SpaceX buys Cursor for $60 billion following historic IPO
SpaceX is shaking up the market with the acquisition of AI coding startup Cursor for $60 billion in stock. This occurs just days after the space company's massive IPO, considered one of the largest in history. The strategy is clear: to strengthen SpaceX's artificial intelligence division, which had already been undergoing restructuring. This division is based on xAI, Elon Musk's AI company, which merged with SpaceX earlier this year. The acquisition is expected to close in the third quarter of this year.
Before SpaceX entered the picture, Cursor was about to close a $2 billion funding round with heavyweight investors like Andreessen Horowitz, Thrive, and Nvidia, valuing it at $50 billion. But SpaceX made an irresistible offer: buy Cursor for $60 billion in stock, or pay a $10 billion penalty if the deal fell through. The startup, which emerged as Anysphere in 2022, has grown rapidly as AI coding gains momentum.
Why SpaceX acted now
Signs of SpaceX's interest in Cursor appeared earlier this year when xAI hired two of the startup's top engineers. In April, it was reported that xAI leased part of its data center capacity to Cursor, an indication of the upcoming negotiations. These conversations quickly evolved into the deal now being finalized. Interestingly, this occurred while xAI faced internal issues, with all 11 co-founders leaving the company by the end of March.
During its IPO, SpaceX presented investors with a $28 trillion potential market, with most of that value tied to its AI efforts. The company sees a $2.4 trillion potential in the AI infrastructure business and $22.7 trillion in enterprise applications. With the acquisition of Cursor, SpaceX hopes to deliver on some of these promises and further leverage its market value, which has already risen significantly since the IPO.
Impacts of the acquisition
Since going public, SpaceX has seen its shares soar from $135 to over $200 per share, increasing its market cap by nearly $1 trillion. That equates to about 16 times Cursor's value. This post-IPO appreciation makes acquiring the startup even more attractive for SpaceX, which now relies on Cursor's expertise to advance its ambitious AI plans.
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