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Musk's $1 Trillion SpaceX Deal Dwarfs All Records
4 Feb
Summary
- SpaceX acquired xAI in a $1 trillion deal for SpaceX.
- xAI valued at $250 billion in the record-breaking transaction.
- The deal is the largest merger and acquisition in history.
Elon Musk has finalized the largest merger and acquisition deal in history, acquiring his artificial intelligence company xAI for $250 billion. This transaction places a $1 trillion valuation on his rocket and satellite firm, SpaceX. The deal's financial logic is tied to Musk's ambitious, often unconventional, terms.
SpaceX reportedly generated approximately $8 billion in EBITDA on up to $16 billion in revenue last year. Projections suggest over $22 billion in revenue next year, potentially yielding $11 billion in EBITDA. This valuation is comparable to Tesla's market multiples.
xAI's valuation is a more complex calculation, having lost $1.5 billion in the third quarter on $107 million in revenue. Despite current losses, its revenue doubled in the preceding quarter, with projections indicating over $6 billion this year.
Musk has stated the deal's rationale involves "scaling to make a sentient sun to understand the Universe." This, along with plans for orbital data centers, reflects highly ambitious, perhaps even audacious, goals.
Historically, mega-M&A deals like Vodafone's acquisition of Mannesmann and AOL's merger with Time Warner, built on revolutionary technologies, ultimately faced significant financial write-downs and unraveling. Musk's current venture presents even more extraordinary aspirations.
