In February 2026, SpaceX completed a merger with xAI, valuing the combined entity at approximately $1.25 trillion. This makes SpaceX — already the world's most valuable private company — significantly larger, with Elon Musk consolidating his two most valuable private ventures under one structure.
What this means for SpaceX employees
For existing SpaceX employees, the merger primarily changes the asset base of the company, not the equity structure. SpaceX continues to run periodic employee tender offers — its primary liquidity mechanism — and those are expected to continue. Revenue from Starlink, launch services, and now xAI's AI business contributes to a reported $15.5B+ annual revenue run rate.
What this means for legacy xAI equity holders
Employees who held xAI options or RSUs had their positions converted into SpaceX equity as part of the merger terms. The implied valuation at conversion was approximately $250B for the xAI portion, against the $1.25T combined entity — meaning xAI equity holders received SpaceX shares at a ratio reflecting xAI's share of combined value.
Tax math: ISO vs share holding period
If you exercised ISOs more than a year before a tender, and more than two years after grant, the entire gain qualifies for long-term capital gains — roughly 23.8% at federal max rates versus the 37% top ordinary rate.
If you exercised options and tendered within a year, the gain is short-term and taxed as ordinary income. A merger conversion is typically a non-taxable exchange if structured as a stock-for-stock deal — but consult a tax advisor to confirm based on your specific grant terms.
If you held xAI equity and had it converted in the merger, the clock for long-term capital gains treatment on your SpaceX shares likely resets to the conversion date. Verify this with a tax advisor before any tender participation.
Liquidity outlook
SpaceX has run employee tenders roughly twice a year for the past several years. With the combined entity at $1.25T, the pool of capital required to run a meaningful tender is larger — but SpaceX's access to institutional capital and sovereign wealth funds makes this feasible. No IPO is currently planned.