SpaceX agrees to buy AI coding startup Cursor for $60B in stock

In short: SpaceX has agreed to acquire Cursor, an AI coding startup, in a $60 billion deal paid with SpaceX stock.

What happened

SpaceX said it has agreed to buy Cursor for $60 billion in stock. That means Cursor’s owners would get shares in SpaceX instead of cash. The announcement comes just a few days after SpaceX’s initial public offering, or IPO, which is when a company first sells its shares to the public.

SpaceX said the deal is expected to close in the third quarter of this year. The company had discussed a possible purchase earlier this spring, after announcing a partnership with Cursor.

According to TechCrunch, Cursor had been preparing to raise $2 billion from investors, which would have valued it at about $50 billion. SpaceX’s offer was higher. SpaceX and Cursor also had an unusual agreement in April, SpaceX would either buy Cursor for $60 billion in stock or pay a $10 billion break-up fee if the deal fell through.

SpaceX said the acquisition is meant to help its AI division, which it built around Elon Musk’s AI company xAI after a merger earlier this year. TechCrunch reports that this AI division has gone through restructuring after controversies, including users generating non-consensual deepfakes (fake images or videos made to look real, like a convincing forgery).

Why it matters

Cursor makes tools that help people write software using AI, which can speed up coding in the same way spellcheck speeds up writing. If SpaceX integrates Cursor’s tools into its own AI efforts, it could affect the products SpaceX builds and sells, and how it competes with other big AI companies. SpaceX also told IPO investors it sees a $26 trillion market for AI products, so this deal signals how serious it is about growing that side of the business.

Source: TechCrunch AI