into selling him a Ferrari for the price of a camera that somehow they'll decide to do that. We, I.e. the president have been so played here by the IRGC. And unfortunately European allies, China and Russia are kind of all saying, you know what? I don't mind it this guy gets his eyebrows sensed really badly. And if he loses a couple of fingers and maybe even a couple of hands because he's been such an asshole. I mean, it's just weird to think that the IRGC

now has potentially more support. And then the wild card here is Israel. Israel, Netanyahu is on record for decades saying it's given the opportunity. He is going to eliminate what he perceives Israel's enemies and their proxies. They're the wild card here because I'm not sure Trump has as much authority or power over Netanyahu as he would like to believe. And notice they were not Netanyahu who was not shown the quote unquote memo. Because I thought he was worried he was going to front

run it and say, no, this isn't going to happen. We're not going to cooperate. Yeah, exactly. So many wild cards in here, including Israel, including also if this deal is branded as a disaster, which I believe it already is, the Neacopropi C Trump is going back on it because all he really wants at this point is to just save his skin and probably to save himself for the midterms. Because that's really,

“I think it's likely that this is what this is all about. His approval ratings are tanking,”

inflation's going up. Everyone knows that this is a disaster. So he needs to save face in some way, shape or form. And if everyone believes that this wasn't a success, then he hasn't really accomplished his objective. So maybe he'll just blow it up again as he's done multiple times in the past. In terms of the economic takeaways, why should investors care about this? Again, this all goes back to inflation and as a result, interest rates and the probability of rate

hikes. I mean, if you're belief is that we have a deal and therefore inflation's going to come down, I would just encourage you to just reconsider that belief. I just don't think that you can really say with any level of confidence or certainty or optimism that we have a deal here and that we're

to mean that inflation's going to come down and therefore that we won't have to raise rates. I mean,

the Federal Reserve meeting was literally unanimous for the first time ever. It was the first time

that we didn't see anyone advocating for a cut. And now the probability of a rate hike in 2020

“sets has gone up to more than 50%. So the likelihood is yes, we will have rate hikes and I think”

if we learn anything for the Federal Reserve, it's that we know now that they are very worried about inflation. And I think maybe this can slightly reduce your concerns about inflation, but I don't think it can eliminate them. And I certainly don't think that this changes the path forward for the Fed in any significant way. So those are the economic takeaways. In my view, we'll see, but I think we should expect rate hikes in 2020, six. We'll be right back off to the break,

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We're back with Prophecy Markets. As the two biggest AI companies prepare to go public, investors are getting a look at the numbers behind the hype. Last week, leaked financial statements

can sustain its current level of spending. Andthropic meanwhile appears to be on a different trajectory, according to reports from the Wall Street Journal, the company expects revenue to

surge $130 per cent year of a year to $10.9 billion in second quarter. And supposedly,

it is on track to generate its first operating profit. But because both companies remain private, we still have only a partial picture of their finances. So we wanted to fill in some of the blacks in this section. So Scott, there's a lot of nuance to these numbers, especially the numbers

“that I just mentioned in this intro. And I think it's really essential for two of the most”

important and significant IPOs in history, opening AI andthropic, which are coming out on the pipeline this year. I think it's essential for us to have an understanding of how profitable or unprofitable these companies actually are. And in a lot of the discourse, what I'm getting a sense of is that people have a lot of opinions about opening AI or unthropic, but no one really seems to have an actual understanding of their profitability and how much money they are making and how much money they are

losing and spending. So I wanted to just start here with like a demystification of what's really going on. And I'm going to start with open AI's financials. So those financials were leaked and we had a conversation with Ed Zitron who leaked them earlier on the week. And it gave us a picture

“into open AI's financials in 2025 and it was independently verified by multiple sources, including”

financial times. So let's just go through them. So $13 billion in revenue in 2025, up 240%.

That is significant. That's a big deal. They lost 38 and a half billion dollars. That was the net loss. That's a big number, very scary, very bad. But there are some nuance in there because that was reflective of multiple things like stock-based conversation. And then also supposedly this one-off charge that they had to pay during their re-org from non-profit to for-profit, there's some debate on this. So it's a little bit unclear. We'll return to that in a moment. But let's just focus

on what we know about their operating profitability. Because we actually do have clarity on that now. And that is meaningful. So just as a reminder for our listeners on what operating profitability actually is, this is basically the amount of money that you're either making or losing from your day-to-day operation. So it doesn't include your capital expenditures. In the case of open AI, it wouldn't include how much they're spending on building like the Stargate data center.

So this is like what the business looks like day-to-day. Let's just break down what the line items are in the operating profit. So how much are they spending on general and administrative? That's the first line item. This is mostly how much they're paying their employees. It was $1.6 billion in 2025. Sales and marketing expenses. $5.7 billion, staggering number. I'm sure you have some thoughts. Costs of revenue. This is basically the cost of delivering the

product. I see this as inference costs. How much are you paying for compute when your users are asking charging BT questions? $7.5 billion, staggering number. Finally, research and development. This is training costs. This is how much you're paying to compute providers when your engineers are basically training and models. The number was $19 billion. So that total operating costs and expenses in 2025 was $34 billion. That's on 13 billion in revenue, which means that total

operating loss, and this is the most important number, was $21 billion in 2025. That's how much they

lost on day-to-day operations. There's a lot of debate on this, but I can tell you with a high degree of certainty, I want to get your reactions and then we can maybe keep going and digging into

“these numbers. The weird thing is I don't think a matter is anymore. I think that I think what matters”

more is, well one, SpaceX, the SpaceX IPO has been such a, I know the term is, it's been such a spectacle. It's been so incredible in terms of the valuation and the fact that I think it's up 30 or 40 percent since then. It's come back a little bit, but it's still just remarkable. That every person that's opening on and thropic is calling whoever was the lead banker at SpaceX and said, "Can you manufacture the same scarcity and cadence of lock-ups?" They're all trying to take a note

out of SpaceX's book, right? I think operating losses to a certain extent have become moot. It's manufacture scarcity. It's growth and which SpaceX doesn't have, but more than anything,

to see who gets their first, because the valuation of anthropic and open AI would,

whatever their valuations would have been if they'd gone after SpaceX or up 20 to 50 percent,

because the most exciting thing from an investor relations standpoint or from the bankers who are going to market this is that, well, if you thought SpaceX was a great deal and it popped 40 percent,

“what if I told you I had a company that was growing 10 times as fast and is only 40 times revenues?”

Welcome to OpenAI, or Anthropic. The bigger problem right now for OpenAI versus Anthropic is that what you're seeing, I've had some dialogue with different CEOs of companies talking about AI and their investments in AI. And what you're seeing is what I call a blame the model narrative right now. And that is a lot of companies are waking up and saying, "Jesus Christ, I'm spending all this money on AI and they're putting pressure on their CFOs and some of their managers to show a return."

And so what a lot of them are doing is swapping out OpenAI for Anthropic. Because they think, "Oh, it's a model problem." It's not. I mean, I think Anthropic's great, but you have a lot of blame the model which is disadvenaging OpenAI and Anthropic. And I think what you're going to see as the numbers come out is not only as Anthropic operating at greater physical discipline, it's still a money furnace, but it's an oven as opposed to the volcano that the

“incinerator OpenAI is. But I don't even think that that's what the market's going to be focused on.”

I think the market's going to be focused on to Anthropic's advantage that Anthropic will reflect more momentum upwards. But the fact that these companies are a money furnace, I don't know. I think they're going to be able to position it as if you have a company like SpaceX out there with two and a half trillion dollar market cap. And they need at some point, it's basically it's got one great business, right? It's got the starling business. That's a great business,

but it's, you know, a relatively small business. It's got a sexy business, the rocket business, which isn't even smaller business. And then it's got a money furnace. There's smart. They just brought by cursor, which is a real business. But if I were marketing OpenAI Anthropic, I'd say, you know, at the end of the day, there's a debt, there's a floor on this of say, three or four

hundred billion because why wouldn't must come in and buy this thing if things got rough? And overnight,

be the, you know, at some point, he's going to have to backfill these expectations. So it's almost as if cashless, at least for the next couple of years, don't appear to have much, much importance, growth, shockingly had less impact on the SpaceX IPO. It's total addressable market, which I think both OpenAI and Anthropic are going to be able to have all sorts of pictures of every person in the world losing their job to, to AI and everything being run by AI. And then with the law, so I think

be able to say, as Jesus Christ, these are value stocks of these valuations. We're going out at 40 or 50 times revenue, which is a value stock compared to what else, compared to the, the thing you just bought shares. And so I think the money furnace that there is OpenAI is less important than we might think. Yeah, I think, I think it's definitely possible that that could be true when these companies go out. And that'll be really interesting to see to test the markets,

“do investors care about the thing that honestly only matters, the only thing that really matters”

in investing, which is profitability. I mean, maybe I'm like a boomer at heart for thinking that,

but that's basically what the whole game is all about. But the question is, can they paper over

that giant wound in the business with something else? And I think to your point, SpaceX has been a success story. And they've employed very interesting and very honestly smart tactics to do that. One thing you mentioned was this tiny flow. The fact that 4% of the shares are publicly traded, which basically means that the stock can be pumped by its super fans, by the retail investors, to a big degree. And that is exactly what we're seeing right now. To be clear, as the lockups expire,

I still think that the stock is going to get crushed over the long term. I think in 6 to 12 months, you're going to see huge amounts of selling of the stock because people are going to realize they need to take their winnings and use it to buy something like a house or a cool apartment, whatever it may be. You also mentioned the total addressable market. The fact that SpaceX said that the term is $28 trillion, which is more than the GDP of every nation on Earth except for America. And by the way,

technically, open AI and anthropic could play the same game. They could say, "Oh, our term is the GDP of America because we're in AI. There's all this excitement and such a huge opportunity here."

there's Elon Musk. And I think that is a big reason why SpaceX has been as successful as it has been going out in this IPO. And that is there is a huge cult following around Elon Musk

around his track record of making people rich in the form of Tesla. His 240 million followers on Twitter,

the fact that he is this, you know, Jamie Dimon is calling him the Edison of all time,

“whether or not you agree with him, that's what people are saying about him. And that's not”

something that Sam Altman and Daria Amadeh can really do. They don't have that level of cultic following. Nor do they have the storytelling ability that Elon Musk has and has demonstrated to have had in his long tenure of being a public company CEO of both Tesla and now SpaceX. So I think that eventually the profitability problem is going to have to matter. And I just want to dispel some myths that are going on about opening AI right now. Because when those financials

came out, as I said, there was this net loss of $38.5 billion. But in the financial times reporting,

they talked to someone who was quote familiar with the matter. And that person said that that number doesn't make sense or that it isn't real. Because $30 billion of that net loss was attributable to this one-off charge from when they went to a for profit. And so supposedly the more accurate net loss that is going to be recurring for opening AI was $8 billion. And that is the number that all of the AI boosters are clinging to right now. They're saying it's not that bad. It was only $8 billion.

The, the exit financials are fake. Like this is not that big of a deal. But I just want to bring us back to again what happened, what we know about the operating profitability. And that is, we know that the operating losses were $21 billion. Negative. Those losses are not massageable. You can't bullshit out of those. Those are the actual losses. And so my takeaway here is that someone is lying. Either it's the financial times who was lying about what we saw

on the income statement or exit, who's lying about those financials, which were independently verified by those journalists or someone who was familiar with the matter is lying about what the profitability actually looks like. Either way, this stuff is getting very shady, very weird. There's a lot of murkiness. And I think eventually investors are going to have to care, because eventually the entire business model of AI is going to be called into question. And more and

more people are asking themselves, does this business actually make sense? Open AI is reducing their prices because they need to compete with those Chinese models that we've talked about, which means that their margins are only going to get even wider. So I do think that eventually it becomes a problem, but to your point, maybe in the first few weeks of trading, it doesn't

“matter to people. But if you're a long-term investor, I don't know. I think eventually you have to”

care about this. Well, here's your flaw. You're speaking rationally. And yeah, I mean, let's forget what companies are supposed to do. Companies are supposed to gather inputs and use culture, IP, plant property and equipment to produce an output that they can sell more for their cost of the inputs. That's called profitability and cash flow. And when you buy a share of stock, you're buying an ownership in that cash flow. And growth companies, which have dominated the market,

have done so because they've been able to say, if you give us enough capital, we can use that cheap capital to pull the future forward or make acquisitions. And ultimately, we end up with a special night of digital economy. These just cash volcanoes of high margin revenues. And basically, you know, are essentially monopolies in the form of toll boosts on, you know, the global citizens or West's daily life. These companies, everyone's looking for the next one. At some point,

you know, you find out that, okay, if this company can't produce profits at some point, it's either an acquisition target or it has IP value or it's a trophy asset or something like that. But I generally believe we have made the jump to hyperspace right now and it feels like 1999, whereas long as it's

“a hot area, either space or AI, I think you could price these things at a ridiculous number.”

And I'm predicting a pop on day one. I just think retail investors have thrown in the towel. And institutional investors have said, yeah, it's not an investment. It's a trade. But why wouldn't

we get in on the trade as long as the getting is good? But that never ends. Well, right,

institutional, I mean, maybe there's some institutional players looking to hold these things for 10 years. But at a minimum, I don't care what the price is. If I get allocation an open AI or anthropic, I'm going to take everything I can. And after the end of the first stand, I'm going to look at it,

“the end of the second day, the end of the fifth day, I'm going to look at it. I think it would be”

very difficult for any of these companies to sustain their current valuations. And last it ends up to, you know, 40% of American jobs go away. And it's all replaced by tokens and AI and data centers in space. It ends up I'm wrong and that every person I know that knows fuck all about physics, who's told me this is literally impossible with their, they're explaining in their S1 or in their perspective. Until then, this is a trade. But it's a trade that's working out for everybody,

so it keeps attracting more capital. But you're talking about long-term, rational valuations and cash flow. We are in, we are in a different era right now. And I'm officially saying this is 99. In 99, you could sell, you could sell $30 worth of dog food or $70, they cost $60 to ship. But if you sold it for $19.95, the internet, the total adjustable market of internet commerce was so huge that you would bid up pets.com. You would bid up. These ridiculously stupid companies

that made no sense that we're going to losing more money as they grew, that at negative margins. At least these companies, in most instances, have positive margins. These are great companies that won't collapse the way they did in the.com era. But they could easily, easily. If, I mean,

I'm very riddled, said, if SpaceX declines by 80 percent, in absence of knowing where it was,

you wouldn't look at it at 500 billion and think that it's cheap, you think that it was expensive.

“So I think, look, if you get out, I've had a bunch of people call me saying,”

should I get allocation or should I sell? And the people who comment, say, should I sell, I'm like, yeah, wait till the first couple trades and then sell as much as it can. And the people who think they said, I've been offered allocation, I'm like, take it and I think it's a trade. I think a trade out of this thing soon rather than a layer. As an investment, I'm a boomer. I cannot in any way see how these companies sustain the growth and profitability. They're going to need to justify

these valuations over the medium and the long term. Yeah, it's just a fairly big statement, which I agree with. I want to return to anthropic because anthropic is possibly the only company in this space, the only hot company that is potentially defying this narrative, specifically because of that Wall Street Journal report that we got last month, which said that they are on track to achieve operating profitability in the June quarter. And if that is true, that is a

big deal because here we have the one AI company that is supposedly profitable on an RPEX basis.

“If it's true and personally my view, I don't think that it is true. I think this is an extreme”

example of the numbers being massaged because if you dig into the numbers, you learn that they are extrapolating based on a quarter in which they are receiving a huge discount on their compute deal with SpaceX, a discount which will literally end at the end of the June quarter,

at which point they will be spending $15 billion a year on their contract with SpaceX. In other

words, their compute costs are about to explode. So for them to say, we're about to reach operating profitability, it's like the profitability equivalent of bullshitting your ARR, I think. It's like if we would assign some massive one-off contract with an advertiser and then we just multiply it by 12 and we were like, look, we have this incredible ARR, we're going to keep making money like this, but of course we won't. So when people say anthropic is profitable, one they're

not, they said that they're trending to be in a single quarter and two, we should treat that statement with a lot of skepticism. Having said that, from a spending perspective, anthropic, we don't know much, but what little we do know, it appears that anthropic has its ship together in a much bigger way than that open AI. And we did a little bit of analysis on this according to a Wall Street Journal

report, anthropics compute costs last year with $7 billion. However, the Wall Street Journal had also

gotten that wrong in that same report about Open AI, they were off by about 60%. Now that we know what Open AI's real financials are. So let's assume the same thing was true of anthropic, that means their compute costs were about $11 billion last year. That is an estimate. Then you add in some of the sales and marketing costs, which would be a lot smaller than Open AI's. Also the employee compensation, big, big point here, anthropic has about half the number of employees as Open AI does. Our estimate

their revenues that they lost $11 billion. That's a lot, but it's half as much as Open AI.

So I think if, if, if I'm anthropic, they say they've got $47 billion ARR right now. If they actually hit that number, if they actually generate that much revenue, and if they can not let their costs grow by 200%. They have a path to profitability, I think. But that's a lot of ifs, a lot of stuff up in the air. That's where I land on this. I think that it's possible for this

“business model to work. But I think that you have to be crazy, crazy strict about your spending”

and about managing your costs. Something that I think anthropic has somewhat of an interest in doing, but Open AI doesn't at all. So Open AI, to me, trade, anthropic potentially a real investment. Yeah. And also, I do believe that if these companies wanted, they could be profitable right away. If they priced, there is, there are a lot of users who would play a lot more money for these these models. And I think they could cut a lot of costs in investments. And I do think that costs

with scale will come down dramatically. The problem is that business is a great business where

30 or 50 billion, not worth 500 billion or a trillion. So they have to kind of spend against a future that they're predicting to justify these valuations. But these are businesses I do believe that could be profitable sooner rather than later. They just wouldn't be able to sustain, you know, what is it anthropic is growing 5x a year. So again, the market, not even the market, valuations are the tailed wags of dog. What is wagging the dog right now? Getting JP Morgan and Goldman Sachs

through soft and hard lockups and a low flow to create manufactured scarcity, a vision of a total addressable market that is just so enormous that it's impossible for anyone to calculate where

your potential market size is. And then, you know, a spokesperson who is just commanding a ton of

“attention. And I think these companies, they should all send, I think, you know, wine and roses”

to Elon Musk because these companies are going to look cheap by comparison. And it's going to create, I think it's going to grow, I just think, well, we're going to run out of money to invest in these guys because Musk is soaking up all the capital and off of that preempting and cutting line. I've now gone now. Everyone is, is drunk on this and is going to pile into these things. And they're going to, they're going to pull back, I wouldn't be surprised if they pull back the numbers of shares

they're offering, but they try and implement some of those tactics, the soft lockups with retail investors or what have you. But you can bet, you know, the CFOs of open AI and a throttle to send. Can we speak to the bankers at JP Morgan and Goldman and how they managed to float here and what they're in, how they marketed this? And they'll say, come on in because this is hundreds of millions of dollars of fees. And I walked with SpaceX and we said that revenues would grow 100 x

by 2030. None of us knew what we were talking about, but it didn't matter because we cashed out. So our 100% agreed on that. We'll see in the meantime, I'm using AI models to try and predict what are the costs of Team Scotland tickets if they're get into the quarter finals. It's not pretty. It's not pretty. If that happens, we need to do a live podcast in the stadium. If we do that, we're going. Yes. If we do that, we're going. Yep. Okay, I'm very excited about that.

Now I might be Team Scotland. We'll be right back and for even more markets content, sign up for on newsletter at ProphtheMarkets.com.

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giant thud. Last week, the company unveiled its new augmented reality glasses. The Snap Specs, CEO Evan Spiegel has described the launch as a crucible moment for the company. But investors were less than impressed, shares fell nearly 8% following the announcement. One of the main concerns for investors is the price. Snap Specs will retail for roughly $2,200, which is nearly 3 times the cost of metas competing, smart glasses. So,

Scott, these new smart Specs, Snap Specs, excuse me, have been released. I'd love to just play this clip of Evan, the CEO, getting interviewed on CNBC, unveiling his new Snap Specs. "You're wearing your new specs, but you just unveiled. They cost $2,195, the stocks down more than 5%. How do you address investor concerns about the potential market for these?" "Well, Julia, thanks so much for joining us here at AWE. It's been such an exciting

day for the company, and something we've been working towards for more than 12 years now. It's a really bring computing into the world and make it more human."

"When I saw him put on those glasses, I thought, I felt for the first time in whatever I thought,

“I am much cooler than Evan Spiegel. I think I could pull it a bar,”

more easily than Evan Spiegel at those things on. If he were those things, I think it's an even race. Look, they launched specs in 2016 at $150 or was 130, and nobody bought them, so they decided the solution was obviously to launch $2,200 glasses to look even more stupid. This is a bottom line. This is the beginning of the end of Snap as a hardware company. And on a larger level, what this reflects is the danger of dual-class shareholder stocks,

because Snap's stock is off 90% in the last five years. While the S&P has been up 80%, Evan Spiegel and his fever dreams of being Apple, and said it's Zoom has cost his shareholders an absolute ton of money. And this is the tragedy. Snap is actually the core business is actually pretty good. Essentially, Meta came in with this fever dream also of wearables, but they can

lose $60 billion, and it's a speed bump. Snap cannot. Cook can waste a billion dollars,

trying to have an option to see if in fact Zuckerberg was crazy genius with his mixed reality headset. Kill it, it doesn't even show up in the earnings. Snap has spent $3.5 billion in

one in half billion in market value. Essentially, it's a hilariously small number,

“just shows you how not valuable this company is. This is the problem, and it's the perfect”

activist play. But as an activist, it was stupid enough to go into dual-class shareholder companies with people who are not business people as the people controlling the business. You're just in the back seat as someone drunk has their hands on the wheel, and there's nothing you can do. You can you can scream slow down, but they've got the radio blasted and they're there doing shots of Jack with their hands on it. They just don't give a shit what you think.

Because if you look at the core business, Snap has a young engaged user base nearly half a

billion daily users, four or fifths are under the age of 35. That's an advertiser's dream compared

to meta where it's 43%. And American Snap Chatters open the app, and I can testify to this as the father of teenagers, 30 times per day. Investors value meta's daily users at $400 each, investors value Snap's daily users. It's $16 each, because the CEO is fucking crazy. It's out of his mind, and has an obsession, has a meth addiction, a crack addiction, to burning capital on prophylactics, cosplaying, wearable. So I know some people on this board, act like fucking fiduciaries,

either spin the specs company or shit can it, and focus on what is Snap's core asset. And the fact is that it's a great messaging platform with one of the most attractive user bases. This stock is at four bucks or five bucks, 90% value destruction. It's easily a $20 or a $30 stock. If they get this guy's lips off of the crack pipe, a believing he's Steve Jobs and can come up with the next iPhone. Their subscale, they don't have the capital. The guy went to design school. This is

where he spends all his time and money, and he's the controlling shareholder here, and he's already a billionaire married to a model. Does it give a flying fuck? What your stock prices? And that's the problem. So this is, this is the problem with dual-class shareholder companies, is you can be rational, and it doesn't matter. They're in charge. Yeah, I just want to, the dual-class

“shareholder point is a really important one. I just want to make sure we're all on the same page about”

it. What this means and this used to not be a thing and in the last two decades, it's basically starting a Google, it became a thing. It means that there are two classes of stock. One of them has a lot fewer votes, and the other has a lot more votes. And essentially what happens with these dual-class share companies is that the founders give themselves all of the stock that has more votes basically giving them more voting power. That's the case for a lot of companies, Google,

matter, play with them. Snap is that times a million, because they have three classes of stock.

There's class A, which is the shares that you can buy as a retail investor, the publicly traded shares. They have no voting rights whatsoever. You don't get any vote. Class B, you get one vote. Class C, you get 10 votes. Evan and his co-founder are the only people in the world who own class C, which means that him and his co-founder together control 99% of the voting power in this company. Evan personally controls 53% of the voting power, which basically means that he controls the company.

No matter how many shares other people go out and try to buy, no matter if an activist investor tries to come in and steer the ship in the right direction. And also by the way, you mentioned the board should get their act together. What are they supposed to do? They can't fire him. He's the

“only guy who can make the real decisions about what the company does. And I think it's such an”

important point because the dual-class stock has become such a popular thing over the last few years. More than 40% of tech companies that went public last year went public with dual-class stock. In the 90s that number was less than 10%. This is one of the sexiest things in terms of corporate governance right now is issuing two classes of stock and giving the founder the founder CEO all of the power. And usually it's worked out, it worked out for meta,

it worked out for Google, put to your point. This is the perfect example of dual-class stock going in the wrong direction. My friend Alex Heath had the best quote. He said, this is founder mode gone wrong, which I think is 100% true. This guy clearly

because he's in charge. I never miss a chance to tell a story that I think makes me seem

more important than I am. You asked what the board members should do. They should do what I did on the board of the New York Times. And that is be such a fucking pain in the ass, eventually they kick you off of the board. I can tell you, Arthur Solsberger was so happy and to finally kick me off the board because every time you showed up to a board meeting, he knew that asshole was going to be there, asking him questions like, "What the fuck are we thinking

owning 17% of the Boston rats? Why do we own about dot com?" Snap board members?

“You should be making Evans' life fucking miserable every three months. He has made the lives”

of your shareholders who you are supposed to represent. He has made their lives miserable.

He needs to feel that every 90 days. What are the chances? This Sunday night I've been invited to a party hosted by Evan and I've RSVP DS. What is the chance that that invitation is withdrawn? Let's create a thing on calcium right now because the board members will be there and guess what board members? You are not doing your fucking job unless you make that guy's life miserable during the board meeting every 90 days because the people you represent are miserable.

Yes. What do you think? Do you think I'm in my room Sunday night ordering room service? True story. True story. What do you think? You ship post a lot of people and they seem to continue to keep coming back to you. I think you still get that invite. I'll just put the

“caveat out there. We're criticizing Evan's big old, we're criticizing the strategy because”

you and I both think that it's a bad one. From what I understand about like I like the guy, I actually think he seems like a really nice, very likely. He's a lovely young man. There we go. Yeah, he's a lovely young man. But so are you. But if you have your head up your ass and it was 90% of shareholders money, you deserve to be fired. I mean, it's not about whether he's love. Here's the bottom. I'm just trying to get your invite back. That's all I'm doing.

Humans we're going to be at the hotel to cap on Sunday night. The guy's a billionaire. He's handsome. He's married to a model. Does he care that some hedge fund manager managing the Wisconsin public retirement fund is down 90%? Surprisingly important point. Does he give a shit? He's a billionaire in the hotel's door surrounded by people who will kiss his ass and tell him that the glass is a great idea. I tried him last night. Oh my god. This thing is literally these glasses are a

steaming pile of shit. It is so ridiculous that these things, it's like these things made Tim Cook with that mixed reality headset look cool. He looked like he had game with that thing on. Yeah.

Anyway, I'll see you Sunday, Evan. Final point here. Snap has a market cap of $8 billion. It's

less valuable than Domino's pizza. It's roughly as valuable as the gap. I mean, compared to like SpaceX just bought curse if it's $60 billion. $8 billion. This is chump change. Meaning this is a very

“acquirable company. I think that I would be shocked if companies aren't looking at that market”

cap and thinking. Let's go in and make an offer acquire the audience acquire maybe some of the hardware and some of the wearables tech have were interested in it and Claire made this Claire our producer Claire Miller. We were thinking who might be the acquireer and she suggested a company that actually I totally agree with. I think this will probably happen. Open AI. Open AI loves spending money on stupid bullshit. They've acquired 18 companies so far. If they're trying to build

this wearables device with Johnny Ive, Evan Speagles got in halfway there with his 132 gram pair of glasses that weighs as much as the baseball. Maybe they can get to the finish line with snap. So I think that this is going to be an interesting story. It's not going to be acquired. Will it be activist investment or interest? I think certainly. But I could totally see opening AI making an offer. An activist in a dual-class shareholder company is not even

paying into the wind it's jerking off into the wind. It is so it is such an exercise and futility that I thought I was going to change Arthur Sol's burger's mind and get him to think rational. Sure. I'm sorry. I'm still on joke. I just thought of that. That's pretty good, right? By the way, Team Scotland. Team Scotland. It's jerking off into the window. We do good. Continue. It's not hack as it's a shank. If I'm not exaggerating, the board of snap. Okay, this stocks at four or five

It's at 20 bucks in two days and I was like to try to bring my profanity and ability to get uninvited

from things back to a personal learning. One of the most powerful words in business vocabulary

is fiduciary and fiduciary means the following. That once I have my deal, I'm getting a certain amount of money as a board member. I'm a fiduciary. I represent the interests of other people. One of the biggest honors I've ever had is twice I've been asked to be someone's executive for their estate. That is your fiduciary for them after they are dead. Meaning they trust you, they trust you 100% to represent them after they have no voice at all. That is such a fiduciary

is such a powerful word. You are representing other people's interests. And what I would remind this, the board of snap is you're supposed to be fiduciaries for all shareholders. It is such a

powerful word and board members consistently forget that that F word.

“Anyways, that's my speech. I love it. I think it's right. Let's take a look at the”

we've had. We'll see the feds preferred measure inflation from the personal consumption expenditures index for May. We will also see earnings from FedEx, Carnival, Serebris, and Micron technology. Not that exciting, but maybe something interesting will happen. It's got to have any predictions. God, that felt like a giant flacid penis after everything we've been talking about. That felt like my sexual performance. My sexual performance after a few too many

margaritas. Yeah, I'm so profaned today. Your thesis. It's a Scotland in you. Shocking, I was kicked off the board of the New York Times, isn't it? It's not hard to believe. Yeah, I love it. That's your advice to board on my deck. He couldn't wait to kick me out. When you think about it, one of the worst pieces of advice possible.

“Go out with all. Sometimes the best thing you can do is, anyways, that's the problem.”

Ultimately, for shareholders, it's the right move. But if you're trying to be honest, you know what's going to happen? The board, how do you know? The board members are going to

be able to hotel the cap, collecting their quarter of a million dollars or $500,000 a year.

Do they do the shareholders even matter? They don't even care. They don't even hear from them, those anyways. Can't wait to see you in the code disorder. Production? Well, look, something's got something. Anything has to happen here. And I don't know what it is. I'm going to go out on a limb here in a soon that Evan has some some responsibility. And there are some same board members that have the

wear with all and the gravitas and the logic and the relationship with Evan to go. Evan, we've been at this since 2016. We've been at this for 10 years. This hardware fantasy, it needs to stop. You have some obligation to your shareholders to manage them in here. How do they hold

“on to any employees? Do you realize not a single employee has made any real money there?”

That look at the employees. They're just waiting around to see once the next round of thousand person layoffs. Who's made money there? The people at Snap, I would imagine the best and brightest at Snap have been at tons of offers from Meta. What if you had gone to work for Meta in 2016 versus Snap? I'm sure there's people that have been there for a decade. They've made their three or four hundred grand a year. If they taken that job in Meta, they'd be worth 30 or 40

million. Yeah, go for an AI company as well. I mean, at least Zuckerberg had that no one was more all in on the Metaverse and wearables in Zuckerberg. And even he had the foresight and the obligation to say, "Okay, it is time to sunset this thing." So anyways, my prediction is that there is a board member on the board of Snap that can sit up and down and go look Evan, how does $20 a share sound right now? It's not that hard. You'll be a hero. We'll get this company newfound growth. It's a great

company. You have one of the most attractive user bases in history. We don't need glasses. We don't need them. You've built an amazing platform, an amazing product for advertisers that has incredible loyalty of a half a billion people who use it every day who are literally advertisers bulls eye. Let's move come to the light, Evan, come to the light. My prediction is a hopeful prediction that he's going to listen to one of these board members. Okay. I like that. I like that a lot. My prediction

I just want to end on this. I don't know if you saw mid journey, which is the AI image generator,

scanner that does all of the work of an MRI machine within 60 seconds. They've put all of these

“little ultra sound cameras around in a wheel and they use water and you step inside of this”

basically bath tub and then within 60 seconds you get a full body MRI. I mean we'll see how legit it

actually is, but from what I've seen, this thing is absolutely incredible. I'm so amazed and inspired

by it and just sort of a kind of a general prediction. I do think that this might inspire a hardware

“revolution. I think that there's a lot of excitement around building in hardware. I think what we're”

about to see is that hardware is about to become the new software where the coolest thing to be

working on isn't the next AI LLA or software product, but to be working on something physical, something like this ultra sound machine. Probably not wearables, probably not the snap specs, but something that you can actually touch and feel because this technology is really exciting. So

“that will be my prediction. I think you have it. I think this is your way of telling us that you're”

pregnant. And I want you to know we support you. Team Scotland. Team Scotland. Team England. Scotland. I'm going to let you take a wave from that. Team England. We'll see both of them. I'm going to record something if we get to the court as well. Team UK. You can see it's very exciting. This episode was produced by Claire Miller and Awesome Weiss and engineered by Benjamin Spencer. Our video editor is Jorge Coltty, our research team is Dash Alon, Isabella Kinsel,

Chris Nodonhoe, and Mia Savario. Jake McPherson is our social producer, Drew Borrow's is our technical director and Catherine Dylan is our executive producer. Thank you for listening to Prophecy Markets from Prophecy Media. If you liked what you heard, give us a follow and tune in tomorrow for a fresh take on the markets.