How are these numbers even working out, I get free markets and all that, but Microsoft paid 2.5B for Minecraft, which was printing money at the time (seems they still lost on that deal). Now a rocket company is buying an editor company for 60B and everyone seems to think that makes sense.

I’m happy to be old man yelling at clouds here because I can’t for the life of me figure out these valuations and purchases.

▲

fluoridation 9 hours ago | parent | next [-]

All I know is, it's going to be fun when everyone wakes up sober and hungover realizing they've been sleeping on piles of tulips.

▲

farfatched 9 hours ago | parent | prev | next [-]

There's a lot of investment in AI for its potential.

An AI editor company might never make 60B itself, but it might help another AI company grow faster (relative to its competitors, who might also want to buy the AI editor company).

What else can an AI giant do with all that money?

Build in-house: they do, and there's only so fast they can hire/build.

Save? Yes, still do, but if they save it all, and let competitors buy Cursor, they lose.

Invest in other fields? Sure, but if they lose the AI race, that's all they'll be left with.

Tesla's IPO is a bet that if Musk has the right opportunity, he will do well. So he's given a big bucket of money, and needs a team that can deliver. So he buys Cursor.

The winners are Cursor. The losers are whoever is funding the AI companies that get outcompeted.

(Full disclosure: I don't know anything about Cursor, nor much about Tesla or its IPO.)

▲

techpression 9 hours ago | parent [-]

But surely 60B could buy you something better if you want to spend money on AI. The number seems completely arbitrary, would Cursor say no to 40B? I really don’t see Cursor as bringing them anything of actual value, it’s more of a bragging thing, but I can be very wrong.

	▲	shaewest an hour ago \| parent [-]
		Couple things. First, it was a all-stock deal, not cash, so it's closer to a merger than anything. Second, this deal was determined months ago, most likely at a equity stake defined then. That could mean that a 30B deal 3 months ago is now worth 60B.

▲

baggachipz 9 hours ago | parent | prev [-]

> How are these numbers even working out

You must be new here.