Original Title: "After Musk Steps Down from DOGE, His Companies Welcome a Wave of Financing: xAI Issues Stocks and Bonds, Neuralink Also Raises Funds"
Original Author: He Hao, Wall Street Journal
After Musk returned to his business empire and distanced himself from politics, his companies quickly launched a series of financing efforts, including xAI initiating a $300 million stock sale plan and a $5 billion debt sale. Additionally, the brain-computer interface company Neuralink raised $650 million in its Series E funding.
xAI Issues Stocks and Bonds
On Monday, according to media reports, Musk's xAI is initiating a $300 million stock sale plan, which will allow employees to sell shares to new investors. The company is valued at $113 billion in this transaction. This aligns with the price Musk paid when xAI acquired its social media platform X in March of this year.
This year, Musk merged xAI with his social platform X into a new company called XAI Holdings. The acquisition deal in March valued the entire group at $113 billion, with xAI valued at $80 billion and X valued at $33 billion. Musk acquired X (then Twitter) for $44 billion in October 2022.
Industry insiders noted that this secondary stock sale, known as a "tender offer," is expected to be followed by a larger financing round, during which the company will issue new shares to external investors. Earlier in April, media reports indicated that XAI was in talks with investors to raise about $20 billion for its newly merged AI startup and social media business, highlighting the market's enthusiasm for AI and Musk's influence.
Additionally, Musk has initiated a $5 billion debt sale for xAI. According to media reports, Morgan Stanley is seeking debt financing for xAI, which could help Musk continue to invest heavily in AI infrastructure, particularly in building a large data center called Colossus in Memphis.
Media sources cited informed individuals revealing that this debt financing plan includes Class B term loans, fixed-rate term loans, and senior secured notes. The funds will be used for general corporate purposes, with a maturity date of June 17. xAI declined to comment on the above news.
Regarding the merger of xAI and X into one company, Musk previously stated that this integration would allow his two companies to achieve synergies through the consolidation of models, computing power, distribution channels, and talent. For example, AI developers could better utilize data from the social media platform to train their models and reach its user base. Musk did not disclose further details about the specific structure of the March merger transaction between xAI and X. Analysts have suggested that this opaque deal allows X to leverage xAI's rising valuation for support.
Musk founded xAI in 2023 to challenge Sam Altman's OpenAI and other large tech companies. The AI startup was valued at $45 billion in a $500 million private funding round at the end of last year. Musk also granted xAI a 25% stake to investors who supported his acquisition of Twitter.
xAI quickly launched the Grok chatbot and built the Colossus supercomputer cluster, one of the largest AI data center projects in the U.S. In addition to competing with large tech companies and Grok's sometimes "rough" image, Musk has also signed several partnership agreements. Last month, Microsoft announced it would provide xAI models to its cloud computing customers, and the messaging app Telegram also agreed to distribute Grok to its 1 billion users.
Musk previously revealed on May 20 that his Memphis data center has deployed 200,000 GPUs for training AI systems, and he plans to add another 1 million GPUs at a nearby location.
Neuralink Raises $650 Million
Media reports indicate that Musk has also raised $650 million for his brain-computer interface company Neuralink, which is valued at $9 billion, excluding this new investment. Neuralink's valuation in the previous funding round was $3.5 billion, which took place in 2023.
Musk Returns to Business Empire from DOGE
Musk previously spent several months serving as a senior advisor to Trump, frequently accompanying him to events and providing significant support for Trump's 2024 presidential campaign, being one of his main financial backers. Musk's role in the U.S. Government Efficiency Department (DOGE) ended last week, during which he launched a large-scale government spending cut plan that not only drew widespread criticism of him personally but also raised concerns about the performance of his companies.
This series of financing efforts comes after Musk stepped down from his role in the Trump administration, where he was responsible for cutting administrative spending. Analysts pointed out that Musk seems eager to refocus on his various businesses. Since Trump's inauguration, Tesla's stock price, where Musk serves as CEO, has dropped by 20%.
Musk previously stated that after his companies were affected by his ties to President Trump, he would refocus on his business landscape. At the end of last month, Musk wrote on X: "Back to 24/7 work mode, sleeping in the conference room/server room/factory. I must fully focus on X/xAI and Tesla. Because we are at a critical stage of technology releases."
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