Valuation soars! Elon Musk's Boring Tunnel Company targets $20 billion valuation in new round of financing

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Elon Musk’s tunnel startup, The Boring Company, is seeking to raise a new round of funding at a valuation of about $20 billion, aiming to raise about $4 billion—more than double the $5.7 billion valuation from its previous round in 2022.

The Wall Street Journal, citing sources, said that this round of financing has not yet closed and the terms may still change. The 2022 financing raised $675 million, with investors including Vy Capital, Sequoia Capital, and Founders Fund.

Multi-city expansion, difficult implementation

Boring Company was spun off from SpaceX in 2018 and manufactures tunnel boring machines, claiming construction costs are lower than traditional builders. The company currently operates an underground transit network beneath the Las Vegas Strip, where drivers operate Teslas to shuttle passengers to and from the convention center.

Previously, the company pitched privately-funded tunnel projects to Baltimore, Chicago, and Los Angeles, planning to profit from ticket sales, but most failed to launch.

Currently, the company is self-funding the construction of a new loop in Nashville. In February, it announced a Dubai underground loop project—the first phase is 4 miles, costing $154 million and scheduled to take one year; the second phase will expand to 14 miles, estimated to cost $545 million and take three years, but the funding sources remain unclear.

'Musk Premium' faces market headwinds

Despite limited project track record, private investors still view Musk-related companies as certain assets and are willing to pay a premium to participate.

Investors who participated in Musk's $44 billion acquisition of Twitter once suffered losses, but after Musk merged Twitter into AI company xAI and then integrated it into SpaceX, these investors eventually turned a profit.

However, Musk’s publicly-listed companies have recently performed poorly. Tesla plunged 15% on Thursday, erasing $215 billion in market value, with earnings below expectations and negative cash flow for the first time in two years. SpaceX, which had a record IPO in June, raising $86 billion, saw its market value nearly double after listing, but has recently fallen about 50% from its peak.

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