Posted by dmarcos 16 hours ago
https://www.nytimes.com/2026/04/21/business/spacex-cursor-de... (https://archive.ph/c2Tac)
https://www.bloomberg.com/news/articles/2026-04-21/spacex-sa...
As far as I know, xAI’s enterprise market share is non-existent. This is their way to get some much needed customers.
When they could instead sign with the new hottest enterprise coding IDE (Claude, Codex, etc who are way more popular now). Maybe if it’s an acquihire, it’s the GTM/Sales that xAI is after?
What you might pay for is market signal + model distribution. Grok needs a story for why enterprises should switch. "The model that powers the tool you already use every day" is a much easier enterprise sales pitch than "our LLM benchmarks slightly better." The $60B is at least partially buying the answer to the question: why should any company bet on xAI?
The AI bubble music stops when one of these former-darling companies has a complete crashout rather than a "successful exit". The investors keep investing because even largely-failed products get acquihire paydays
Note that Meta paid ~16b for Alexandr Wang, and Google paid ~3b for the windsurf executive team. You are making a category error -- the talent pool isn't "ML researcher" it's "competent leader"
They’re buying the customers and the brand.
You should learn about securitizations. It’s actually interesting. But people talk about it colloquially and so incorrectly that it’s mind dumbing.
Here’s a simplified example of how you can take something and turn it into a safe investment:
Suppose you have 10 loans and each has a 50% chance of default. Ignore coupon, and say they are $10 each. Expected value is $50
If you were to put this in a deal and cut it up into tranches, say the first tranche gets the first $10, this would be your AAA bond because odds of getting paid out you $10 would be > 99.9%. The equity (bottom tranches) would pay a lot less. For instance the expected value of the bottom half would be considerably less than $50 that is being promised. So there’s upside since you’ll be paying cents on the dollar and even though in the median scenario you’re making nothing, you have to weight the expected values of each scenario to figure out how to price it.
The problem w this model is that it only works if assets are relatively uncorrelated which wasn’t true (it was true in the past but ignored systematic risk and adverse selection in originations).
What this has to do w musk or spacex I’m still not sure
What you've described is how the base level mortgage-backed securities (MBSs) work. The tranches work because there actually exist mortgages that are at lower default risk (high home equity, well qualified borrowers, etc.), and the senior tranches are effective in capturing their underlying safety. What CDOs did was to take the lower, riskier tranches of MBSs from various sources and repackage them and divided them into tranches again. Then they got the ratings agencies to rate the top tranches of the CDOs as AAA as well. It's as if a teacher graded several classes and then took everyone that got a C or below from all the classes and then graded them on a curve again. And suddenly a lot of the C students became A students. It was outright financial insanity. Well, mixing a rocket/satellite company with a couple of also-ran AI outfits and the walking corpse of Twitter, and then calling the whole thing SpaceX and valued at $1.75T is a similarly level of financial insanity to me.
Mortgages are very cuspy. It's pretty wild that someone would give you a 30 year loan with 20% equity for a few percent higher than risk free. Also you could default on that loan and they can't garnish your wages. And if you default, your credit history would reset after 7 years. Oh and you can repay the loan at no cost, so if rates go down you can just pay it back and turn around and get another loan at a lower rate, or if rates go up you can hold on to it until 30 years.
It's the same thing with CDOs. You take something that has some undesirable characteristics (these cuspy BBB), structure it in such a way to create some safe and riskier assets. And hopefully the sum of the final tranches is worth more than the components.
It's like if you were forced to sell an animal whole. The individual components are worth more because people have different preferences. With CDOs (excluding synthetic), the amount of exposure is unchanged. It's a bit more concentrated where the riskiest parts are in these CDOs, but nothing changes.
I get that finance isn't really sexy and people see it as just pushing paper around, not creating any value. But there's real value in taking some components and creating something more valuable with it. It's like using flour + sugar + egg to create cookies worth a lot more than the individual components. There was fraud and negligence but people are mad at the wrong things.
Rating agencies did a poor job, but in their defense, delinquencies and defaults reached levels well outside expected values due to systematic risks. Also rating agencies are kind of a joke. Investors aren't dumb. Even today, look at debt, there's a big difference between bonds of the same rating and similar weighted average life.
The bad thing about rating agencies is how regulations rely on them to determine what "safe" is and capital requirements. Of course, mandated capital requirements shouldn't be the end all be all of risk management, but these guidelines that over rely on rating agencies don't help the matter.
Mixing rocket company with AI and social media is fine. It's just a conglomerate. Who cares? Look at Samsung, they sell smartphones, TVs, ships, they're involved in construction, even insurance and biotech.
The question is what is the underlying core competency they're relying on and it's obviously Musk. And he has been able to deliver innovative products (manufacturing and forward thinking technologies). He scaled up one of the largest training clusters in the world in a very short period of time. He created a large car company after decades of stagnation. He lowered cost of getting stuff to orbit by orders of magnitude and now handles something like 90% of rocket launches. He's gotta be doing something, right?
I think you meant "the chances of getting paid", not of not getting paid.
And that naive statistical reasoning is where it goes terribly wrong. You have to consider the causal process that generates that distribution!
The type of people who would default on a coinflip are extremely sensitive to how the economy changes. The probabilities are very correlated, the expected value is rather meaningless then. It's closer to having a 50% chance to either get a full return or get zero returns, depending the macroeconomy, quite the gamble. Actually, those people were in a rather dodgy situation in the first place, or are not great at decision-making, so it might be more like 50% chance either of getting 50% return or getting 0% return.
PS: Just elaborating on your point, not meant as a counterargument, I know you said the same thing.
What this has to do with with SpaceX is that there's the same blatant disregard for sound financial analysis by the very institutions that were/are supposed to know better. The NASDAQ 100 fast track decision is a similar level of financial malpractice as the ratings agencies slapping AAA on things that they knew were little better than junk. The abuses of the subprime mortgage originators were well known long before the actual meltdown. As were those systemic risks you spoke of. They were ignored by those whose entire job it was to not ignore them, and they sold out their credibility for a quick buck. If you can't see the similarities to the present situation then I can only wish you luck.
I do agree that the optics of this aren’t great, and it’s rather easy to be cynical about motives.
I'm trying to help my parents now their at retirement age and am seeing first hand what not planning for your future looks like. They hit retirement with nothing but a small social security check every month. Not even enough to cover rent in most places.
I don't know how much you have in your 401k, but it will be worth literally hundreds of thousands more if you pull it out when you retire. You aren't just paying the penalties now, you're paying for potentially decades of compounding.
But if by some tragedy you don't die young, your older self is gonna be pissed at younger you for costing him hundreds of thousands of dollars.
The thing is, every dollar you spend on insurance is a dollar (and its interest) you lose. Furthermore, we don't know when it will pop. 1 year? 5 years?
The more reasonable solution is probably gradually reduce exposure to US markets by selling SP500 shares and turning to Europe and emerging markets ETFs. No need to cash out 401k.
If you just look at the past 20 years, the US has had exceptional returns compared to the rest of the world.
The thing is, historically, high PE ratios like what we're seeing in the US do not correlate with short term returns that are as high. Expected future returns decrease as the PE ratios go up in a pretty linear fashion.
https://am.jpmorgan.com/us/en/asset-management/institutional...
If you want a different point to backtest from, try Japan in the 80s and early 90s
I'm not an expert but it looks to my like 80% of my allocation won't be tracking spacex, because it's mid cap or small cap etc, and the 20% that's in the vanguard growth index might? I assume whoever sets the rules for the fund could change the rules to say companies must be listed for X months if they want to avoid this, right?
And I can change my allocation.
edit: Actually wait, isn't it only nasdaq 100 that's tracking it early, after 15 days rather than 3 months of trading? So 0% of my 401k is exposed to buying it quickly after IPO already, I think.
They removed it largely because investors wanted higher returns, and the tech companies that had such dual classes (1) were doing really well, and the S&P ended up caving on that rule.
1: Perennial hot button around here Palantir did this in a more extreme fashion than most. The three founders F class shares will always be at 49.9999% of the votes and the early investors B class shares have 10 votes each as compared to the publicly traded A class shares 1 votes.
S&P 500 includes companies from multiple exchanges. Like Nvidia, which lists on Nasdaq.
https://www.morningstar.com/funds/spacex-ipo-how-index-funds...
> Nasdaq was the first to consider a rule change that would grant mega IPOs like SpaceX early admission to its flagship Nasdaq-100 index. The exchange and index provider began a consultation period in February to assess the viability of and industry response to a proposed “fast entry” rule. The change was approved on March 30 and will be effective on May 1.
Now why is this bad? Well, if you invest in a fund that is based off of the indices, you’re going to be investing in SpaceX whether you want to or not and I certainly don’t think 15 days is enough time to sus out whether this is a stable investment worthy of being in the index, but it’ll be great…until it drags a million retirement funds down with it.
Well, I said no. Not getting burned that way again!
Google and others were sitting at the corner, laughing that they gonna burn their money for no reason! they turned out to be wrong.
Turns out offering discounted/subsized tokens to developers massively improves your AI compared to just being a talking parrot for normal user workflow where you do not get "instant feedback" on if it worked or not.
This type of bundling is just what conglomerates do. Is it a good thing? Not really. Many investors also hate this kind of stuff and avoid investing in these types of companies.
I know a ton of people that use Codex, Claude, OpenCode but can't name a single person that uses Cursor or Grok that is knee deep into agentic coding.
And xAI now gets 10B of more revenue on their income statement.
Perfect financial statement boosting for the IPO which in turn will pay back these costs.
At least that’s the bet.
If so that would seem like the most plausible take on why this is happening.
I feel like we're finally at a point where you don't have to constantly argue with and constantly babysit coding models, which makes it even more frustrating when you're suddenly forced to deal with one that ignores your instructions and gets stuck in thinking loops again.
I suspect it's the vast troves of training data rather than any tech that Cursor possesses that SpaceX is after...
The problem is they can't compete with Anthropic and OpenAI because they can't sell Opus and GPT at a discount to subscribers like OpenAI and Anthropic do with their subscriptions.
So they either need to build a competing model or slowly die.
Cursor is essentially all the Claude Code products but without the horrible bugs of Claude Code products.
You can transfer from CLI to web and it actually works.
I think Gemini is best model out there, and it's not Cursor who you should praise. I use it with jetbrains junie. Vastly cheaper than claude, faster, produces better quality code, actually listens to your instructions, more accurate. I'm sure claude code cli has some cli magic that I'm missing out on, but having everything just work in a nice IDE (and llm to actually understand your symbol table) is like magic.
IDK how Junie does it, but I spend less than $50 USD per month and I'm on it 30 hours per week.
A controlled environment to determine effort and token usage, and to get plenty of exclusive training on code.
It could end up making sense. Idk if they needed to offer 60B though.
I think they’ve been caught in a bad spot. They’re a profitable company, but nowhere on the scale of Microsoft. And they don’t have billions of VC to effectively price dump. Other tools that can focus on one thing and burn cash are advancing quickly and some of them don’t really need an IDE at all.
The semi-recent introduction of ACP integration in the JetBrains IDEs has been a nice bridge. But now it’s confusing how everything comes together. I really hope they can survive.
But I just... barely use an IDE anymore. I think I have the lowest possible subscription price for "all products" you can have (at least as an outsider) and I think I'm going to cancel this year. I've been paying for a decade+
Not sure what problems people here have with JetBrains offerings
Honestly unlimited codex with 5.4 high has a similar effect.
SOTA models + harnesses used together is very different than it was 6 months ago. People that have significant software engineering experience can get so much done it's scary.
We hit some sort of tipping point between models and harnesses and people learning how to use the tools idk.
And directs / engineers / friends seem happier.
Simon Wilson recently did a podcast where he discussed his experience and it felt very familiar.
Worth listening (ignore the click bait title) https://www.youtube.com/watch?v=wc8FBhQtdsA
I do not need to "shift my perspective" since I do use agents to the degree that I need and it helps help me very much. I am way more productive with them.
Generated code is still not perfect disregarding of any particular model (I have access to all). I have to watch and fix, sometimes by supplying more precise specs, sometimes asking to rewrite piece of code in such and such manner using this and that structures.
I keep seeing what I'm referring to happen - folks are using / opening their editor less and less.
What's crazy is a developer can go on a walk and use tmux/tailscale and keep working as if they were sitting at their desk.
Yet JetBrains tried to do everything themselves and failed :(
Not sure what problems people here have with JetBrains offerings
I know JetBrain product could be sluggish on "normal" computers however all 4 of my development machines run on 16 cores AMD with 128GB RAM. It flies in environments like that
But it's clearly not worth 60B dollars in April 2026.
for contrast, Elon paid $44b for twitter back in 2022. When you adjust for inflation, Twitter was acquired for $49b in 2026 money. Cursor getting bought for 1.22x more is just insanity.
Elon seems unwilling to shake off the image that he has basically no idea what he's doing.
> Nikita Bier @nikitabier
>
> If you’re seeing a bunch of Japanese posts, here are some fun facts:
> Japan has more daily active users and more time spent on X than any other country in the world.
> Over two thirds of the country is monthly active on X.
> X in Japan has one of the highest penetration rates of any social network in history.
1: https://twitter.com/nikitabier/status/2037764895064867061
in ten the speed'll kick in, can of coke and a ciggy and he'll be right as rain
More accurately it is 3.4% of SpaceX at the last rumored valuation of $1.75T.
This is actually an amazing sweetheart deal for Cursor. Many times with these high profile acquisitions, most stock is tied to LPA's and employment at the company, and also earnout provisions. The company then finds a way to parachute them out early, which both voids the earnout and their employment, thus they never vest most of the units and the few units they do vest get bought out at 409A valuations which are typically much, much lower.
In the case of Cursor this is an amazing boon as SpaceX listed at an almost 100x multiple which is absolutely staggering. Had SpaceX stayed private they could have 409a'd Cursor and got it for effectively ~100M$ cash.
Not just OpenAI, but OpenAI and OpenAI[1].