Elon Musk, on paper the world’s wealthiest human, threatens to go supernova under the pressure of his appearances in the Epstein Files, porn accusations, his suit against OpenAI and Microsoft, the self-dealing merger of SpaceX and xAI (formerly Twitter), and Tesla’s ever-changing business model.
Forgive the strained metaphor, but the guy is pushing his luck beyond all reasonable bounds, even in an era of utter unreality.
Epstein Files Embarrassment
Last June, Musk made his infamous declaration that “Donald Trump is in the Epstein Files. That is why they have not been made public.”
Unfortunately for Musk, he’s all over the Epstein Files as well and this new tranche has been particularly embarrassing for him.
Here’s what we knew about Musk & Epstein as of 2019 per Vanity Fair:
Epstein remained a fixture in elite circles even after he was a registered sex offender. A few years ago, for example, he was a guest at a dinner in Palo Alto hosted by LinkedIn cofounder Reid Hoffman for the MIT neuroscientist Ed Boyden. At the dinner, Elon Musk introduced Epstein to Mark Zuckerberg. (“Mark met Epstein in passing one time at a dinner honoring scientists that was not organized by Epstein,” Zuckerberg spokesman Ben LaBolt told me. “Mark did not communicate with Epstein again following the dinner.”)
In an email, Elon Musk responded: “I don’t recall introducing Epstein to anyone, as I don’t know the guy well enough to do so, Epstein is obviously a creep and Zuckerberg is not a friend of mine. Several years ago, I was at his house in Manhattan for about 30 minutes in the middle of the afternoon with Talulah [Riley], as she was curious about meeting this strange person for a novel she was writing. We did not see anything inappropriate at all, apart from weird art. He tried repeatedly to get me to visit his island. I declined.”
A Musk spokesperson also emailed: “Elon never introduced Jeffrey Epstein to Mark Zuckerberg and does not know either person well enough to do so. They simply happened to be guests at a neuroscience dinner organized by Reid Hoffman.”
The Guardian documents how the latest tranche of Epstein files contradict Musk’s 2019 claims:
Emails in the files appear to show the two cordially messaging each other on two separate occasions to make plans for Musk to visit Epstein’s island.
The documents include Musk and Epstein emailing in both 2012 and 2013 to determine when Musk should make the trip to Little St James. Neither exchanges appear to have resulted in Musk visiting the island, due to logistical issues.
“Will be in the BVI/St Bart’s area over the holidays. Is there a good time to visit?” Musk states on 13 December 2013.
“any day 1st – 8th . play it by ear if you want. always space for you,” Epstein replies.
Musk then sends several emails relaying his schedule, and the two settle on 2 January as a date for the visit. The email exchange ends with Epstein telling Musk that he would need to remain in New York and sending his regrets that they could not meet.
“Bad news- Unfortunately , my schedule will keep me in New York . I was really looking forward to finally spending some time together with just fun as the agenda. so i am very disappointed. Hopefully we can schedule another time in the near future,” Epstein wrote.
In November 2012, Epstein sent Musk an email asking “how many people will you be for the heli to island”.
“Probably just Talulah and me. What day/night will be the wildest party on your island?” Musk replied, in an apparent reference to his former wife Talulah Riley.
Musk followed up with an email on 25 December in response to another Epstein message that encouraged him to visit and offered use of his helicopter.
“Do you have any parties planned? I’ve been working to the edge of sanity this year and so, once my kids head home after Christmas, I really want to hit the party scene in St Barts or elsewhere and let loose. The invitation is much appreciated, but a peaceful island experience is the opposite of what I’m looking for,” Musk wrote.
“Understood , I will see you on st Barth, the ratio on my island might make Talilah uncomfortable,” Epstein responded.
“Ratio is not a problem for Talulah,” Musk said.
On 2 January 2013, Musk sent Epstein an email suggesting that the visit wouldn’t take place saying: “Logistics won’t work this time around.”
Futurism documents Elon’s floundering post-reveal:
First, Musk acted like nothing happened. He questionably reshared an AI-generated video of an anime-style child, posted political memes, and spoke of his chatbot Grok’s ability to probe the Universe itself. It was only in an after-midnight tweet that he finally addressed the elephant in the room.
“No one pushed harder than me to have the Epstein files released and I’m glad that has finally happened,” Musk wrote. “I had very little correspondence with Epstein and declined repeated invitations to go to his island or fly on his ‘Lolita Express’, but was well aware that some email correspondence with him could be misinterpreted and used by detractors to smear my name.”…The desperation only got more palpable as the posts went on. Musk responded to a screenshot of news headlines about his newly revealed ties to Epstein — none of which were all that sensationalized — with his favorite refrain that “Legacy media lies relentlessly.”
But as his replies continued to fill up with screenshots of the emails, Musk tried a new defense: that he was so good with “young women” that he had no reason to solicit the services of the billionaire child sex offender.
“If I actually wanted to spend my time partying with young women, it would be trivial for me to do so without the help of a creepy loser like Epstein,” Musk fumed, before boasting about his incredible mental capacity. “And I would still have 99% of my mind available to think about other things. But I don’t.” (X users pointed out a tweet Musk made in 2022 lamenting that he hadn’t “had sex in ages (sigh).”)
The post, puzzlingly, was made in reply to Grok. Musk was arguing not with his own critics, but his AI chatbot that’s notorious for being closely aligned with his personal views.
He has also tried to draw attention to other tech figures who were in the Epstein files to distract from himself.
Is that the sound of a swell-head billionaire going supernova?
And the Epstein Files are just a sideshow for Elon, he’s got legal battles to fight.
Grok: Porn Purveyor
We’ll start with the legal case where Elon is playing defense.
Trouble started in January when reports like this one from The Atlantic emerged.
Earlier this week, some people on X began replying to photos with a very specific kind of request. “Put her in a bikini,” “take her dress off,” “spread her legs,” and so on, they commanded Grok, the platform’s built-in chatbot. Again and again, the bot complied, using photos of real people—celebrities and noncelebrities, including some who appear to be young children—and putting them in bikinis, revealing underwear, or sexual poses. By one estimate, Grok generated one nonconsensual sexual image every minute in a roughly 24-hour stretch.
And now France is raiding the X Paris office and there’s trouble in the UK, via the BBC:
The French offices of Elon Musk’s X have been raided by the Paris prosecutor’s cyber-crime unit, as part of an investigation into suspected offences including unlawful data extraction and complicity in the possession of child pornography.
The prosecutor’s office also said both Musk and former X chief executive Linda Yaccarino had been summoned to appear at hearings in April.
In a separate development, the UK’s Information Commissioner’s Office (ICO) announced a probe into Musk’s AI tool, Grok, over its “potential to produce harmful sexualised image and video content.”
The Washington Post is in fine hand-wringing form as it tries to explain how Musk got himself into this particular pickle:
Since leaving his role overseeing the U.S. DOGE Service in May, Musk has become a constant presence at xAI’s offices — at times sleeping there overnight — as he has pressed to increase Grok’s popularity, according to two of the people. In meeting after meeting he has championed a new metric, “user active seconds,” to granularly measure how long people spent conversing with the chatbot, according to two of the people.
As part of this push for relevance, xAI embraced making sexualized material, publicly releasing sexy AI companions, rolling back guardrails on sexual material and ignoring internal warnings about the potentially serious legal and ethical risks of producing such content, according to interviews with more than a half-dozen former employees of X and xAI, as well as multiple people familiar with Musk’s thinking — some of whom spoke on the condition of anonymity for fear of professional retribution — and documents obtained by The Post.
…when xAI merged its editing tools into X in December, giving anyone with an account the ability to make an AI picture, it allowed sexual images to spread at unprecedented speed and scale…
That behind-the-scenes shift in xAI’s philosophy burst into public view last month, when Grok generated a wave of sexualized images, placing real women in sexual poses, such as suggestively splattering their faces with whipped cream, and “undressing” them into revealing clothing, including bikinis as tiny as a string of dental floss. Musk appeared to egg on the undressing in posts on X.
Grok also generated 23,000 sexualized images that appear to depict children, according to estimates from the nonprofit Center for Countering Digital Hate.
Reuters has a little more:
After Musk’s social media company X announced new curbs on Grok’s public output, nine Reuters reporters gave it a series of prompts to determine whether and under what circumstances the chatbot would generate nonconsensual sexualized images.
While Grok’s public X account is no longer producing the same flood of sexualized imagery, the Grok chatbot continues to do so when prompted, even after being warned that the subjects were vulnerable or would be humiliated by the pictures, the Reuters reporters found.
X and xAI did not address detailed questions about Grok’s generation of sexualized material. xAI repeatedly sent a boilerplate response saying, “Legacy Media Lies.”…The Reuters reporters – six men and three women in the U.S. and the UK – submitted fully clothed photos of themselves and one another to Grok between January 14 – 16 and between January 27 – 28. They asked the chatbot to alter the images to depict them in sexually provocative or humiliating poses.
In the first batch of prompts, Grok produced the sexualized images in response to 45 of 55 instances. In 31 out of those 45 cases, Grok had also been warned that the subject was particularly vulnerable. In 17 out of the 45 cases, Grok generated images after being specifically told they would be used to degrade the person.
Super-villain or rich idiot going supernova out of desperation to monetize a terrible investment (or maybe it wasn’t)? Time will tell.
Let’s move on to the suit where Elon is on offense.
Suing OpenAI and Microsoft
I meant to include this in my January post about Microsoft and OpenAI but ran out of time & space.
The Times (UK) has a decent summary of what supernova Elon is up to by suing a company he co-founded and their biggest corporate patron:
Elon Musk is seeking damages of up to $134 billion from OpenAI and its long-time backer Microsoft, claiming he deserves the “wrongful gains” both companies received from his early support.
In a federal court filing on Friday, Musk’s lawyer claimed the ChatGPT owner gained between $65.5 billion and $109.4 billion from Musk’s contributions when he co-founded OpenAI with its chief executive Sam Altman in 2015, while Microsoft, which has a 27 per cent stake in OpenAI, gained between $13.3 billion and $25.1 billion.
“Without Elon Musk, there’d be no OpenAI. He provided the bulk of the seed funding, lent his reputation, and taught them all he knows about scaling a business. A pre-eminent expert quantified the value of that,” Musk’s lawyer, Steven Molo, said.…OpenAI said it was an “unserious demand” by Musk and part of what it said was his “harassment campaign” against OpenAI. Both OpenAI and Microsoft challenged Musk’s damages claims in a separate filing on Friday.
The Wall Street Journal has a little more:
Musk was the primary funder in the AI company’s early days, but he and Altman soon had a power struggle over control of the venture. In 2018, Musk stepped down from the board and stopped giving money to OpenAI in 2020, the lawsuit said.…In January, more than 100 documents were unsealed as part of the continuing legal battle. The documents include texts and emails between Musk and Altman; transcripts of depositions from Musk, Altman and Microsoft CEO Satya Nadella; and even private diary entries from (OpenAI President Greg) Brockman.…Musk’s attorneys also pointed to private journal entries written by OpenAI’s Brockman in 2017, obtained as part of legal discovery, as proof that the OpenAI founders “secretly had other plans” about the company’s corporate structure, according to a recent court filing.“We’ve been thinking that maybe we should just flip to a for profit,” Brockman allegedly wrote in a private journal entry. “Making the money for us sounds great and all.”
This OpenAI blogpost titled “The truth Elon left out” claims that “and Elon agreed in 2017 that a for-profit structure would be the next phase for OpenAI; negotiations ended when we refused to give him full control; we rejected his offer to merge OpenAI into Tesla; we tried to find another path to achieve the mission together; and then he quit OpenAI.”
OpenAI CSO Jason Kwon has fired numerous shots across Musk’s bow and they’re worth a look for those following the case.
The case is expected to go to trial in April. FWIW, Polymarket gives supernova Elon a 55% chance of winning.
But let’s get to the real meat of this post, the major moves Musk is making.
Merging SpaceX and xAI
Musk is merging xAI (formerly Twiter) and SpaceX, the company with this motto on its homepage: “Making life multiplanetary. SpaceX was founded under the belief that a future where humanity is out exploring the stars is fundamentally more exciting than one where we are not.”
And here’s how SpaceX is describing the deal on its website in a memo titled “xAI joins SpaceX to Accelerate Humanity’s Future“:
SpaceX has acquired xAI to form the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform. This marks not just the next chapter, but the next book in SpaceX and xAI’s mission: scaling to make a sentient sun to understand the Universe and extend the light of consciousness to the stars!
Current advances in AI are dependent on large terrestrial data centers, which require immense amounts of power and cooling. Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment.
In the long term, space-based AI is obviously the only way to scale. To harness even a millionth of our Sun’s energy would require over a million times more energy than our civilization currently uses!
The only logical solution therefore is to transport these resource-intensive efforts to a location with vast power and space. I mean, space is called “space” for a reason. 😂
By directly harnessing near-constant solar power with little operating or maintenance costs, these satellites will transform our ability to scale compute. It’s always sunny in space! Launching a constellation of a million satellites that operate as orbital data centers is a first step towards becoming a Kardashev II-level civilization, one that can harness the Sun’s full power, while supporting AI-driven applications for billions of people today and ensuring humanity’s multi-planetary future.
Followed by 9 paragraphs of nonsense about orbiting data centers.
The Information has several thousand words worth of info in this chart:
pic.twitter.com/LycZv4KyY7
— Nat Wilson Turner (@natwilsonturner) February 3, 2026
The Wall Street Journal has a more down to Earth explanation of the newly formed private company valued at $1.25 trillian:
Elon Musk said SpaceX acquired xAI, a deal that combines his powerful rocket-and-satellite business with his artificial-intelligence startup that is facing steep competition.
The combination brings together a mature and dominant company in SpaceX, with one that is in a nascent stage. SpaceX operates a fleet of reusable rockets, spacecraft that ferry astronauts to orbit, and Starlink, the world’s largest satellite fleet that provides broadband internet to millions of customers worldwide.
Musk’s xAI, like other AI companies, is training large-language models and runs Grok, a chatbot integrated into the X social-media platform. XAI is facing formidable competition from OpenAI, Anthropic, DeepMind and others.
The Financial Times boils down what Elon is up to very succintly:
Elon Musk pulled off one of the most audacious deals of his career on Monday, merging SpaceX with xAI to create the most valuable private company in history.
The $1.25tn merger combines the billionaire’s dominant rocket maker with his lossmaking AI start-up and social media network X.
Musk said the move was needed to launch data centres into space, build factories on the moon and colonise Mars.
Supporters have praised the tie-up as further evidence of his genius, taking advantage of his reusable rockets and Starlink network of satellites, combined with the data from X and models from xAI.
His critics see it as the latest example of financial engineering, using his personal brand and SpaceX to prop up xAI as it burns through $1bn of cash a month.“None of the valuations are based on any rational multiple,” said one person who has invested in xAI. “They’re all trading off Elon.”
Gary Marcus has a pretty spicy take that I endorse:
For me anyway, the math ain’t mathing. Trading SpaceX at sixty times 2025 revenue seems, um, optimistic, but at least they have a near-monopoly on both low-cost rackets and satellite internet infrastructure. In contrast, trading xAI at a thousand times revenue when they are in an increasingly crowded field where everyone is being forced into price wars seems nuts. If I owned SpaceX shares I would feel like Elon way overpaid for his own company. For not that much more they could have bought Anthropic, which has had far broader adoption and far less controversy attached to it.
Anyone remember Tesla’s acquisition of Musk’s SolarCity, and how that turned out?
And no matter how stupid and implausible the SpaceX/xAI combination might seem, there’s an analyst on CNBC talking about something even stupider: merging them both with Tesla.
Axios also spins hard for Musk’s SpaceX/xAI combo, or maybe it’s tongue in cheek sarcasm because it sounds like BS to me:
Elon Musk is making one of the most audacious moves in the history of business and tech, arguably betting his empire on the idea of orbital data centers that are powered by the sun.
Don’t be surprised if this is a prelude to a future merger with Tesla, which recently invested $2 billion into xAI.
Tesla would make the chips, SpaceX would be responsible for launch and satellites, and xAI would build the models and agentic networks.
It’s credulous MSM coverage like the above that keeps the mask of unreality firmly affixed on Musk and keeps Tesla’s stock price completely detached from the reality of its abysmal fundamentals.
George Noble has an edifying take:
xAI is burning through $1 billion per month.
The company generated $107 million in revenue last quarter while hemorrhaging $1.46 billion in losses. It burned nearly $8 billion in cash through the first nine months of 2025.
That’s not a business.
SpaceX meanwhile generated $8 billion in profit on $15-16 billion of revenue last year. It’s the ONLY Musk company that actually prints money.
So what do you do when your AI startup is drowning in red ink ahead of your mega-IPO?
You fold the cash-burner into the entity that can still raise absurd amounts of capital.
And we’ve literally seen this exact thing before:
In 2016, Tesla acquired SolarCity for $2.6 billion.
SolarCity was bleeding cash, drowning in debt, and trading near all-time lows.
Tesla – the only Musk company at the time that could access the capital markets – absorbed it.
Wall Street analysts called it a “bailout dressed as synergy.” Tesla’s stock dropped 10% on the announcement.
The SpaceX/xAI deal is the same playbook.
$TSLA – Today SpaceX is likely cash flow positive. Post the xAI merger it is likely not. Combining with Tesla does not help as it is cash flow negative too. A $3trn combined EV implies > $500bn required annual FCF in 10 years time or 5x current revenue. pic.twitter.com/0ursFFZTxT
— LostFundamentals (@LostFundamental) February 4, 2026
Is Musk Going Supernova Because Tesla Is Flailing?
Aaskash Gupta has more:
The math is wild. Before the merger, Musk owned 42% of SpaceX (valued at $800B) and 49% of xAI (valued at $250B). After combining them, his 43% stake in the merged entity is worth $542 billion. The combined valuation jumped to $1.25 trillion, which is $200 billion more than the sum of the parts. That $200 billion in new value appeared because Musk said so. No new revenue. No new product. No external buyer setting the price.
This is the third time he’s done this in under a year. March 2025, xAI acquired X in a stock deal. January 2026, Tesla invested $2 billion of shareholder money into xAI while shareholders are literally suing Musk for conflicts of interest over founding xAI in the first place. February 2026, SpaceX acquires xAI in the largest merger in history. Each transaction reprices the assets upward. Each one has Musk on both sides of the table.
And xAI is burning $1 billion a month trying to compete with OpenAI and Anthropic. SpaceX generates 80% of its revenue launching its own Starlink satellites. Tesla just posted its first annual revenue decline on record. The company he used to fund xAI is shrinking. The company absorbing xAI makes most of its money from itself.
The play is obvious: bundle everything together, inflate the combined valuation, IPO at $1.5 trillion, and let public markets absorb the risk. This is the SolarCity playbook at 100x scale.
Motorhead attempts to explain in their latest newsletter:
The rumors of a possible Tesla + SpaceX merger after horrible earnings and guidance at Tesla last week, and yesterday’s announcement of a SpaceX and xAI merger, are clear signs of desperation by Musk.
After Musk, who has a 75%+ super-majority voting power at SpaceX, got the rocket company to acquire xAI—the worst AI among the major names—it’s only a matter of time for SpaceX shareholders to launch lawsuits against Musk and SpaceX.
And this is all because Musk is now feeling the walls close in on him more quickly than ever before. His plan to do this was always in place, but expedited after the worse-than-expected outlook for Tesla and last weekend’s disclosure that he reveled with Jeffrey Epstein in his twisted ideas of “fun”.…While talk of a $1.5 trillion SpaceX IPO had been around since late last year, after Tesla’s Q4 2025 earnings call last Wednesday, when Tesla’s CFO dropped a bombshell of a capex guidance in “excess of $20 billion” (147% YoY and 1.4x Tesla’s 2025 operating cash flow of $14.7 billion), rumors suddenly emerged that Tesla and SpaceX might merge.
The SpaceX numbers being bandied around are said to be so good that if its IPO raised $50 billion at a $1.5 trillion valuation, it would be stupid not to own Tesla shares, as SpaceX’s balance sheet could more than cover “in excess of $20 billion” of Tesla’s capex needs for robotaxis, AI compute power, maintenance capex, and more, of several years (I doubt it).
Will Lockett has more in his piece titled “Tesla Is Officially In Its Enshittification Era“:
Musk is taking Tesla in a downward spiral of enshittification to line his own pocket.…Ultimately, all of the conditions of Musk’s $1 trillion pay package have been phrased in such a manner that Musk can meet them without actually delivering any tangible growth…
Tesla has officially discontinued Autopilot for new vehicles in the US and Canada. Now, Tesla bundles it with FSD, so the only way to access this core feature is to buy the $99 FSD subscription.
Autopilot had two features: Traffic Aware Cruise Control (TACC), which managed speed and following distance, and Autosteer, which actively kept your vehicle in lane. The Autosteer is the feature that has been paywalled, so as standard, Teslas now only come with TACC.
That is an insane thing to put behind the FSD paywall and proves just how desperate Musk is.…Musk knows this. He is, in my opinion, an idiot, but even his two pesky neurons are capable of understanding the consequences. Still, he continues to plough ahead anyway, damaging Tesla’s core business in a blatant attempt to meet this awfully worded, arbitrary condition of his ludicrous pay package.
And this is just the start. I can almost guarantee that this decision will not increase FSD sales enough. We can expect more of this enshittification to come. Even the fact that Musk pulled this move months before I expected him to is a telling sign. It hints at desperation.
This piece from NextPit that sums up Musk’s MO:
While Elon Musk raves about robot cabs and his robot Optimus, tests and confessions expose his lies. Are his promises of technical milestones simply miscalculated, or deliberate strategic maneuvers to boost share prices? A reality check!
In Elon Musk’s world, the future is not something that just happens – it is announced with big words. Loudly, visionarily, and with great regularity. But if you take a closer look, Musk’s grandiose promises are not the predictions of an incorrigible optimist and mastermind. Rather, we see a recurring strategic instrument in action! These announcements are not random visions, but calculated maneuvers. The timing, conspicuously often just before the announcement of crucial quarterly figures, exposes their primary function: to deliberately influence the share price and calm nervous investors during critical phases. It is the art of controlling the narrative before the bare figures do. Or the short, more honest definition: Elon Musk is lying!
I’ll close with one last quote tweet, from the delightfully named BonkDaCarnivore:
$TSLA has no focus, piss-poor execution, and rot from the top. It’s a car company whose car sales are in the toilet; plus, they’ve missed every deadline they’ve set by themselves by at least half a decade. The Roadster is a decade late. Auto-summon (which was supposed to be solved by 2018) still won’t work in most parking lots. They wasted money on getting into solar roofing and executed it like trash. Then they claimed they were an AI company for autonomous driving and ended up last to market and years behind their competition in what will be a commodity priced space. They get into power delivery – which remains their only interesting vertical to this day – but invest so little into it that it’s just waiting for a Chinese company to come eat its lunch. And now they’re sinking tens of billions on robots that are 15 years behind Boston Dynamics and numerous other companies, with pie-in-the-sky delivery dates for something that still can’t even effectively walk itself.
Meanwhile, they’ve traded at a valuation more than just about every other car company in the world combined and still trade at a 400 multiple in spite of declining revenues and massive capex spend with no roadmap to ROI.
Oh, and did I mention in the midst of all of this that Elmo routinely commits fraud by taking $TSLA assets and giving them to his other, privately held companies with no value provided to shareholders for their lost property? Remember all those $NVDA GPUs Tesla had that he gave to xAI because “Tesla wasn’t using them”? And all the while the only thing he’s effective at is increasing his pay package in spite of the fact that, for all his “vision”, he’s an absolute shit CEO that all of his top talent flees the moment the golden handcuffs are off. Him getting cozy w/ MAGA is just icing on top of an already rotten cake.
Musk is definite proof of the old scammer’s axiom “Go big or go home,” I’m unaware of anyone in business history with such an appalling track record of dishonesty and yet, no one on Earth can match his financial success.
The market can certainly continue to irrationally reward Musk’s antics longer than all but the shrewdest and best-capitalized shorts can stay solvent, but at some point the Elon Musk supernova could become a financial black hole.
