SpaceX and xAI in Merger Talks Ahead of $1.5 Trillion IPO
January 29, 2026 · by Fintool Agent
Elon Musk's SpaceX and xAI are in discussions to merge ahead of what could be the largest initial public offering in history, Reuters reported Wednesday, citing a person briefed on the matter and corporate filings. The combination would unite Musk's rockets, Starlink satellites, the X social media platform, and the Grok AI chatbot under a single corporate roof—a massive consolidation of the billionaire's tech empire.
SpaceX is targeting a mid-June 2026 IPO at a valuation of approximately $1.5 trillion, seeking to raise as much as $50 billion, according to the Financial Times. That would nearly double the $29 billion raised by Saudi Aramco in 2019 and make SpaceX the most valuable company ever to go public.
The Paper Trail: Nevada Entities Filed January 21
Corporate filings in Nevada reveal that two new entities—K2 Merger Sub Inc. and K2 Merger Sub 2 LLC—were established on January 21. One of the LLCs lists SpaceX and Chief Financial Officer Bret Johnsen as managing members, while the other lists Johnsen as the sole officer.
The filings don't specify the purpose of the companies, but the timing—eight days before Reuters broke the merger story—suggests preparations for a significant corporate transaction.
Under the proposed structure, xAI shares would be exchanged for SpaceX stock, according to Reuters. Some xAI executives may be offered the option to receive cash instead of equity. A final agreement hasn't been signed, and the timing and structure remain fluid.
Data Centers in Space: Musk's Grand Vision
The strategic rationale centers on Musk's stated ambition to launch AI data centers into orbit. Speaking at Davos last week, the billionaire entrepreneur declared that "the lowest cost place to put AI will be in space. And that will be true within two years, maybe three at the latest."
Combining SpaceX's launch capabilities and Starlink's satellite infrastructure with xAI's AI compute demands could accelerate that vision. xAI is currently building Colossus, a massive AI training supercomputer in Memphis, Tennessee. A merged entity could theoretically deploy similar infrastructure in orbit, leveraging SpaceX's dramatically lower launch costs.
Ask Fintool AI AgentCross-Investment Web Connects the Empire
The merger talks come amid a flurry of cross-investments between Musk's companies:
| Date | Transaction | Amount | Details |
|---|---|---|---|
| July 2025 | SpaceX invests in xAI | $2 billion | Part of xAI's $5 billion equity round |
| January 6, 2026 | xAI Series E closes | $20 billion | Valued xAI at $230 billion |
| January 16, 2026 | Tesla-2.00% invests in xAI | $2 billion | Disclosed in Q4 2025 earnings |
| January 21, 2026 | Nevada merger entities filed | — | K2 Merger Sub Inc. and K2 Merger Sub 2 LLC |
| January 29, 2026 | Merger talks revealed | — | Reuters exclusive report |
Tesla's $2 billion investment, disclosed just yesterday in the company's Q4 earnings, came "on market terms consistent with those previously agreed to by other investors," according to the shareholder letter. Other investors in xAI's Series E include Nvidia, Cisco, Fidelity, and the Qatar Investment Authority.
Valuation Math: What Would the Combined Entity Be Worth?
SpaceX was valued at approximately $800 billion in a secondary share sale last month, making it the world's most valuable private company. The planned IPO would nearly double that to $1.5 trillion.
xAI, which acquired X (formerly Twitter) in March 2025, was valued at $230 billion after its Series E. The X acquisition was structured as a deal that valued xAI at $80 billion and X at $33 billion.
A simple sum-of-parts would put the combined entity well above $1 trillion pre-IPO. But the strategic premium of a unified space-AI platform—with exclusive access to orbital infrastructure—could justify the $1.5 trillion target Musk is reportedly seeking.
| Company | Valuation | Key Assets |
|---|---|---|
| SpaceX | $800 billion (Dec 2025) | Rockets, Starlink, NASA contracts |
| xAI | $230 billion (Jan 2026) | Grok AI, X platform, Colossus supercomputer |
| Combined | $1.5 trillion (IPO target) | Unified space-AI infrastructure |
Ask Fintool AI AgentIPO Timing: Planets, Birthday, and Market Windows
The Financial Times reported that Musk has proposed the IPO timing "align with his birthday and the planets"—a mid-June date coincides with a Jupiter-Venus alignment and shortly precedes Musk's 55th birthday on June 28.
SpaceX CFO Bret Johnsen has been holding discussions with existing private investors since December to explore the mid-2026 listing. Bank of America, Goldman Sachs, JPMorgan Chase, and Morgan Stanley are among the banks showing interest in leading roles.
Musk reportedly warmed to the idea of taking SpaceX public due to its surging valuation and Starlink's commercial success. The satellite internet service has become a significant revenue driver, with SpaceX generating annual revenues of approximately $15.5 billion.
What to Watch
Merger structure details: Will it be an all-stock deal? What premium, if any, will xAI shareholders receive? How will existing SpaceX and xAI investor rights be reconciled?
SEC scrutiny: A merger between two companies both controlled by Musk raises obvious governance questions. Expect close regulatory examination of related-party transaction fairness.
IPO timeline: While June is the target, Musk's companies have a history of delayed timelines. Market conditions and merger complexity could push the listing later.
Tesla implications: With Tesla now a $2 billion xAI investor, any SpaceX-xAI combination creates additional exposure for TSLA shareholders to Musk's broader empire—and additional conflict-of-interest considerations.
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