Elon Musk starts and owns lots of companies. Maybe he’s going to change that, a bit: The world’s richest man is reportedly working on a plan to merge two of his most valuable companies into one megacompany.
Musk, Reuters reports, wants to merge xAI — his very valuable AI company that has already merged with the company that used to be called Twitter — into SpaceX, his very valuable rocket company.
“The combination would bring Musk’s rockets, Starlink satellites, the X social media platform and Grok AI chatbot under one roof,” Reuters says, suggesting that a combined company could help Musk build data centers in space. Then again, Reuters also says it doesn’t know several key details about the theoretical deal, including “its primary rationale.”
And to be honest, the rationale seems a little obscure to me, too.
The main reason I can think of to merge one private company with another private company that’s about to go public would be to make it easier for the smaller private company to finance itself.
In this case, that would mean that xAI wouldn’t have to rely on the private markets as it races after the likes of OpenAI, Google, and Meta in the competition for AI talent and chips. It could tap the public market instead.
The problem with that theory: People in the private market are lining up to throw money at xAI, which just raised $20 billion. The company boasted that it was only going to raise $15 billion, but people kept throwing money at it, so it had to go and raise more.
And, Muskian boasting aside, that makes lots of sense: Despite all the AI bubble chat, people are eager to put money into big, privately owned AI companies, as OpenAI and Anthropic prove every time they raise a ton of money, which happens to be all the time.
Just as important: People are eager to give Elon Musk money because he’s made a lot of people a lot of money from Tesla, and they’re eager to give him another chance. (That’s why the people who helped him fund his value-destroying Twitter deal never once complained about it in public: They wanted a chance to invest in his next deal.)
I’ve asked Musk, SpaceX, and xAI for comment. It may be worth noting that Musk, who complains about coverage of his companies all the time, did not complain when someone retweeted the Reuters story Thursday afternoon.
I suppose you could also try to argue that SpaceX and xAI make sense together because a bunch of their work overlaps, like the theoretical xAI space data centers that could get built with SpaceX rockets.
But Elon Musk has always treated his various companies as one big company when it suits him. He moves engineering and managing talent from one company to another when he wants — even when those employees work for Tesla, which is publicly owned, and theoretically should have a problem with lending its staff to other people’s companies.
Sometimes there are complaints about Musk using resources from one company to help another — or, perhaps, himself. But Musk has pretty much ignored all of those complaints. I can’t believe he’s interested in moving xAI into SpaceX because he cares about corporate governance.
Another reason to mash the companies together might be to reward investors who bet on one private company by giving them publicly traded shares in the combined company. But, again, that doesn’t really track here: Musk has a bunch of loyal backers, like Fidelity and Valor Equity Partners, which try to get into all his deals, and are already in both companies.
So maybe there will be a big galaxy-brained rationale for mushing xAI and SpaceX together, and we just have to wait for Musk to unveil it. In the absence of that, here’s my last guess: Musk, who is already reportedly trying to time his SpaceX IPO to “coincide with a rare planetary alignment and his birthday,” per Financial Times reports, just wants his giant SpaceX IPO to be even bigger. Prior to Thursday’s report, SpaceX was supposed to go public at a $1.5 trillion valuation — the largest IPO in history. So maybe he’s just trying to boost that valuation by a half trillion more.
Anyone have a better idea?
