SpaceX announced this week that it has secured an option to acquire AI coding startup Cursor for $60 billion, or pay $10 billion for the work they’re doing together if it doesn’t end up acquiring the company. The agreement gives Cursor access to SpaceX’s Colossus supercomputer and a path to reducing its dependence on Anthropic and OpenAI, whose models currently power much of Cursor’s product and whose fees have weighed heavily on its margins.
The timing of the SpaceX deal is interesting. Just a few weeks earlier, Cursor had been quietly attempting to raise billions in private markets, but had encountered a lack of interest from late-stage investors like Iconiq, many of whom had just deployed capital into OpenAI and Anthropic and weren’t ready to back a competitor at a $50 billion valuation. Cursor’s gross margins were negative 23% as of January, an unusual position for a company generating $2.7 billion in annualized revenue. The company ultimately lined up $2 billion from Nvidia, a16z, and Thrive before canceling the round following after the deal with SpaceX was announced.
The Cursor deal complicates an already complicated financial picture for SpaceX ahead of its June IPO. Reuters reported this week that SpaceX took out a $20 billion bridge loan last month to refinance debt tied to X and xAI, reducing total debt from $22 billion to $20 billion, with repayment potentially contingent on IPO proceeds. xAI spent $12.7 billion in capital expenditures last year while generating only $3.2 billion in revenue. Cursor lost nearly $900 million in its last fiscal year. This may indicate that SpaceX is using its IPO momentum to paper over a collection of cash-hungry businesses before public market investors get a full look at the S-1.
Important Disclosures
This material has been distributed solely for informational and educational purposes only and is not a solicitation or an offer to buy any security or to participate in any trading strategy. All material presented is compiled from sources believed to be reliable, but accuracy, adequacy, or completeness cannot be guaranteed, and Contrary LLC (Contrary LLC, together with its affiliates, “Contrary”) makes no representation as to its accuracy, adequacy, or completeness.
The information herein is based on Contrary beliefs, as well as certain assumptions regarding future events based on information available to Contrary on a formal and informal basis as of the date of this publication. The material may include projections or other forward-looking statements regarding future events, targets or expectations. Past performance of a company is no guarantee of future results. There is no guarantee that any opinions, forecasts, projections, risk assumptions, or commentary discussed herein will be realized. Actual experience may not reflect all of these opinions, forecasts, projections, risk assumptions, or commentary.
Contrary shall have no responsibility for: (i) determining that any opinions, forecasts, projections, risk assumptions, or commentary discussed herein is suitable for any particular reader; (ii) monitoring whether any opinions, forecasts, projections, risk assumptions, or commentary discussed herein continues to be suitable for any reader; or (iii) tailoring any opinions, forecasts, projections, risk assumptions, or commentary discussed herein to any particular reader’s objectives, guidelines, or restrictions. Receipt of this material does not, by itself, imply that Contrary has an advisory agreement, oral or otherwise, with any reader.
Contrary is registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940. The registration of Contrary in no way implies a certain level of skill or expertise or that the SEC has endorsed Contrary. Investment decisions for Contrary clients are made by Contrary. Please note that, although Contrary manages assets on behalf of Contrary clients, Contrary clients may take any position (whether positive or negative) with respect to the company described in this material. The information provided in this material does not represent any investment strategy that Contrary manages on behalf of, or recommends to, its clients.
Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, company or product made reference to directly or indirectly in this material, will be profitable, equal any corresponding indicated performance level(s), or be suitable for your portfolio. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Investors should seek financial advice regarding the appropriateness of investing in any security of the company discussed in this presentation.
Please see www.contrary.com/legal for additional important information.
