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So SpaceX bought a $60B Option on Cursor, plus a bunch of services, for $10B. If strike date comes and Cursor is in fact worth less than $60B... they can move
by Lonestar1440 6mo ago
So SpaceX bought a $60B Option on Cursor, plus a bunch of services, for $10B.
If strike date comes and Cursor is in fact worth less than $60B... they can move to acquire it for that price. Or just let it "expire". And if it's worth more, they get a savage good deal. If the services were worth $8B anyway, it's hard to lose.
It seems less crazy to me through this lens. A straight acquisition, today, at $60B would in fact be crazy.
- gpm 6mo agoPaying $10B for the option is also crazy though. Paying $10B for the thing outright and not just an option would be absurdly high.
- muyuu 6mo agoIs that so or would those 10B be discounted from the purchase? not that it isn't wild regardless
- gpm 6mo agoI'm not sure what you're referring to by "that" but I think you're right that it's 10B to not purchase or 60B to purchase, so as an option posting $10B for an option with a $50 strike price.
- Lonestar1440 6mo agoBut they also get a whole bunch of AI Services from Cursor. Other comments have noted that xAI has fallen on bad times (idk one way or the other) so perhaps they were going to spend $5B on getting these services elsewhere, anyway. SpaceX spending $1B a month on various AI services seems ~plausible (EDIT - Or maybe it's an IP transfer, or maybe it's over a longer time horizon. Idk but SpaceX clearly expects value from 'our work together' even if they don't exercise.)
- gpm 6mo ago$1B per month on AI services does not seem remotely plausible to me... Engineers don't consume that many tokens... And on the AI development side they're the ones providing compute in the form of a "million H100 equivalent Colossus training supercomputer"... On top of the cash.
- deleted 6mo ago[deleted]
- NuclearPM 6mo agoPlausible how? Explain please.
- Lonestar1440 6mo agoTokens. Tokens spawning sub agents using more tokens. Maybe some training too. I didn't say it was Wise. I said it seems within possibility for this, very particular, corporation.
- robertjpayne 6mo agoCursor has no AI services, they do not develop their own frontier models. I see no reason to understand why $10bn for Cursor's services is an advantage xAI versus say a $10bn deal with Anthropic, OpenAI or Google.
- Lonestar1440 6mo ago
- MPSimmons 6mo agoIt reportedly has a $2B ARR, and a 5x multiplier doesn't seem insane to me, but who knows, honestly
- danpalmer 6mo agoBut it's paying a 5x ARR multiplier for the right to buy at a 30x multiplier.
- Unit327 6mo ago2B ARR at what cost base?
- rvnx 6mo agoThey have 2B ARR because their business model is about selling models cheaper than they cost. The main frenzy with Cursor started when you could access Anthropic models practically for free. Otherwise it is just VS Code.
- NitpickLawyer 6mo ago> Otherwise it is just VS Code. This is a bit simplistic. It's the VS Code that everyone used before cc came to town. Real devs, on real projects. All that data they collected is worth a lot more than "just vscode". Their composer2 is better than kimi2.5 and it's just a finetune on that data. xAI had a decent model in grok4 (it was even sota on a bunch of benchmarks for a few weeks), but they didn't have great coding models (code-fast was ok-ish but nothing to write home about, certainly nowhere near SotA). Now that they've been banned from using claude, they'll get their expertise + data to build a coding model on top of whatever grok5 will be + their cluster for compute. It doesn't sound like a bad plan to me, financial shenanigans or not.
- jurgenburgen 6mo agoWhat data? Their commercial terms promised they wouldn’t keep any for training.
- omcnoe 6mo agoProblem is basically, that if the option works out (Cursor truly has the talent to train a frontier model on SpaceX's infrastructure, and were simply lacking the infra before) the fair price would be way way more than $60B. OpenAI tried to acquire Windsurf last year for $3B and couldn't.
- 4dsf 6mo agoSeems like Elon's move is two fold 1) A gamble based on cursor's compute constraint 2) if 1) plays out, he can purchase cursor via shares of spaceX over valued shares, at a fixed price should the valuation increase.
- sailingparrot 6mo ago> Cursor truly has the talent to train a frontier model on SpaceX's infrastructure, and were simply lacking the infra before Wild conjecture.
- jaccola 6mo agoI think this was an “if” scenario
- sailingparrot 6mo agoThis makes more sense that my initial reading of it indeed
- mlinsey 6mo agoIs this cash or compute? Elon has one of the world's biggest compute clusters spun up, and little inference demand to speak of. Trading billions worth of idle compute, in exchange for a high-strike call option on the #3 player in the most-promising-vertical for AI, plus (presmuably) some access to their data, starts to sound like not a bad trade. Especially if you're pre-committed to betting your entire rocket company on winning in AI, and you're currently in sixth or seventh place.
- Barbing 6mo agoI heard he made a deal with a company to use his clusters. Is there good data on demand for Grok? Seems like relatively little chatter at least, in spite of tremendous investment.
- throwanem 6mo ago[flagged]
- the-peter 6mo ago[flagged]
- estomagordo 6mo agoI hate Trump as much as the next guy, but what is that evidence, again?
- pyvpx 6mo agoClearly you don’t and that disingenuousness is frowned upon in discussions here.
- walletdrainer 6mo agoSo, where’s the evidence?
- vessenes 6mo agoNot only is it almost certainly compute (“services”) it’s likely priced at Anthropic rack-rate, or at least what Cursor’s been paying Anthropic. The cluster’s already paid for, so likely in the $2B range for operating cash needs. Not more than $5. If I imagine bringing in Cursor’s team to build a frontier model, ideally combined with Grok, which has one of the few truly proprietary data feeds available to it, and with a much larger custom model Cursor can solidify a place, and I get to do a stock swap to buy it, this sounds like a bet worth making. Upshot - I bet there’s an MS/oAI deal on IP on the back of this; meanwhile the cluster goes brrr.
- ignoramous 6mo agoDespite their impressive ARR, Cursor faces existential threat from not only BigLabs (Claude Code, Open AI Codex) but also BigTech (AWS Kiro, Google Antigravity, MS VSCode). I am sure the usual suspects would have lined up to purchase Cursor, and the deal from xAI was probably the best of the lot. Marks an end to a remarkable sprint for a 3yo company, and an admirable exit (considering the recent discombobulation of Windsurf's), just as investor money and/or hype is going belly up.
- bredren 6mo agoIt has shown surprising stickiness. Occupying some middle ground between full adoption and still ~in the code. I am starting to see some potential in moving back away from pure terminal, a mixed modality with AI. But it is not in the direction of IDE in any traditional sense.
- tber123 6mo ago[dead]
- ryanSrich 6mo agoHaving tried most (all?) of the commercially available + open source options, and even tangential competitors like CC, Conductor, Antimetal, etc. I haven't found anything that's close to the experience of Cursor. The harness they've built is incredible. I'd even go so far as to say that any competitors that are direct (windsurf, kiro, etc.) aren't even in the same universe. Cursor is just so much better, faster, has better features (plan and debug mode), and squeezes much better results/code out of the same models. They absolutely have some secrete sauce that the other options just don't have.
- fumar 6mo agoCursor is my favorite of the VS forks. Agree that it delivers better plans than others. I prefer using Claude in Cursor over CC CLI when I am heads down going through bugs. I am disappointed in how "little value" in token use Cursor provides compared to others.
- isodev 6mo agoThis valuation is absurd. Perhaps a year ago- sure, but there have been so many iterations of this “kind of editor” since then, not to mention countless alternatives. So for me it’s more of a data deal - Elon buying himself some insight into codebases and real dev usage patterns? Oh finally someone to use his dirty data centres
- nbardy 6mo agoPeople keep saying this and they don't understand how businesses work. Cursor has 1B in enterprise revenue. It doesn't matter if people can clone their product, those deals don't move slowly
- spiderfarmer 6mo agoPut 1B into a better product and 10B into marketing. If you can’t beat their 1B in revenue, the market for making your money back on the Cursor acquisition also isn’t there.
- aoshifo 6mo ago> Cursor has 1B in enterprise revenue. That' all well and good and they had astounding growth rates but doesn't mean much. And 1B in ARR is not _that_ much in comparison. Also, reportedly they spend all their revenue and they have no control over the spend-side. The models they use will very likely get much more expensive. All the foundation model companies have a competing product. Cursor has the first mover advantage, but that will only help then so much. There have been plenty companies who grew fast, had huge revenue, but failed in the end, because they never got profitable. That's also in the cards for Cursor, if they don't fundamentally change their business model
- digitaltrees 6mo agoCursor is still the best I’ve used are there others I should try?
- 542458 6mo agoI've been using Kilo Code (VS Code Plugin) for the last few days, and it does most of what I liked in Cursor without tying me to their particular subscription. That said, people are increasingly migrating to CLI tools (Claude Code if you like the Claude models, Pi Agent if you want something that's highly customizable, Crush if you want something fun), or GUI tools that are less code-first (Codex GUI).
- rob74 6mo agoWhat's crazy is that a company that sells an IDE (that's not even a particularly good one compared to competitors like JetBrains) integrating some AI plugins could be worth more than $60B...
- wahnfrieden 6mo agoThey are now a Codex clone and without the subscription pricing. You have to spend thousands to get what you get from a $200 Codex subscription. How do they compete with this except from users who haven't caught on yet, or businesses that are unbothered to spend thousands a month per dev and wouldn't consider just subscribing to 1-3 $200 subscriptions instead? And their price is so high because it's markup on API rates. API rates, even without markup, are just insanely irresponsible for anyone to be spending on full-time daily usage.
- deleted 6mo ago[deleted]
- mandeepj 6mo ago> users who haven't caught on yet They are catching up fast! https://www.businessinsider.com/chamath-palihapitiya-ai-costs-tokens-8090-2026-3 https://www.businessinsider.com/chamath-palihapitiya-ai-cost...
- altacc 6mo agoTellingly, from his full post: "Mostly because I do not yet see an equivalent uptick in productivity or revenue..." https://x.com/chamath/status/2029634071966666964 https://x.com/chamath/status/2029634071966666964 I suspect that as the value a company provides is more than its code, then increasing code churn does not lead to an equivalent increase in revenue. Even for a tech company, a business' concept, connections, knowledge, assets, non-coding staff, etc.. are a significant value and increasing code doesn't increase the throughput of that value. For non-tech companies code is the grease in the gears, not the gears themselves.
- ascorbic 6mo agoWhat services could SpaceX possibly be buying from Cursor that would cost $8bn?
- dnnddidiej 6mo agoIf you pay 10B for options at 60B and the strike is 8B you ... just lost 10B. Thats it. Add emotional hedges if needed but they are just emotional not financial. Your argument is based on an assumption that cursor cannot lose value. Even if the market says it has. No free lunch: an option is a bet for both sides. Zero sum.
- zaphirplane 6mo ago3 things bug me Now why would cursor agree to that unless the offer was better than what their market valuation + acquisition premium < 60 This was a similar play for twitter by the same person While an innovator at the time, today there are a lot of LLM coding solution, sold by model providers, model aggregators even open source ones , it’s not obvious what is being bought that isn’t a feature of vs code or one of the LLM agents ( as the dismissive saying goes )
- outside1234 6mo agoTo be worth $60B at a 50x P/E ratio this implies $1.2B in profit. Not happening
- changyou 6mo agoThinking of it as an option makes it much more rational. Downside is capped (cost of services + deal structure), upside is asymmetric if Cursor outperforms. That said, these deals always hinge on whether the “$8B in services” is real economic value or just internal accounting. If it’s the latter, the risk profile looks very different.
- igl 6mo agoI used to be a hardcore Cursor user until I spent more time with the alternatives and cursor has gotten rough on my machine lately: spins up the MBP fans in minutes and drains the battery in an hour or two on the go. The harness is great, but eventually someone will build something equally good that is not vibe coded to death.