Elon Musk has launched a major restructuring at his artificial intelligence startup xAI. Several cofounders and employees left as the company prepares for a potential public offering linked to SpaceX. Reports show the shakeup followed Musk’s dissatisfaction with the company’s coding division. The changes come as SpaceX considers a record IPO that could value the company between $1.5 trillion and $1.75 trillion. xAI Cofounders Exit as Leadership Changes Accelerate Multiple founders have departed from xAI in recent weeks during a broad internal restructuring. The departures reduced the founding team from twelve members to only two. Guodong Zhang, who led the Imagine team at xAI, confirmed his departure in a post on X. According to reports, Musk blamed problems with the company’s coding product on Zhang. Another cofounder, Zihang Dai, left earlier in the same week. Several earlier departures included Toby Pohlen, Jimmy Ba, Tony Wu, and Greg Yang. The exits followed Musk’s decision to review the company’s operations and leadership structure. Only Manuel Kroiss and Ross Nordeen remain from the original founding team. Some staff members reported morale concerns during the restructuring period. Researchers have also left after long working hours and stronger offers from competing companies. SpaceX and Tesla Executives Audit xAI Operations Musk brought senior staff from SpaceX and Tesla to review xAI’s internal systems and projects. The review aimed to assess performance across teams and products. According to reports, several employees lost their roles after the audit. Musk wanted faster development progress and stronger results from the coding division. In a message on X, Musk said the company did not build the organization correctly at the start. He wrote, “xAI was not built right first time around, so is being rebuilt from the foundations up.” He also apologized to candidates who had previously been rejected by the company. Musk said recruiters are now reaching out again to several candidates with improved job offers. The company also hired Andrew Milich and Jason Ginsberg from the code generation startup Cursor. Their recruitment followed the restructuring of the coding team. SpaceX Merger Positions xAI for Large Public Listing The restructuring comes after SpaceX acquired xAI earlier this year. The deal valued the combined company at about $1.25 trillion. The merger linked Musk’s space and artificial intelligence businesses. The move also created a larger technology group ahead of potential public market plans. Tesla recently received approval from the United States government to convert its investment in xAI into SpaceX shares. Tesla had previously invested about $2 billion into the AI company. Earlier this year, xAI raised $20 billion in a Series E funding round. Previous reports suggested the company could reach a valuation of about $230 billion in later funding rounds. Potential Record IPO Draws Market Attention Industry reports suggest SpaceX may pursue an initial public offering in 2026. Analysts estimate the offering could value the company between $1.5 trillion and $1.75 trillion. The IPO could raise around $50 billion in new capital. Such an offering would surpass the $29.4 billion listing completed by Saudi Aramco in 2019. Private market transactions valued SpaceX at about $800 billion in late 2025. Strong growth in the Starlink satellite network supported the higher valuation estimates. Some reports suggest a confidential filing could appear in early 2026. Market observers expect a possible listing window between June and July if plans move forward.
