AI goes IPO
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What recent IPO announcements are shaking up the AI industry?
Big news this week for all my Gordon Geckos, my Robin Hooders, my Claude Squad Anthropic, which is newly the most valuable AI company in the world, announced it would be going public. That news follows reporting that OpenAI plans to go public as soon as September, and that that news follows reporting that SpaceX, which also considers itself an AI company, will be going public in maybe just a few weeks from now. Welcome to the era of the Omega IPO. We are about to see millionaires, billionaires, and yes, probably even the world's first trillionaire created overnight. And yes, it's that guy. This is the chainsaw for bureaucracy. Chainsaw. But all the tech bros who are going to make all the money, they need our money way more than we need their products.
And we're going to remind you why on today's Explain from Vox.
Hey, chat. Introduce Today Explained, the podcast.
Of course. Today Explained is a daily news podcast from Vox.
Each episode takes a single... No, just introduce it like you're introducing the show. Like, this is Today Explained.
Ah, got it. This is Today Explained. OK, so all the big AI companies are going to IPO, even the one that you previously thought was a spaceship company. And their IPO is the one we know the most about. So we asked Tim Higgins, who writes about Elon and SpaceX for The Wall Street Journal, to help us separate the facts from the fantasy of this company. Absolutely. This is about this bright future that Musk is selling. And for a lot of people, they also hope they can make a lot of money. Giving some credence to some of this is the success that Musk has had with Tesla, another company that, when it was created and went public in 2010, There were a lot of people who were like, yeah, yeah, right. A startup car company selling electric cars.
The likelihood of success seemed very unlikely.
When would you say you could reassure investors that you'll turn a profit? You've lost $290 million since the company started in 2003. You've yet to turn a profit. When do you expect that to happen? No, that's a good question.
You don't want to own this stock. You shouldn't even rent the darn thing.
It was many years of struggle for Tesla, but eventually it came through and became the world's most valuable car company.
Well, big losses on Wall Street today, as we've been reporting, and it's just the same for just about any U.S. stock, except for Tesla Motors.
And those investors who hung on for that wild ride saw a lot of returns.
I have the stock market big. What investments? Tesla. Destroy Tesla.
There's people who kind of believe that Musk can keep doing this and keep performing. How does the SpaceX IPO compare to the Tesla IPO? Dramatically different. This time around, there is the power of the Musk brand around SpaceX. SpaceX has clearly shown that it can make private space travel possible. It has developed reusable rockets. It is the largest satellite launcher out there. It has created a satellite business with Starlink that provides broadband, fast internet around the world.
Starlink is space-based internet. So we've got a constellation of satellites.
We've got now well over 2,000 satellites. There's a business there. Now, the company overall is not profitable because it's spending a lot of money on these shiny, bright things for the future, whether they're giant spaceships or AI.
When you buy into SpaceX, you're buying into three businesses, the rocket launches, Starlinks, and XAI. The Starlink business is pretty amazing, bringing in $11 billion, but the XAI business is burning through $2.5 billion every single quarter. So you have one business carrying the losses of the other segment.
The AI side is burning cash at a pace that dwarfs everything else in the company. So that's why they need the money. And this IPO hopes to raise way more money than Tesla ever could have imagined back in 2010. The expectations are potentially $80 billion or more that would come into the company that it needs for these grand ambitions. And where will those billions of dollars go immediately?
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