Wall Street Wants a Piece of the SpaceX IPO Action? Musk Demands Grok Subscriptions
After years of a scarcity of large IPOs, Wall Street is salivating over deals like SpaceX. Musk has reportedly demanded that banks, law firms, auditing agencies, and other advisors involved in SpaceX's IPO purchase subscriptions to his AI chatbot, Grok. Some banks have agreed to invest tens of millions of dollars in the chatbot and have already begun integrating Grok into their IT systems. After all, Wall Street banks could earn over $500 million in fees simply by providing advisory services
It is not uncommon for large companies to make various demands of their bankers and lawyers when undertaking significant transactions. However, before SpaceX's IPO, Musk presented a particularly bold demand to Wall Street advisors.
According to media reports citing multiple sources familiar with the matter, Musk has demanded that banks, law firms, auditing agencies, and other advisors involved in SpaceX's IPO purchase subscriptions to his AI chatbot, Grok. Grok is part of the SpaceX ecosystem. Some banks have agreed to invest tens of millions of dollars in the chatbot and have already begun integrating Grok into their IT systems.
In almost all major IPOs, banks try to curry favor with the companies going public and their CEOs. After years of a scarcity of large IPOs, Wall Street is salivating over deals like SpaceX, which is expected to be one of the largest IPOs in history.
This IPO is expected to raise $75 billion, and SpaceX's valuation could even exceed $2 trillion, meaning Wall Street banks could earn over $500 million in fees simply by providing advisory services.
Musk's ability to bring business to banks for his AI chatbot demonstrates his immense influence over a banking industry eager to secure his business opportunities.
Media reports, citing several individuals familiar with the arrangements, indicate that banks' purchases of Grok subscriptions are not merely out of "goodwill." Musk insisted that they procure the chatbot service. Additionally, he requested that these banks place advertisements on his social media platform, X, although his stance on this demand was relatively less firm.
Currently, five banks are expected to participate in the offering: Bank of America, Citigroup, Goldman Sachs, JP Morgan, and Morgan Stanley.
The agreement reached between Musk and these banks is a significant victory for SpaceX. SpaceX merged with xAI in February of this year, and its Grok is currently in a relatively lagging position in the AI competition, ranking fourth behind OpenAI's ChatGPT, Anthropic's Claude, and Google's Gemini.
