👉 Background: Elon is the world’s richest man - he’s behind Tesla, SpaceX, Neuralink and most recently, xAI. After stepping down from DOGE (and becomes arch-enemies with his former-bestie Donald Trump), Musk is making a big comeback to the tech world.

👉 What happened: In 2023, Musk founded an AI start up called xAI to compete against OpenAI and DeepSeek — his biggest AI rivals. In March this year, Musk merged xAI with his social platform X (formerly known as Twitter) in a private takeover, buying his own company with his other company, and slapping a $113 billion valuation on the whole thing. But, no actual cash changed hands.

👉 What else: Now he’s launching a $300 million secondary share sale for xAI which means xAI employees can cash out by selling their shares to fresh investors. And it’ll give us a sneak peek at what the market really thinks xAI is worth.

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What's the key learning?

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💡Private companies can claim they're worth billions but it means nothing until other investors are willing to throw real money at it.

💡When no money changes hands, a valuation is pretty much just a number on a spreadsheet. But when new investors agree to buy shares at that price, it gives the valuation a bit more legitimacy (not always though - looking at you WeWork / SoftBank).

💡We know that Elon Musk has a tendency to be flippant with valuations. He’s the same man who lobbed a $44 billion USD valuation at Twitter and then tried to renege when he realised this offer was way too high. So, if Musk is able to pull off this valuation as part of the secondary share sale, it might actually suggest there is some logic to this price.