Five sources told Reuters that Elon Musk’s brain implant business Neuralink, estimated at close to $2 billion in a private fundraising round two years ago, is now worth around $5 billion based on secretly completed stock trades.

The sources claimed enthusiastic investors bought shares in recent months before Neuralink’s May 25 statement that U.S. regulators had approved a brain chip human study.

Experts say Neuralink may need years to get commercial use approval. However, former NIH neural engineering program director Kip Ludwig “optimistically” projected Neuralink to commercialize its brain implant in at least ten years. The corporation also faces federal animal research investigations.

However, according to a Reuters email, Neuralink shares were secretly marketed to investors at a $7 billion valuation or $55 per share. Reuters could not confirm whether the vendor found purchasers at that price. The email stated that the clinical trial’s FDA approval made the bargain “sweeter.”

Musk and Neuralink executives declined to comment.
Musk hopes Neuralink’s chip will allow healthy and impaired people to visit neighborhood facilities for quick surgical insertions of obesity, autism, depression, and schizophrenia devices. He even envisions web surfing and telepathy. However, a Neuralink executive has stated more modest short-term goals, such as assisting paralyzed individuals in typing without typing.

Instead of Neuralink issuing new shares to investors, staff and early backers sold equity at a valuation of $5 billion. Unfortunately, secondary trades are a poor indicator of a company’s value due to low volume and lack of market consensus.
Unlike other firms, Neuralink’s secondary trading valuation rose. According to Caplight, 85% of pre-IPO companies are valued in secondary exchanges at a 47% discount to their last investment round.

According to Pitchbook, Neuralink’s last financing in 2021 raised $205 million at a $2 billion valuation.

Many recent stock transactions have been too small investors that care more about getting a piece of a Musk-owned company than its valuation. For example, according to the email reviewed by Reuters, the maximum price requested for Neuralink shares marketed at a $7 billion valuation was $500,000.

Hiive CEO Sim Desai called Neuralink stock demand “tremendous.” He estimated buyers would pay $4.5 billion.

Biomedical specialists doubt. Neuromodulation expert and entrepreneur Arun Sridhar dubbed Neuralink’s valuation “bonkers” given the brain implant’s early clinical development.

“A study to assess safety and tolerability is in no shape or form valid to justify a $5 billion valuation,” said Sridhar, who helped create Galvani Bioelectronics, an implant developer sponsored by GSK Plc (GSK.L) and Alphabet Inc.’s Verily Life Sciences. Galvani’s rheumatoid arthritis implants will be placed in a spleen artery, not the brain.
Last year, the FDA denied Neuralink’s human trial request for safety reasons, Reuters said. The company faces many obstacles after clearance.

After Reuters reported in May that its animal-research board may have broken conflict-of-interest laws, U.S. senators are investigating Neuralink. The implant’s rapid growth benefited Neuralink personnel on that board, which monitored the animals’ welfare. Based on secondary trading, some employees’ Neuralink stock has increased by 150% in two years.

The U.S. Department of Agriculture is investigating Neuralink for animal-welfare breaches. Last year, Neuralink personnel told Reuters that Musk encouraged them to rush and botch surgery on monkeys, pigs, and lambs to get FDA approval, resulting in more animal fatalities than necessary.

The Department of Transportation is investigating whether Neuralink illegally carried harmful germs on chips from monkey brains without containment.

Musk and Neuralink have ignored demands for comment on the probes, and Reuters reports.