SpaceX Pounces on $60 Billion Cursor Takeover Days After IPO

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1:15Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM.

1:27Scarlet Fu:Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts. Or watch us live on YouTube. Lost in all this SpaceX discussion, is that they made a$60 billion M &A trade today. It's like you don't even talk about it. Well, partly because they had indicated before their IPO that this was something that they acquired the rights for. So now they've just kind of pulled the trigger on it. All right, let's talk to somebody.

2:07It's his job to know what's going on with this stuff. Seth Fiegerman, Bloomberg AI team leader. I didn't know we had an AI team leader, but we do, and it's Seth. That's awesome. What is Cursor, and why did SpaceX buy it? Sure, Cursor is one of the leading startups that focuses on AI coding, so basically building AI tools that streamline the process of writing and debugging code. You know, it's one of the fastest-growing startups in terms of its revenue run rate, but it also faces a lot of competition with the likes of OpenAI and Anthropic, but it has historically been quite beloved by coders in Silicon Valley.

2:39I should say, historically, this is really, you know, a three - or four-year-old company that just got bought for$60 billion, so quick turnaround.

2:46Scarlet Fu:Quick turnaround, indeed. So what does owning cursor allow SpaceX to do? that it couldn't do before. Yeah, I mean, it's important to step back and think that, you know, SpaceX merged with or acquired Elon Musk's AI venture, XAI, and since then has tried to position itself as not just a rocket play, but an AI play. But to date, they really haven't made too much of a dent in the AI landscape. And coding has really been the most lucrative early market for these AI tools. There's a certain irony there. They're kind of disrupting their own folks in their own backyard. But I think the bet here is that bring Cursor in there, bring their talent in there, and you can help supercharge SpaceX's own efforts to build a more viable, credible AI product.

3:24All right, I'm asking for all Cursor shareholders here, did I sell my company for$135 stock or stock today? Do we know the terms? I'm not sure we know at the moment, but the deal should close in the third quarter. I like the$60 billion valuation on$135 stock. So then I get the upside.

3:47Scarlet Fu:Well, let's see how good Cursor was at negotiating all this. SpaceX, do we know how M &A might figure into their growth strategies? Good question. Yeah, again, I think they're trying to position themselves as more of an AI company, and I think they're doing that along two prongs. One is through deals like this one, and I would be shocked if this is the last time that we see them pursue an AI company to build a real credible in-house product. The others, through these infrastructure tie-ups that they're doing with the likes of Anthropic and Google, kind of using the chips and data centers that they already have to make money while they figure out how to build a credible AI product.

4:20Scarlet Fu:SpaceX is using cash and stock to buy Cursor. If they're going to be buying more companies, are we going to see SpaceX taking on debt as well? You know, selling bonds, for instance? Possible. But again, I think the fact that it just went public gives it a leg up on rivals like OpenAI and Anthropic as they compete not just for talent, but for acquisitions like this one. They have something they can offer that other companies can't. All right. You're the AI dude. Where are we on that spectrum of let's spend money, spend money, spend money to now let's really see what we're getting in return for that money?

4:51I think we're still on the spend money, spend money. But I will say what we are starting to see is companies opening IA Anthropic are thinking about how much they're charging for this stuff across different spectrums. That includes getting rid of this all-you-can-eat model where we just charge you a flat fee and then you use as much AI as you want. Now they're starting to charge based on the usage that you do or maybe they'll charge more money for premium subscriptions. So where are we on? So Anthropic and OpenAI have also filed confidentially for initial public offerings. Do we have any sense as to timing for either of those two deals?

5:22You know, the most recent that we've reported is that both were targeting the fall. Now, I should say that could be fluid, but the fact that SpaceX is doing so well right now, and it's early days, but the fact that they're doing so well probably does open up an opportunity for those companies to go public then or sooner. You know, it's always a vibes thing on some level, and this kind of creates a positive moment to try to bring it to market sooner.

5:42Scarlet Fu:I go back to that idea that OpenAI's S1 filing indicated that it wasn't necessarily in a rush to go public either. You know, it said that there are things I could do as a private company that can't. I think that they probably were a bit more explicit on that than Anthropic was. So it's certainly possible that OpenAI pushes this. We don't have updated reporting on that timetable yet, but they certainly indicated that perhaps they could still do financing on the private market as opposed to having to tap the public market. But at the end of the day, all these companies, including SpaceX, are spending tens, if not hundreds of billions of dollars on chips and data centers and talent.

6:16You need capital for that. And public market is a good place for that.

6:20Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. At Brookfield, we invest in the thing behind the thing behind the next big thing. Our focus across infrastructure, energy, real estate, private equity and credit is helping build the backbone of the global economy. We combine deep operational expertise with disciplined long-term investing, uncovering value and partnering alongside clients to shape tomorrow's economy today. Brookfield. Own what's next. Learn more at brookfield.com. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital.

6:57These days, it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agent's identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity. Secure every agent. Secure any agent. Okta secures AI. The thing about AI for business, it may not automatically fit the way your business works.

7:33At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM.

8:00Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. One of my favorite functions on the Bloomberg Terminal is Rich Go, R-I-C-H. It's the best accounting for the wealth of the wealthiest folks out there. The methodology is outstanding. The data is outstanding. Elon Musk is number one. 1.3 let's go exact here 1.273 trillion dollars number one number two is larry page of 313 billion he just so outpaces everyone else it's laughable year to date he's up 650 billion dollars that's representing the the public uh markup and value of spacex here so the question is a trillionaire i mean what are we doing here um what's the impact here gotham akanda he thinks about this stuff.

8:56He's a lecturer at the Yale School of Management, and he's a Bloomberg opinion contributor. Gualtom, when you think Elon, you think about that wealth. And again, number two is$300 billion, and he's at$1.3 trillion. Put that in perspective. How do you think about that? I mean, just imagine being the second wealthiest man in the world and thinking, wow, I'm a trillion dollars behind. You got to feel for them. You got to feel for them, really. It seems awful. So what does it mean for policy? What does it mean for influence? I don't know. The numbers here are getting just, you know, extraordinary.

9:30Yeah. And I think we have to layer in that the big difference between the gargantuan wealth of today's sort of wealthiest people and the equivalent 100 years ago in the Gilded Age when you had people with about the same level of GDP is back then there were profound normative constraints about you could not you could not be seen to use your wealth to just sort of like drown the political system. However much political influence they had, there were limitations about what you could do when you were sort of expected to give money to charity and things like that. All of those things have apparently fallen by the wayside.

10:03So the easiest way to think about the level of Elon Musk's political power, even apart from his work with the administration, is in Ohio, the most expensive Senate race of all time, the two campaigns combined spent about$115 million. So that's a lot of money. So that is about less than 1 % of a day-to-day random fluctuation in Elon Musk's net worth. So he can buy, he can spend more money than two Senate campaigns combined, the most powerful, most expensive Senate campaign in history, about as casually as you or I buy a cup of coffee or a soda. If you are a politician and you're worried and you're thinking about what political stances you should take or how you should shape government action, if that's not top of your mind, you should get out of the business.

10:51Scarlet Fu:OK, well, you've given us a lot to think about here. And one thing that I did like about your column is that you point out these mega billionaires. And I think, according to Rich Go, there's maybe like 20 odd people who have who are worth at least one hundred billion dollars. So let's just call them the mega billionaires and one trillionaire. They run companies, they own companies, and those companies employ a lot of people. And a lot of those people reach out to you for advice. And as you put it, the conversation always goes like this. These are people who have accomplished a lot of things and they're very successful what they do.

11:23Scarlet Fu:But right now they're struggling in this company that they work for. Why is that? And what do you tell them? because when you operate at this stratosphere of wealth and power and influence, we should stop thinking about you like a private citizen. You're a king and you're surrounded by a court. And there are people around you whose only desire in life, whose only goal in life is to please you. That's being a courtier. So, you know, I talk to people who, you know, they've been army special forces or very senior executives and they go to these companies and they're like, Like, nothing makes sense.

11:56I have been trained to succeed, but I don't even know what success means. And I said, that's right, because you've always been trained success means winning a war or making a profit. Success means keeping the king happy. That's what it means. And that's a completely different way of looking at the world. And so now you have these people. They have the power and resources of a nation state. In fact, most of the nation states in the world don't have the resources of someone like Elon Musk. And it changes everything. you know i was i was thinking gotham just when you were speaking here well he's got to answer to his shareholders and then i'm like no he doesn't because he's got the super voting stock

12:32Scarlet Fu:so there goes that argument nominally he might but in practice in reality he doesn't so that's right and in a real sense also like there's this wonderful term post-economic right um if elon musk fails to answer his shareholders and they sell the stock and his net worth goes down by 75 percent, he'll still have 300 billion dollars. I'm sure he'll be OK. Yeah. I mean, although for those who are keeping score, that that's not OK with them. I mean, you don't get to that level without keeping score. So I think that's completely right. You keep, you know, keeping score. And it is striking, right, that like that it seems like the one thing that they can't buy is enough.

13:13But let me put it differently. At that level, I think keeping score isn't just about the number on the Bloomberg billionaires list. It's about power, right? You have transcended with the things where the things you can, where you can buy material things. What you can buy are governments or immunity from the law or just the fulfillment of your every whim, no matter what it is that you, what that might be. And at that point, the amount, the amounts of money that you have can translate to power in ways that we just haven't seen in democratic societies before. Is there any, I'm not going to say there's a problem, so I'm not going to ask you for a solution, but is there any way that you think society may change or bend or try to deal with some of this newfound extraordinary wealth and influence?

14:00There is, because we've done this before, right? The United States has dealt with people of this kind of wealth and power relative to society, not in absolute terms. Before, Theodore Roosevelt did that with J.P. Morgan and, you know, know, the antitrust people did that with John D. Rockefeller. And there are two big lessons that we should take away from that, right? One is that however powerful, wealthy and powerful these people are, when the government backed by the people decides to go and say, do things, the government is still the government. And in a democratic republic like the United States, the people still rule, not individual wealthy people, not individual oligarchs.

14:35But the second thing to remember is that over the long term, that outcome was much better for the wealthy people than the fulfillment of their whims, right? Would you rather live in a state like Russia that bends to the whims of, you know, whatever the wealth, the wealth, the handful of wealthiest people who run the state? Would you rather live in the United States? The answer is you would rather live in the United States. Hard as it is to hear, right? Constraints can be good for you even if you're a trillionaire. And democratic constraints aren't just good for the whole society. They'll end up being good for the wealthiest members of it too.

15:06Scarlet Fu:Gotham, have you gotten any feedback on writing this column. I'm wondering if any readers have reached out to you and what they've said. More than any other column I've written for Bloomberg, actually. And so far, I would say, of people who have reached out to me directly, the result, the response has been sort of enormously positive. Of people who responded on Twitter, who seem to be big fans of Elon Musk, let's just say that they were not so positive. Stay with us. More from Bloomberg Intelligence coming up after this. These days, it seems like AI agents are just about everywhere you turn, every field and every function.

15:42But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agent's identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity. Secure every agent. Secure any agent. Okta secures AI. Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game.

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18:17Scarlet Fu:Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's talk a little retail here. We just got through a lot of the earnings from the retailers. They always kind of bring up the rear of their different calendars here. Bloomberg Intelligence, they got a survey looking at Prime Day deals. And there's a lot to talk about there. I want to talk about how AI influences how we shop. Who do we talk to about that? We talked to Poonam Goyle. She covers all the e-commerce and the retailers for Bloomberg Intelligence. Poonam, I know you have a new survey out here. What did you find here?

18:49What were you looking to find? People are still interested in deals and shopping Amazon's Prime Day, which comes earlier this year. It comes in June versus July last year. So part of 2Q, not 3Q in terms of their financials. I think what we found just confirmed what we believed, which is that more than ever, deals matter today, especially in the face of rising inflation, where you have tariffs and higher gas prices. Consumers are looking to find ways to stretch their dollars and more and more are looking to shop on Prime Day than last year.

19:24Scarlet Fu:This is a dumb question, but I'm going to ask it anyway. It's called Prime Day and Amazon has that Prime loyalty program. But do people who shop Prime Day, are they all Prime members or is there a significant number that actually has not signed on to the program yet and will do so because of these offers? No dumb question, but the answer is Prime Day is for Prime members. So to take advantage of the deals, you have to be a Prime member. So Amazon does have over 200 million Prime members around the world that will be taking advantage of these deals. But it is also a time where many people sign up for deals that don't have the membership.

20:01Some of them sign up to take advantage of the deals and cancel, and many of them do stay on. In fact, in our survey, that was one of the questions we asked is, do you have a Prime membership? And if not, are you planning to get one? And the answer was very consistent with last year, that there is a select group of respondents that plan to get the Prime membership and hold it indefinitely. So just growing that Prime member base, which is always a key win for Amazon. All right. Yesterday, I pulled a John Tucker. I said, you know what? I need a power washer for my back patio.

20:32Scarlet Fu:It sounds like you could borrow that from him. I could probably borrow from John Tucker. So instead of going to Google, I just went into Amazon.com, search bar, power washer. Boom. A lot of stuff comes up. A lot of good descriptions. I found one. Boom. Didn't even go to search. And it's coming tomorrow for those that care. You didn't want to wait for Prime Day? No, I'm not. I just, I don't know. You wanted it right away. I want it right away. AI, Poonam, how are people using AI for shopping? How are retailers using AI? Yeah, I think Amazon is furthest along when you think about how a retailer is using AI.

21:06You know, what you just explained about the search bar, I think what many people still don't know is the Amazon search bar is no longer just a search bar. It's an AI-powered agent-led tool, which means if you don't have to no longer go in the search bar like you did and say power washer you can say i'm looking to clean the bricks or the pavers outside of my house and i want the strongest power washer and it will provide you with an answer not only that when you get to it you can go ahead and say what was the cheapest price that this power washer sold in the last three months six months and it will give you a price chart then you can go ahead and further say, okay, when this power washer drops to this price, go ahead and purchase.