SpaceX Acquires xAI in $1.25 Trillion All-Stock Deal (cnbc.com) 202
Elon Musk's SpaceX has acquired his AI startup xAI in an all-stock deal that values the combined entity at $1.25 trillion, ahead of what would be the largest initial public offering in history. SpaceX pegged its own valuation at $1 trillion -- a markup from the $800 billion it commanded in a December secondary stock sale -- and priced xAI at $250 billion based on a recent $20 billion funding round that valued the two-year-old AI company at $230 billion.
SpaceX CFO Bret Johnsen told investors on a call Monday that shares in the combined company would be priced at $527 and that xAI shares would convert into SpaceX stock at a roughly seven-to-one exchange rate. The company is still targeting a June IPO expected to raise as much as $50 billion, surpassing Saudi Aramco's $29 billion listing in 2019.
Musk said the least expensive way to do AI computation within two to three years will be in space. "Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment," he wrote. SpaceX filed last Friday for permission to launch up to a million satellites into Earth's orbit. xAI merged with Musk's social media platform X last March in a $113 billion deal, and Tesla announced a $2 billion investment in xAI last week.
SpaceX CFO Bret Johnsen told investors on a call Monday that shares in the combined company would be priced at $527 and that xAI shares would convert into SpaceX stock at a roughly seven-to-one exchange rate. The company is still targeting a June IPO expected to raise as much as $50 billion, surpassing Saudi Aramco's $29 billion listing in 2019.
Musk said the least expensive way to do AI computation within two to three years will be in space. "Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment," he wrote. SpaceX filed last Friday for permission to launch up to a million satellites into Earth's orbit. xAI merged with Musk's social media platform X last March in a $113 billion deal, and Tesla announced a $2 billion investment in xAI last week.
Ketamine (Score:5, Insightful)
Re:Ketamine (Score:4, Insightful)
When will the SEC step in? Oh right, never he bought them off.
Trump would simply order them to drop it even if they did step in ... /s
Funny how rich people and supporters are always being treated so unfairly, while poor(er) people and critics are getting what they deserve.
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Theres one law for them and one law for us.
The only time billionares EVER face legal trouble is if they are harming other billionares.
Re: Ketamine (Score:2, Insightful)
What is it you want the SEC to do about this? Who do you believe to be a victim of it? Why are they a victim of it? How were they victimized by it?
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Stockholders and lenders are being damaged.
(SpaceX and xAI have lots of private stockholders and loans)
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Re: Ketamine (Score:2)
When you say those words it doesn't make much sense. When Trump says it, people storm the capital building.
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Basically they want to turn America Into Saudi Arabia. A handful of kings and queens, a very tiny number of people serving them and a vast vast sea of extraordinarily poor people kept down by a combination of brutal violence and religion.
Have you ever actually been to Saudi Arabia?
Re:Ketamine (Score:4, Informative)
The SEC has been depopulated, they do not have the personnel to review anything, which is just la Presidenta and his billionaire friends want it, since they did it to the SEC. And the remaining personnel haven't been tasked to do any important reviews except against la Presidenta's enemies (the list is updated weekly). And as others have noted, even if they did object, la Presidenta would soon see to it that their objections were buried along with their jobs.
Lest we forget, a similar thing happened in the 2000's under Bush Jr. Then the Great Recession happened and laws were passed to tighten things up. The R's immediately set to work to get those laws removed or neutered. They've succeeded. When the shit hits the fan, the R's who did it to us will have left office with their stock portfolios.
Re:Ketamine (Score:4, Informative)
Come on, Elon has been grafting through the Obama, Trump 1, Biden, and Trump 2 administrations without being called on his shit, and your comment about "the Rs stock portfolio" utterly ignores that it's congress as a whole (with a few exceptions) seems to come out with massively increased net worth when all is said and done.
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Parent needs to pull their head out of their partisan ass.
This fucking "us good, them evil" shit is precisely what fucking led us here, because as parent beautifully demonstrated, it makes us absolutely fucking blind to the real graft.
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When will the SEC step in? Oh right, never he bought them off.
I don't see any reason the SEC would be involved. When there is an IPO, then the SEC will care, but even then I don't see any particular reason for concern. Musk may be setting ridiculously-high valuations, but that's a question for the market to decide, not regulators. Either investors will agree or they won't, and they'll either make money or lose money depending on the accuracy of their decision, but that's not something the SEC should care about, that's just the market at work.
The SEC's job is just
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When will the SEC step in? Oh right, never he bought them off.
The merging of two private companies is not directly the responsibility of the SEC. That is why this happened before the SpaceX IPO, where multiple regulatory agencies might have been involved (the SEC, FTC, perhaps the DoJ). This appears to be about protecting xAI from failing (when the AI boom collapses).
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The SEC protects against monopolies. These companies are not even in the same industry. There is zero reason to block this merger. Any claim about issues here is purely from Musk haters who hate that he supported Trump in an election and hate that heâ(TM)s provided massive value to the world producing electric cars, reusable rockets, and ChatGPT.
It must be embarrassing to be this much of a sycophant and so entirely wrong about what the SEC does and does not do. You aren't worth correcting, only being made fun of and embarrassing, because it's trivial to figure out what the SEC actually does and how it could apply to this.
Re: Musk Haters (Score:4, Informative)
I get the value of SpaceX, but... (Score:5, Insightful)
xai? Isn't that the stuff mostly used to make images of famous people naked? 250 billion for that? Seems just a way to payoff Musk.
And a million satellites in space is not ruining our night sky?
Can somebody please...
Re:I get the value of SpaceX, but... (Score:5, Funny)
xai? Isn't that the stuff mostly used to make
What a whining hater. XAI owns Twitter. Thats at least $44B.
XAI is losing $6B/yr, multiply that by industry standard P/E of -40, and you get close to a $250B valuation.
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Porn is the use case. So it's an honest opinion at least.
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Good point. If only they could lose more money per year.
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Re:I get the value of SpaceX, but... (Score:4)
I was being sarcastic, as would be clear from the sentence after.
Even Elon belatedly realised he was paying far too much, but was forced to honour the deal.
OTOH, the Twitter archives are of significant value to training AI. And in these days of mega-inflated AI stock price, X/Twitter may well be worth tens of billions on paper, even though it makes no profit. Reddit is "valued" at $33B FFS!
I hate that you're right (Score:2)
Remember when people would panic when a P/E ratio was extremely high... like 6 or 7?
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I'll bet Musk gave the major SpaceX investors an ultimatum...basically take this junk firm, xAI, or he doesn't let SpaceX go public, and their investments will remain locked up. But, oof, a $250 billion valuation on xAI...that value will not be returned in our lifetimes. But somehow TSLA is still at >$400/share so don't take stock advice from /. btw the TSLA PE is 392 ...that's bonkers)
Recall that previously Tesla invest like $2billion in xAI, but my guess is with Tesla's declining prospects in their
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adding 1 million satellites would impact the DAY SKY.
billionaires are a plague on humanity
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I agree. We need anti-billiotics.
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Re:I get the value of SpaceX, but... (Score:4, Insightful)
I do condone the use of a guillotine for unrepentant pedophiles though, and there's an overlap, maybe that's a start.
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It's their way to combat global warming, by providing global shading.
Re:I get the value of SpaceX, but... (Score:5, Informative)
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We might be dangerously close to a Kessler syndrome already without realising it.
PopSci video: Sabine Hossenfelder - We are Much Closer to Kessler Syndrome Than We Thought [youtube.com].
Paper: CRITICAL NUMBER OF SPACECRAFT IN LOW EARTH ORBIT: A NEW ASSESSMENT OF THE STABILITY OF THE ORBITAL DEBRIS ENVIRONMENT [semanticscholar.org] by Hugh Lewis and Donald Kessler (from whom the Kessler syndrome was named).
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Building houses and cities destroys the natural beauty of the earth. Homeowners are a plague on humanity. Light pollution from houses and towns and cities destroys the night sky. This is not new, and it doesn't end well.
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xai? Isn't that the stuff mostly used to make images of famous people naked? 250 billion for that? Seems just a way to payoff Musk.
And a million satellites in space is not ruining our night sky?
Can somebody please...
Musk wants to AIify space. He says some neat words about needing more power than we can generate terrestrially then immediately pops off that space is the solution. Power generation in space isn't free, but I suppose it is decoupled from the power grid down here, and thus won't have to compete with us pesky brats that aren't billionaires and sometimes need power for cooking, lights, and other silly shit like climate control in our homes.
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In 5 years-old terms, it's like if I owned a lemonade stand and also a baking business out of my own kitchen, and managed to sell 25% of each as a separate business to my friends ("give me $5 and I'll say you own 5% of my lemonade stand business"). My
Re: I get the value of SpaceX, but... (Score:2)
Only if he moves into space as well - he's still liable for the results and output of his company.
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I doubt Musk is liable for much, especially under the current US administration.
Must be nice ... (Score:4, Insightful)
SpaceX pegged its own valuation at $1 trillion -- a markup from the $800 billion it commanded in a December secondary stock sale -- and priced xAI at $250 billion based on a recent $20 billion funding round that valued the two-year-old AI company at $230 billion.
The companies are worth what we (Musk) say they're worth.
Convenient when you're trading between yourself and yourself.
Re:Must be nice ... (Score:5, Informative)
The valuation of SpaceX is based on the external purchasers that have put forth bids over the years, the most recent one settling in January of this year. The valuation of xAI is based on the latest funding round raised from venture capitalists outside of Musk. So there are more people than Musk who believe this valuation -- believe it enough to put multiple billions of their own dollars on the line for it. Whether that is the true valuation or not, well, that's always the game of stocks, right? If enough people believe a price, that's the price.
Re:Must be nice ... (Score:5, Insightful)
If you call your Qatari friends, and ask them to invest in xAI at a given valuation, with the promise that
- you'll back that valuation by having both Tesla and SpaceX acquire shares in xAI at the same price a week later;
- you'll have SpaceX fully acquire xAI another two weeks later at a 10% markup;
- you'll take the entire shebang public at again a 25-50% markup in half a year or so.
Do you think that your Qatari friends are actually investing in your fledgling AI startup? Or in something else entirely?
It's all a circlejerk, and in the case of the Muskonomy, more oftent than not, just outright masturbation.
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Does anyone take the numbers seriously? It seems like they are little more than a fiction based on what someone would pay for part of the company, and pay using the imaginary value of another company.
Either way, it will all come crashing down soon enough. Hopefully not literally in the case of SpaceX, but it would be a shame if the AI bubble bursting wrecked the space part.
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Whether that is the true valuation or not, well, that's always the game of stocks, right?
Indeed, it is.
If enough people believe a price, that's the price.
Until they don't, and reality always sets in eventually. Companies can maintain sky-high valuations on dreams and promises for a few years, but eventually they have to actually start generating investment returns or their price crashes.
In theory, the current value of a company (and therefore its stock) is the net present value of its future dividend stream plus the current value of its net assets. If that phrase made your eyes glaze over, stop and understand it, because it's really not th
Re: Must be nice ... (Score:3)
And investors will still buy it sight unseen at Musks valuation.
People don't appreciate how much money is looking for an asset, any asset, to cling to. QE needs to be toned down to pre-covid levels in a real hurry.
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The companies are worth what we (Musk) say they're worth.
No, your emotions may be blinding you. I'm as angry as you at things like the "dark maga", but the reality is more subtle.
Musk has a history of unorthodox honesty for a CEO, saying Tesla was over-valued. After one tweet, Tesla dropped $14B in value.
So now he has embraced the market valuations. Something akin to the "greater fool theory"? The prices are crazy, but this one is not Elon's fault. Just look at the stock market.
1M satellites? (Score:2)
I know it says "up to", but how long will it take to launch that many? Assuming launches every day of the year, he'd need to launch about 274 per day to achieve the 1M in ten years. Are we talking tiny satellites here and you can pack hundreds into one launch?
Then there's the issue of putting so much garbage into space that we essentially block ourselves in - we end up with an orbit of garbage that no other vehicle can pass through safely. Or is that a non-issue because the orbit is so large?
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I'm not convinced we'll get to 1 million satellites before kessler syndrome is triggered. Kessler's group just barely released a report using updated numbers and it's not looking good at all. We're way past the threshold. It's just a matter of time now, for the 500km zone.
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But think of the 100+ year light show we would get as those little pieces decay back into the atmosphere. I'll pop the corn.
Re: 1M satellites? (Score:4)
Are we talking tiny satellites here and you can pack hundreds into one launch?
I hope so! Imagine if so many of us drive Teslas to avoid car exhaust emissions looking at the exhaust from hundreds of rocket launches.
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Imagine if so many of us drive Teslas to avoid car exhaust emissions looking at the exhaust from hundreds of rocket launches.
Fun fact about the Starship: its fuel is liquid methane and liquid oxygen, which when combusted results in exhaust consisting of water vapor and carbon dioxide. So, not great from a global-warming perspective, but not really polluting in the classic sense.
Falcon 9, OTOH, burns kerosene and oxygen, and emits water vapor, carbon dioxide, and soot. Presumably they will start phasing that out in favor of Starship though, when they can.
Re: 1M satellites? (Score:2)
Interesting! Thank you.
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274 a day is easily achievable. They would be able to afford that if they get Starship working at the same cadence as Falcon 9. The reason it's currently unaffordable with Falcon 9 is Falcon 9 expends the upper stage, which costs about $10 million per launch. Starship will be able to launch at least 200 tons into orbit. Presumably each data center satellite would weigh about 720 kg (weight of a Starlink v2 Mini), they could launch the 275 satellites daily on a Starship. In theory they could reuse the same S
Re:1M satellites? (Score:4, Funny)
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The first gen Starlink satellites were ~60 per launch on Falcon, IIRC, so it's not unreasonable to imagine "hundreds per launch" on Starship.
With that said, the whole "AI in spaaaaaaaace" bit seems even more insane than terrestrial AI. Where is all the heat supposed to go?
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What orbits is he asking for? If it's LEO, then they'll burn out rapidly. If it's geostationary, then it's already crowded. If it's everything in between, then there's (potentially) a lot of space, but it's a bit more expensive to get there. And you'd want everything to have a VERY low eccentricity orbit, so then didn't interact.
One good idea would be to physically link the satellites together, but that would require a lot of development that hasn't really been tested. (It would also mean they keep pos
AI in space (Score:2)
Re: AI in space (Score:3)
How dumb? This will give you some idea: https://www.planetearthandbeyo... [planetearthandbeyond.co]
Re: AI in space (Score:2)
Humans aren't hardened for space either, but we send them up in shielded environments pretty regularly.
Re: AI in space (Score:2)
What a dumb comment. they don't just slowly deteriorate in space, like people. They are inoperable from day one.
Re: AI in space (Score:2)
Why would they be inoperable?
Win-win deal (Score:2)
xAI wins because Grok is burning through billions and has very little prospects of significant revenue.
Elon Musk wins because he increases his ownership in SpaceX, which is making pretty decent money.
SpaceX win..... SpaceX investors get to share that warm feeling that Tesla investors get from handing over additional large portions of their company to Elon Musk.
I'm so glad Elon is here to pay Elon (Score:2)
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Help me, ObElon Kenobi. You're my only hoppe.
Beavis and Butthead episode (Score:3)
You guys remember the Beavis & Butthead episode where they were tasked with selling school fundraiser cookies? They bought all of each other's cookies by exchanging one dollar back & forth with each other. So basically they sold all the cookies, but only raised $1 for the school.
Re:Beavis and Butthead episode (Score:4, Funny)
Heh heh. heh-heh-heh-heh.
Re: Beavis and Butthead episode (Score:2)
That's stupid. The first dollar was the school's so they technically stole the schools dollar over and over again. What are we supposed to learn from this? To lie cheat and steal? Trump and Musk have already tought master classes in that.
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The AI investment economy in a nutshell.
Money. Go. (Score:2)
Round.
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Well, duh. I got a real kick out of his "one million sattelites" plan.. Is that some sort of Dr. Evil joke? This fucking guy...
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Re: Money. Go. (Score:2)
I involuntarily (Score:2)
laughed out loud. This was predicted, and has come to pass. He's fishing for that Trillionaire patch.
We've seen this trick before (Score:3)
Musk has done this before. In 2016, SolarCity was in financial trouble, so Musk had Tesla bail them out by purchasing them. Now he's using the same maneuver to keep xAI afloat using SpaceX's assets.
Pretend Intelligence or PI (Score:3)
hot in here (Score:5, Informative)
Musk said the least expensive way to do AI computation within two to three years will be in space.
Has someone told him about the heat problem in space? Vacuum is cold, but it's also a near perfect insulation. Getting rid of heat is a constant problem for space craft because there is no heat exchange and radiating it off is the only option you have and it's terribly inefficient. And last I checked, GPUs generate quite a bit of heat.
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Starlink V2 sats are already generating about 28kW of electricity, much of which is converted to heat, to give you an example. They work just fine with existing radiator tech.
Scott Manley addresses it in a recent video, at around the 13:30 mark: https://www.youtube.com/watch?... [youtube.com]
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That's when fully operational serving clients. They reduce power over the ocean and countries where they do not operate, which helps radiate away some of the heat. The AI ones will be similar.
The biggest load is the RF transmitters, followed by the computers.
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I worry that Musk will trash SpaceX like he did with Tesla. For a long time I wondered how SpaceX toed the line between crazy idea (e.g., catching a booster with arms) and stupid idea. I fear that the checks on stupid are gone.
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I guess he will send someone up there to do periodic maintenance as well. ;)
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Please. He'd have to not be high for a moment to consider something like that...
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Has someone told him about the heat problem in space?
This isn't about heat in space. It's about heat on earth. Specifically the heat under xAI which has no money thanks to being little more than a shell company used to bail out Musk from his disastrous Twitter acquisition, and SpaceX being about the only good profitable company that Musk could use to bail out xAI (and Tesla, buying 1000 Cybertrucks to clear space so Musk could stop paying dumping fees for parking his unwanted wankpanzer)
Apart from Musk selling (Score:2)
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Can space datacenters even work ? (Score:2)
It is based on Spacex putting datacenters into space where they will be more efficient than on earth and their remoteness will not matter.
I get that the solar power will work better up there, but will the thermodynamics for cooling the processors actually, physically work ?
Re: Can space datacenters even work ? (Score:2)
Yes Musk runs things so they are good for Musk.
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If Musk takes *coal* up to these datacenters and uses that to power them, it will both remove the Carbon in the coal from Earth, and burn it without contributing to global warming. Win, win !
I wonder if this mentioned in the IPO prospectus for the new joint company ?
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We will have AI *in space* !!! (Score:2)
Re: We will have AI *in space* !!! (Score:2)
There is another concern... Apparently no one even tried to put an electronics based on smaller than 16nm process in space...
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Outdated doesn't mean "stops working" or "isn't useful". I'm highly skeptical because of heat problems, and comments others have made about GPUs/TPUs not being space-rated. They sure aren't radiation hardened. But if they keep working, they don't become less useful, just less competitive against the latest model.
Buying with funny money (Score:2)
SpaceX is not public, it only has an estimated value and has not IPOed yet.
So while it is big deal SpaceX's value is using funny money to buy a company whose value is also funny money.
SpaceX claims it had $16b of sales and $8b of profit, so its PE ratio is 125(at $1 trillion value) and even if they were to have the entire launch market that won't increase its sales that much. It is buying a company that has an infinite PE ratio (has not made enough revenue to even pay its loan costs, and is burning cash).
B
pardon my naivete (Score:2)
...but isn't this mostly a matter of left-pocket/right-pocket $ for Musk?
I'm not even sure how this was meaningful or how there was a transaction. He's head of both companies, isn't this technically just a merger and then transfer of (merger of) funds/assets?
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He traded a worthless stake in xAI for additional stake in SpaceX, which has significantly more earning potential.
Invested in AI while not invested in AI (Score:2)
All the silly people come here and talk nonsense about "Spacex is just government contracts". Ignore the jealous liars. Spacex is far along with developing by far the cheapest way
Well then... (Score:2)
...forget about going to Mars, America!
The space servers need protection (Score:2)
So, Musk should create i don't know, some robots to do the protection, big ones at that, in green with red monoeyes to be menacing.
Also to not add even more trash to the space, they should use a melee weapon like an massive axe with a super heated edge.
And the best pilot gets to use a red one that is three times faster.