Why Elon Musk’s SpaceX mega-merger might be his greatest enterprise danger thus far

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Your assist makes all of the distinction. Learn extra A nother day, one other deal for Elon Musk – this time the small matter of making a $1.25 trillion (£900bn) agency by merging two of his present ones collectively.

SpaceX – the corporate which sends out rockets, gives wifi by satellite tv for pc and desires to finally colonise Mars – has now primarily enveloped the actions of xAI, a man-made intelligence-focused companies which owns Grok, in addition to the social media platform X and one of many greatest supercomputers on the planet known as Colossus.

The top result's a privately-owned enterprise which is probably going essentially the most beneficial on the planet. However it will not be so for lengthy – not as a result of one other will usurp it, however as a result of Mr Musk needs to drift SpaceX on the inventory market later this yr. The transfer will allow new traders to personal a chunk of the wide-ranging pie, whereas permitting present ones to take a return on investments made alongside the best way.

The unification of ‘MuskCorp’

SpaceX shopping for xAI for $250bn is just not the primary time that Musk has joined collectively his ventures.

Solely final yr, X (or Twitter should you nonetheless desire it) was purchased up by xAI for $45bn, together with $12bn of debt.

It's one thing of a change of tempo from his earlier selection, the place for instance The Boring Firm – a enterprise which digs and makes superloops and different transport passages underground – was spun out to a separate firm from inside SpaceX, again in 2018.

He additionally stays CEO of one other standalone agency based in 2016, the mind implant firm Neuralink.

Which may not be the tip of the grouping collectively of the companies that the richest man on the planet leads, with Tesla – itself a $1.6tn (£1.16tn) firm listed within the US – additionally a part of the equation.

“Elon Musk has a transparent ambition to carry all his corporations underneath one umbrella. The merger is an enormous step on this path,” mentioned Chris Beauchamp, chief market analyst at IG.

<img src="https://static.independent.co.uk/2026/02/04/12/39/GettyImages-2256968069.jpeg" srcset="https://static.independent.co.uk/2026/02/04/12/39/GettyImages-2256968069.jpeg?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2026/02/04/12/39/GettyImages-2256968069.jpeg?quality=75&width=640&auto=webp 640w" loading="lazy" alt="Elon Musk" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Elon Musk (AFP by way of Getty Pictures) “It's extremely possible that Tesla and the SpaceX group will discover themselves mixed sooner or later as soon as the latter has listed, consolidating Elon as not simply one of many wealthiest males on the planet but additionally one on the forefront of technological progress.”

Russ Mould, funding director at AJ Bell, steered a Tesla-SpaceX mixture may even imply the latter may not have to go public. “Hypothesis a few additional mixture with Tesla to construct an efficient MuskCorp, which may take away the necessity for a SpaceX IPO, has been effervescent away even when it appears like plans for the latter’s launch on the inventory market are effectively superior,” he mentioned.

SpaceX: The large IPO query

It's virtually sure that SpaceX will in reality float and, if it does so, it may effectively be the largest in historical past, outstripping Saudi Aramco’s near-$30bn increase from 2019. Some experiences have estimated SpaceX may generate nearer to $50bn.

Regardless of the worth, it provides kudos and additional renown to one of the crucial well-known names in business, notably given the future-looking side of SpaceX with its visions of information centres in house and other people on different planets.

It additionally makes future sense from a enterprise perspective, says Emma Wall, chief funding strategist at Hargreaves Lansdown– however a longer-term requirement than is common will probably be positioned on these wanting to purchase shares.

“Musk introduced throughout Tesla latest outcomes that he could be pivoting the enterprise away from electrical autos to automation and synthetic intelligence, and this will probably be true of his house journey ambitions too, that means there are technological synergies to be made throughout all his companies,” she mentioned.

“What will probably be key's the market’s view of the valuation. Whereas Musk has a confirmed monitor report of supply, he's a divisive determine and will probably be asking the market to worth an organization based mostly on a multi-decade imaginative and prescient, the place most CEOs function a 3 to 5 yr enterprise cycle.”

Nevertheless, investing in corporations is just not supposed to be totally speculative and even a few of Musk’s extra earth-bound corporations, like EV producer Tesla, has critics with regards to future earnings versus present concepts.

A lot of the income generated by SpaceX proper now comes from the Starlink satellite tv for pc community, an enormous draw for potential traders to pay money for.

Nevertheless, how a lot they're keen to pay to now additionally must tackle board different features of the larger firm is up for query.

Criticism and issues

An preliminary query for traders, for instance, could be that they need to purchase into rocket launches and humungous piles of information, however how a lot do they need to purchase into an AI mannequin which has come underneath intense criticism currently for reportedly creating thousands and thousands of sexualised photos, together with when advised consent was withheld, and is being investigated by UK regulators?

What about investing within the social media platform internet hosting these photos, which itself is being investigated by Paris officers over deepfakes and worse?

In an all-under-one-umbrella setup, there is no such thing as a selection to separate that choice.

open picture in gallery

(AFP/Getty) “For all of the grand speak of making an ‘innovation engine’ and interesting in space-based AI, some traders could really feel the xAI deal impacts the possible attraction of SpaceX. The true moneymaker for this enterprise is the Starlink satellite tv for pc web enterprise quite than the upper profile house rocket arm,” mentioned Mr Mould.

“The possession of xAI, in addition to additional diluting publicity to Starlink, might be seen as exposing SpaceX to unfavourable headlines and regulatory motion given the latest controversies round Grok getting used to create inappropriate photos.”

Other than these regulatory points, there’s a extra particular query round whether or not consumers consider in house industries, synthetic intelligence or each, and whether or not they’d need to must have them grouped collectively in the identical firm quite than valuing them on their very own respective deserves.

And but, betting on Musk has beforehand confirmed profitable for large traders, and, in the long term, right for a number of corporations’ development.

For James Bruegger, chief funding officer at Seraphim Area, an organization which invests in others across the tech and house intersection, there’s merely a one-way journey to the longer term and it’s one the place each industries are merged simply as a lot as xAI and SpaceX now are.

“The influence of house expertise will probably be each bit as profound as AI,” he mentioned. “Area is already an important layer of worldwide infrastructure, and as AI continues to develop exponentially, the 2 domains will change into inseparable.

“Area will underpin each sector of the worldwide economic system, from defence, connectivity and local weather intelligence to subsequent‑era compute. This deal is a strong sign that the way forward for AI will probably be inbuilt orbit.”

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