Big banks that want to participate in SpaceX’s IPO need to sign Musk’s Grok
It is not uncommon for large companies involved in billion-dollar businesses to impose conditions on their banks and law firms.
This time, however, Elon Musk made an especially bold demand of Wall Street advisors ahead of SpaceX’s initial public offering (IPO).
According to four people familiar with the matter, who spoke on condition of anonymity because the negotiations were confidential, Musk ordered banks, law firms, auditors and other consultants involved in the IPO to buy subscriptions to Grok, his artificial intelligence chatbot linked to SpaceX.
According to three of these people, some banks have agreed to spend tens of millions of dollars on the tool and have already started to integrate Grok into their internal IT systems.
Musk and a SpaceX spokesperson did not respond to requests for comment.
In practically any major IPO, banks usually look for ways to please the company that is going public — and, of course, its CEO. After a few years with few relevant offers reaching the market, however, Wall Street was practically “drooling” over a deal the size of SpaceX, which is considered one of the biggest in history.
The operation is expected to raise more than US$50 billion, with the company valued at more than US$1 trillion. At this scale, banks can earn more than $500 million in advisory fees.
Musk’s ability to secure contracts for his AI chatbot from banks also shows the extent of the world’s richest man’s influence over a financial sector eager to maintain a relationship with him now and in the long term.
According to three sources, the purchase of Grok subscriptions by banks is far from just a courtesy gesture. Musk insisted that they hire the chatbot’s services. He also asked banks to advertise on X, his social network — which is also under the SpaceX umbrella — but was much less firm on this point, according to two of those people.
For now, five banks are expected to participate in the offer: Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley. The law firms of Gibson Dunn and Davis Polk are also advising on the transaction.
Musk’s deal with the banks is a nice victory for SpaceX, which merged with xAI in February. Grok, however, is still on the outside in the artificial intelligence competition, well behind ChatGPT, OpenAI, Claude and Gemini, from Google.
Musk has been selling Grok as an antidote to “political correctness” and says his chatbot would not be “woke”, unlike rivals. In recent months, however, Grok has found itself at the center of controversy after broadcasting anti-Semitic content, praising Adolf Hitler and generating sexualized images, without consent, of women and girls. Countries such as Indonesia and Malaysia have already banned Grok, while others have opened investigations into the spread of this type of material.
Despite the controversies, Musk continues to promote the chatbot and repeatedly asks the more than 237 million followers he has on X to “test Grok”. By noon on Friday in New York, he had already posted 18 times a day about the tool, which launched a new version of the app on Thursday.
“Grok and xAI are definitely improving faster than any other AI,” read a message on X that Musk shared.
Today, Grok earns mainly from individual users, not from companies. Subscriptions contracted by banks tend to give a boost to the corporate front of the AI business on the eve of SpaceX’s IPO.
In the last financial report presented to investors before the merger with SpaceX, xAI reported about $1 billion in revenue from its artificial intelligence operations, according to a person with access to the numbers. The company did not detail how much came from end customers and how much from corporate customers.
Starlink — SpaceX’s satellite internet service — is its crown jewel, generating billions of dollars in free cash flow, according to a person with knowledge of the company’s finances. Documents obtained by Google show that Starlink recorded around $8 billion in revenue in 2024.
For months, bankers have been circulating around SpaceX’s offices in the Los Angeles region to help the company prepare its IPO prospectus.
It has not yet been decided which bank — if there will be just one — will lead the operation, as it usually guarantees more prestige and a larger share of fees, according to two people familiar with the negotiations. SpaceX, which confidentially filed its IPO paperwork with the Securities and Exchange Commission (SEC) this week, left the names of the banks involved out of the document, one of these sources said.
