$60B acquisition of Cursor—SpaceX is spending the money that hasn’t been listed yet

Author: David, Deep Tide TechFlow

SpaceX posted on X last night, announcing a partnership agreement with AI programming tool Cursor.

The agreement gives SpaceX an option: either acquire Cursor later this year for $60 billion, or pay a “collaboration fee” of $10 billion.

Choose one, but regardless of the choice, this amount is not small.

Cursor’s situation, those paying attention to the AI coding track over the past two years should have a feeling. It was once the most sought-after coding tool among programmers, with ARR soaring from $100 million at the start of last year to $1 billion by the end of the year, and according to Bloomberg reports, it surpassed $2 billion in February this year.

But the wind has shifted this year. Anthropic’s Claude Code, with an annualized revenue of $2.5 billion and over 300k enterprise clients, has entered the scene, and OpenAI has also launched Codex. Microsoft has even directly given away its own GitHub Copilot for free.

Cursor now looks more like the top player from the last AI coding boom, but the game has changed.

It’s such a company, and SpaceX is offering it a $60 billion acquisition price. What does $60 billion mean? It’s more expensive than Disney’s acquisition of 21st Century Fox, and the entire AI coding tool market’s total size in 2026, according to public research, is less than $10 billion.

A rocket company offering six times the entire industry’s size to buy a code editor being chased by competitors?

And then, taking the $10 billion out of the merger deal separately, it’s also a bit puzzling. If an acquisition deal ultimately fails, the buyer usually pays a breakup fee, typically 1% to 3% of the transaction amount. Based on $60 billion, the breakup fee should be between $600 million and $1.8 billion.

But SpaceX’s announcement states $10 billion, close to 17% of the transaction amount, and it’s not called a breakup fee but a “collaboration fee.”

A rocket company with an annual revenue of $16 billion, according to public financial reports, paying a “collaboration fee” of over half a year’s revenue—what exactly is this collaboration?

$10 billion, buying a bullish IPO call option

Why doesn’t SpaceX just buy directly? $60 billion isn’t an astronomical number for a target space company.

Actually, they can’t afford it.

SpaceX is currently a private company, with 2025 revenue reportedly around $15.5 billion, as Elon Musk previously disclosed. It doesn’t have $60 billion in cash. So, the “or” in this announcement becomes quite clever.

Either acquire for $60 billion, or pay $10 billion as a collaboration fee. The choice is up to SpaceX. Cursor cannot refuse the acquisition, nor can it return the $10 billion. The decision-making power is entirely in SpaceX’s hands.

This structure looks familiar to those in finance.

Pay a sum of money to lock in a future right to buy, and decide whether to buy at maturity. The $10 billion paid by SpaceX is essentially an option premium.

But such a thing usually doesn’t appear in normal mergers and acquisitions. You buy, you negotiate a price, and sign a contract. Why leave yourself a “decision to make later” window?

The problem might be related to timing.

SpaceX is still a private company, with 2025 revenue around $15.5 billion as previously disclosed by Musk. It doesn’t have $60 billion in cash to buy anything. But according to multiple media reports, SpaceX is preparing for an IPO with a target valuation of $1.75 trillion, planning to raise between $300k and $75 billion, possibly listing as soon as June this year.

Once listed, it’s a different story. A company valued at $1.75 trillion issuing stock to acquire a $60 billion company dilutes by only about 3.4%, which is hardly noticeable.

So, the timeline of this deal isn’t coincidental. First, announce the partnership with Cursor, adding a narrative slide to the IPO roadshow, like “We’re not just a rocket company; nearly 70% of the Fortune 500 engineers worldwide use our tools to write code every day”…

After the IPO completes and the stock price stabilizes, exercise the stock options to acquire.

This way, the $10 billion option fee is secured. SpaceX plans to IPO raising $40–75 billion, locking in Cursor’s acquisition rights with about 15% of that fundraising, effectively obtaining exclusive purchase rights in the top AI application layer of the coding track.

In other words, Musk is now spending money from investors who will give it to him later, to buy something that he only needs to pay for fully after going public.

The only variable here is whether the IPO succeeds and whether the valuation reaches $1.75 trillion.

If it does, $60 billion paid in stock is almost like paying nothing. If it doesn’t, then that $10 billion cash is just tuition.

The collateral for the Cursor deal is an IPO that hasn’t happened yet.

Musk’s valuation stacking trick

Musk has used this approach before.

In March 2025, xAI acquired the social platform X entirely through stock transactions, with a third-party valuation of about $33 billion for X at the time. A year earlier, Musk spent $44 billion to buy Twitter and renamed it X, which then shrank by more than half.

After merging with xAI, X no longer needs to prove its value independently; it becomes “xAI’s data source and distribution channel.”

In February 2026, SpaceX again acquired xAI entirely through stock, with a combined valuation of $1.25 trillion, with xAI valued at $250 billion. Just a few months earlier, xAI’s own funding round valued it at only $80 billion. After merging with SpaceX, xAI no longer needs to justify its $250 billion valuation; it becomes “SpaceX’s AI capability layer.”

In April 2026, SpaceX locked in Cursor, with a $60 billion purchase option. If the deal goes through, Cursor will no longer need to prove whether its coding tools can beat Claude Code; it will become “the application layer of SpaceX’s AI ecosystem”…

All three deals follow the same pattern.

They take a company that can’t be valued on its own or is shrinking, and put it into a larger container, valuing it as a narrative component rather than an independent entity.

X going public alone would prompt investors to ask how it makes money, whether ads are still running. But within the $1.75 trillion SpaceX, no one asks that because X only accounts for a tiny fraction of the total valuation.

Similarly, xAI going public alone would prompt questions about how Grok compares to ChatGPT, or when it will break even. But within SpaceX, these expenses are covered by Starlink’s profits.

My impression of this approach is that it’s a kind of asset packaging. Selling each piece separately requires market scrutiny, but packaging them together tells a unified story.

A $1.75 trillion valuation relies on two legs: rockets and satellites—investors may believe or not. Add xAI, and that’s another leg. Add Cursor, and that’s yet another.

The more legs, the more it looks like a stable structure. Whether each leg can stand alone is a question to answer before the packaging.

Pricing the position

This year, some of the biggest AI deals are increasingly like statements.

When Amazon invested another $25 billion in Anthropic, no one questioned Anthropic’s P/E ratio; when Meta spent billions acquiring Manus just nine months after its launch, no one questioned Manus’s valuation. Now, SpaceX’s $60 billion for Cursor is six times the entire AI coding market’s annual revenue.

These prices share a common feature: they are not about valuing a company’s current business, but about pricing a position. Anthropic’s position is one of the strongest closed-source models; Manus’s is the entry point for AI agent applications; Cursor’s is the largest global AI tool for programmers.

Position pricing is unrelated to revenue; it’s about how close you are to that entry point.

If SpaceX’s IPO succeeds, it will have completed a textbook operation. Using a single post, an option fee, and an IPO that hasn’t happened yet, it locks in the top asset in the AI coding track. It costs nothing out of pocket. If it fails, Cursor still has at least $10 billion.

But I think what’s truly worth remembering isn’t about success or failure.

The real benefit is that now, AI company valuations are no longer calculated—they are shouted out. For example, the $60 billion acquisition figure is not derived from any financial model.

As long as you believe AI coding is the future gateway for every programmer, that position must be occupied. Whoever claims it’s worth how much, it’s worth that much.