To The Moon

Last December, I was the first to report that SpaceX was planning an initial public offering for this year, a story that has since remained a headline-grabbing topic, with any scrap of news about the company's impending market debut attracting significant media attention. The latest development now emerging is actually of considerable significance. Reuters reported on something many had previously speculated might happen: SpaceX is in talks to merge with Musk's artificial intelligence company xAI ahead of its IPO. This news is both surprising and logical. It's surprising because SpaceX is merely months away from going public, and initiating such a large-scale acquisition at this stage is highly unusual—xAI was recently valued at $230 billion in a funding round. As my colleague Cory Weinberg noted, this implies a substantial amount of last-minute paperwork needs to be completed. However, external observers had frequently predicted this event would occur, as it aligns perfectly with Musk's characteristic approach. Last year, he merged the social platform X (formerly Twitter) with xAI. Why is Musk so intent on consolidating his portfolio companies? It's not about reducing the number of enterprises he needs to manage; rather, this strategy benefits his shareholders. Musk enjoys rewarding those who have shown him loyalty and is keen to prevent them from suffering financial losses. Investors such as Sequoia Capital, Andreessen Horowitz, and Valor Equity Partners collectively poured billions into Musk's leveraged buyout of Twitter at a $44 billion valuation. For a period, as Twitter's advertising revenue plummeted, some major investors, including Musk himself, wrote down the company's carrying value. But when these investors received equity in xAI, valued at the same $44 billion privatization price for Twitter, their losses were at least offset on paper. Now, xAI's investors are set to receive shares in SpaceX, a highly valuable and rapidly growing enterprise. Furthermore, this merger can generate synergies. Musk has recently been focusing on linking SpaceX with the field of artificial intelligence, and he, along with other industry insiders, has been vigorously promoting the advantages of deploying data centers in space—the space environment offers free and uninterrupted solar power while providing natural cooling conditions. This merger also paves a path to public markets and access to stock market capital for capital-intensive companies like xAI. Could this merger delay SpaceX's IPO preparations? That possibility certainly exists. Although there are reports that Musk plans to take the company public this summer, a takeover transaction exceeding $200 billion is not something that can be completed overnight. However, the world's richest man undoubtedly possesses the financial clout to accelerate processes far beyond conventional timelines, especially considering SpaceX's recent valuation has reached $800 billion. Without a doubt, legions of lawyers, investment bankers, and consultants will be deployed to prepare for what could become the largest IPO in history.