According to people familiar with the negotiations, The Boring Company, a tunneling start-up owned by Elon Musk, is negotiating a new round of financing, with a post-money valuation expected to reach approximately US$20 billion. The company plans to raise about $4 billion, multiple people familiar with the matter said. This round of financing has not been completed yet, and relevant sources reminded that there is still the possibility of changes in the transaction terms.
Steve Davis, president of The Boring Company, did not respond to media requests for comment.
The Boring Company independently develops tunnel boring machines, and the company claims that its underground excavation construction costs are lower than those of traditional engineering companies. This independent company, which was spun off from SpaceX in 2018, has built an underground transportation loop on the Las Vegas Strip, relying on Tesla vehicles to transport passengers to and from the Las Vegas Convention and Exhibition Center.
After the completion of a round of financing in 2022, the company will be valued at approximately US$5.7 billion. At that time, the round of financing raised US$675 million, and investors included Victoria Capital, Sequoia Capital and Founders Fund.
The company has promoted privately-funded underground tunnel projects to cities such as Baltimore, Chicago, and Los Angeles, and plans to rely on the ticket sales of underground transportation lines to make profits, but most of the projects ultimately failed to come to fruition.
Even so, a large number of private market investors still regard Musk's companies as sure-fire targets and are willing to pay a premium for the opportunity to invest in his companies.
In 2022, a group of investors invested US$44 billion to support Musk's acquisition of Twitter. After the completion of the transaction, the company suffered losses on its books for several consecutive months. However, the billionaire entrepreneur merged the poorly managed Twitter into his AI company xAI, and later integrated the entity into SpaceX, and the investors finally realized profits.
Recently, the valuations of Musk's two listed companies, Tesla and SpaceX, have plummeted. Tesla's stock price fell 15% on Thursday; the electric vehicle company's financial report fell short of expectations, and it recorded negative free cash flow for the first time in two years, and its market value evaporated by US$215 billion in a single day.
Musk’s aerospace company SpaceX completed an unprecedented IPO in history in June this year, raising US$86 billion from Wall Street. The stock price nearly doubled in the early days of listing, but recently the stock price has retraced about 50% from its high point.
The Boring Company is self-funding a new underground loop line in Nashville.
In February this year, the company announced the launch of the Dubai underground tunnel ring project. The company said that the first phase of the 4-mile line cost US$154 million and the construction period is one year; the second phase will extend the line to 14 miles, is expected to take three years, and has a total investment of US$545 million. The funder of the project has not yet been identified.