On July 23, Elon Musk launched a poll on X, asking whether Tesla should invest $5 billion in xAI, contingent upon a valuation determined by several credible outside investors.
Musk clarified that board approval and a shareholder vote would be required, emphasizing that the poll was intended to gauge public interest.
The poll attracted significant attention, receiving over 958,000 votes. The results showed strong support, with 67.9% of respondents voting in favor of the investment, while 32.1% opposed it.
Looks like the public is in favor. Will discuss with Tesla board.
— Elon Musk (@elonmusk) July 25, 2024
Following the poll, Musk commented today, stating, “Looks like the public is in favor. Will discuss with Tesla board.” This indicates that Musk will now bring the proposal to Tesla’s board for further consideration, taking into account the positive response from the public.
According to analyst Gene Munster, he said, “Bottom line is this would have a material benefit to xAI, given it would almost double xAI’s capital raised to date. As for Tesla, the impact would be more subtle. If xAI’s post money valuation was $29B (the recent round was at $24B post money), this implies Tesla would hold 17% of xAI. Assuming no dilution and xAI reaches a valuation of $200B in the next 5 years, it would add just over 4% to Tesla’s market cap ($30B).”
“From a return on capital perspective, a 600% return over 5 years is a great outcome. My recommendation is Tesla should invest $20B into xAI to move the needle for investors,” concluded Munster.