Ed Ludlow

It's the deflationary nature of their business.

And when you look at other hardware categories where we've seen that historically, such as Moore's Law in transistors or Flatley's Law in genomics, when you drive down cost by orders of magnitude, it opens up

phenomenal un unforeseeable use cases um and we're seeing that in the domain of space now starlink has been the first application of that and we think there's a stateable case that data centers in space could well be the next application that opens up as you drive down that cost of launch now it's early days for that it remains unproven but if that is

to be something that is feasible, being vertically integrated into an LM model such as the Grok model will be an advantage for SpaceX.

At the time that the news came that SpaceX would acquire XAI, we did some reporting that essentially XAI operates as a subsidiary of SpaceX.

In part, there's also ITAR considerations, but there's also XAI's financial situation, which is the debt burden and its rate of cash burn.

How did you feel about SpaceX taking on that balance sheet, essentially?

I think if any business is going to take on a company that has those necessary capex requirements, it needs to be a company that's in a very robust financial position.

And SpaceX is in a privileged position of having not only a very strong balance sheet, but having strong profitability and cash flow.

And so the combination of a business that does require significant capex in the form of XAI alongside a business that has a history of high capex investment but has been able to show how that can translate into, you know, help very strong levels of profitability, I think would be a strong combination.

Kyle did, I think, a pretty good job a few moments ago explaining the sort of technicalities of a transaction closed like this.

But the big picture is the net result of Tesla now having literally a financial stake in SpaceX because of the investment it made of the Series E of XAI, that being rollover in SpaceX.

The Elon Inc.

story is kind of coming together.

How do you feel about that?

you know, the proximity of those two giants?

I think there's always been a complicated web of interconnections between Elon Musk's companies.

And we saw this as Tesla owners when they acquired SolarCity.

Ultimately, what will drive shareholder returns will be the strong execution and growth of these businesses.

And at the time of the SolarCity acquisition by Tesla, it was controversial.