Finimize - 💰 SpaceX's multi-billion-dollar deal

What’s going on here?

SpaceX will sell insider shares in a tender offer, at a price that could make Elon Musk’s space and satellite venture the world’s second-highest-valued private company.

What does this mean?

A tender offer is when an investor proposes to buy shares directly from shareholders, usually at a premium price to convince them to part with their stakes. That not only acts as a public vote of confidence, but the prospective price tag gives the rest of the world a peek at how much a company may be worth. And this time, SpaceX shares could end up being sold at $112 each, suggesting a valuation of roughly $210 billion. That’s way higher than the $180 billion figure floated in December. In fact, it’s enough to put Musk’s company on the silver podium spot. SpaceX isn’t far behind the prevailing champ, either: TikTok’s parent company ByteDance is worth $268 billion, so maybe Musk just needs to swap tweets for two-steps.

Why should I care?

The bigger picture: The not-so-terrible twos.

Big-money investors seem hooked on disruptive tech companies these days. SoftBank’s Vision Fund 2, for one, is considering funneling a ton of cash into Perplexity. The tech-focused investment fund believes the US-based AI startup could steal screen time from even established giants like Google. That investment forms part of a wider $250 million funding round, which triples Perplexity’s valuation to $3 billion. That’s one of the highest valuations in the industry – not too shabby for a two-year-old startup.

For markets: For the few, not the many.

Mind you, a lot of the tech hype is hidden away in private circles right now. Out in the harsh light of Wall Street, Goldman Sachs revealed that hedge funds are “aggressively” offloading their tech stocks, especially those related to semiconductors. Software and internet stock are being kicked to the curb, too. So either private companies are stealing the limelight, or the AI trend is losing steam.

What’s going on here?

Micron Technology revealed better-than-expected results, but demanding investors still ditched the biggest US memory chip maker.

What does this mean?

On paper, Micron’s last quarter looked like a doozy. The chipmaker’s revenue shot up 82% over the year to nearly $7 billion, making for better-than-expected profit. And confident that the results were far from a fluke, Micron predicted that this quarter’s profit would be slightly higher than the average analyst believes. But it seems Micron was a victim of its own success. The company’s shares are up more than 60% this year – and like parents to a child prodigy, investors are now expecting results worthy of the honor roll. So despite a solid report card, Micron’s shares tumbled 7% on Wednesday.

Why should I care?

Zooming out: Skin in the game.

Micron’s cutting-edge memory chips are crucial for AI systems, slotting into the graphics processing units that Nvidia is known for. That means the chipmaker is at the center of the AI feeding frenzy – so much so that its results tend to set the mood for the whole chip sector, indicating demand for a range of companies in the industry. They’ll be delighted with Micron’s projections, then: it’s confident that chipmakers will keep recovering this year, and even pull off record sales next year. And that sort of demand is why Micron projects higher prices for its own AI-focused gizmos and gadgets in the years to come.

The bigger picture: Just can’t get enough.

The issue with Micron wasn’t just that investors got overly excited. See, they’d effectively already “priced in” their predictions, so anything below what they’d hoped for would see the stock pulled down a little. Nowadays, it’s not enough to buy a popular stock with decent fundamentals – investors need to make sure that it isn’t overhyped. And in the age of AI, that could be easier said than done.