Can Elon Musk Form a Super-Company?
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What is Elon Musk's plan for merging SpaceX and xAI?
Is Elon Musk gonna make SpaceX, Tesla, and XAI a super company? Motley Fool Money starts now.
Everybody needs money. That's why they call it money.
From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. I'm Travis Hoyum, joined by Lou Whiteman and Emily Flippen. Guys, there's a lot going on in the market. We're going to get to earnings, especially tech earnings, which really kicked off this week. But I want to start with the discussion around SpaceX and XAI potentially merging ahead of SpaceX's likely IPO in 2026. Lou, this is something that we've seen before. Elon Musk merged SolarCity with Tesla. You could argue that that was probably not a great merger, although it did work out ultimately for shareholders in the long run, but the solar business didn't become what we thought it would be. This looks a little bit similar, but where does your head go when you see another one of these huge Elon Musk companies potentially merging with each other?
First of all, to be fair, if I squint, I can see the current energy business in Tesla, which is the only part that's really growing, coming out of the solar city. I guess maybe we give them credit for that in hindsight, but yeah, I know what you mean. When I look at this I look at it in the context of these reports that OpenAI and Anthropic are rushing to an IPO. There's a beauty pageant going on right now, Travis. Everybody, all of these huge capital-intensive companies want to tap equity markets at the same time, trillions of dollars, that's a lot of capacity. They're all trying to look as pretty as possible, as attractive as possible relative to the competition. If you combine SpaceX with XAI and all the potential of AI, I think arguably that is something that will capture the imaginations and make it easier to sell.
Backdrop here is that these more established tech giants, maybe we'll talk about them later, Alphabet, Amazon, they have revenue. Meta, they are fueling their AI spend with their revenue. We joked about this last fall, but for these guys that don't have that, the best time to have gone public was yesterday, and it always has been. They need to do this as soon as possible. To the extent that you can combine a whole bunch of things that have captured investor intention or captured imagination and put them into one package, I think that helps sell the IPO, and I think that's what really is at the heart of this.
Emily, is there a story at least that all of these Elon Musk-related companies kind of talk to each other and work together. So they might as well just kind of be one massive conglomerate.
Well, if you're Elon Musk, that's certainly the narrative you're trying to sell. And there really is a positive way to view the investments that Musk and team are making between these companies, right? Which is that SpaceX, XAI, and Tesla, which by the way, just invested another two-ish billion dollars in XAI, kind of work together narratively to create some sort of- I'm sure that was an arm's length transaction. I'm sure it was an arm length. Of course, aren't they all between Musk? But no, there is some sort of flywheel, right? Between the hardware, the distribution, the connectivity, the interference, whatever it may be between the businesses that feeds demand for one another. But I think more realistically, in my opinion, this is really just going back to what business is funding another.
And you could argue that it's a little bit of a money grab ahead of an IPO to justify its valuation, right? The more opaque a narrative is for, say, SpaceX. If If there is a merger between XAI and SpaceX going into SpaceX's IPO, the more optionality that's built into the business, the harder it is to value that company. So maybe the more likely it is that they are able to generate revenue. But realistically speaking, I don't actually see any actual mergers happening here. Because to your point, Travis, those typically get a lot of recourse from investors. Those typically need... to be arm's length transactions.
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Chapters
8 chapters
1
What is Elon Musk's plan for merging SpaceX and xAI?
0:05–4:28
2
How could the merger affect Tesla shareholders?
4:28–7:51
3
What insights do the hosts share about recent big tech earnings?
7:51–10:30
4
How is Google positioning itself in the AI landscape?
10:30–13:56
5
What challenges are SaaS companies currently facing?
13:56–17:16
6
Which SaaS stocks do the hosts recommend for potential investment?
17:16–20:05
7
What are the implications of the upcoming SpaceX IPO for the market?
20:05–22:59
8
How does the latest Chrome update reflect Google's strategy?
22:59–38:55