Could A Grok Disaster Threaten The SpaceX Valuation?

It depends on how you measure the use for both AI downloads and enterprise adoption. Grok is being demolished by the competition. A look at Apple’s App Store shows that OpenAI’s ChatGPT is the top app in downloads. Anthropic’s Claude is in second. Google’s Gemini is in third place. xAI is in 20th place, behind Google Maps

The Wall Street Journal came up with figures that point to the disaster as well. “Downloads of Grok fell to about 8.3 million in April, from a high of more than 20 million in January, according to analysis firm AppMagic,” the paper reported.

Add to these signs the fact that Grok’s parent, SpaceX, has rented server capacity to Claude. If xAI were a success, that facility would not be available. Among other things, the lease increases SpaceX’s revenue, which, in turn, should raise its valuation as its top line grows from the deal. However, it’s not that simple.

In February, xAI was merged with SpaceX. At the time, SpaceX was valued at $1 tillion. xAI was valued at $250 million. Of that $250 million, the social media company X accounted for about a third, and xAI for about two-thirds. That means the failure of Grok, the xAI product, will dent the valuation of SpaceX by as much as $160 billion. Based on Elon Musk’s valuations of each piece (x, xAI, the merged xAI, and SpaceX), it is hard to determine exactly what these figures are.

However, it is clear that a drop in Grok usage harms SpaceX’s valuation as the company goes public. As OpenAI and Anthropic demonstrate, the valuations of AI companies are insanely high. Grok does not get to be part of that insanity.

Musk may simply have been too clever with his X, xAI, X merger with xAI, and the additional merger with SpaceX. However, the Grok failure will be taken into account by many people who want to pin down a SpaceX valuation. And, the SpaceX valuations are already under siege.