Elon Musk has announced his AI company xAI has acquired the social media platform X (formerly Twitter) in an all-stock transaction that values X at $33 billion. The deal price was stated as $45 billion less $12 billion in debt, according to Musk’s post on Friday.
“xAI and X’s futures are intertwined,” Musk wrote. “Today, we officially take the step to combine the data, models, compute, distribution and talent. This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.”
Valuation Discrepancy Noted
Reports on the deal’s valuation showed some inconsistency. While CNBC and CNN reported the $33 billion figure (after accounting for debt), Reuters initially mentioned a $45 billion price tag before clarifying it included the $12 billion debt load.
This $33 billion valuation represents a substantial recovery for X, which had previously been valued by Fidelity at nearly 80% less than Musk’s original purchase price in late 2022. By December, X had recovered to about 30% of what Musk paid, according to Fidelity estimates.
Strategic Integration
The merger formalizes the existing relationship between the two companies, with xAI’s Grok chatbot already integrated into the X platform. Industry analysts note this combination could help xAI push its AI models to a broader audience while providing valuable data for training.
Saudi Arabian investor Prince Alwaleed bin Talal, who states his companies are the second-largest investors in both X and xAI, expressed support for the deal: “After this deal, the value of our investments is expected to reach between $4-$5 billion… and the meter is running,” he posted on X.
SImilar Posts
Market Context
The deal comes amid growing competition in the AI sector. xAI, launched less than two years ago, was recently valued at approximately $80 billion according to the merger announcement. The startup competes directly with OpenAI, which Musk co-founded in 2015 before departing. Earlier this year, Musk led an unsuccessful bid to purchase OpenAI.
xAI has been expanding its data center capacity in Memphis, Tennessee, building what it calls “Colossus,” touted as the world’s largest supercomputer cluster. However, environmental advocates have raised concerns about the development’s speed, citing lack of community input and oversight of the natural gas-powered facility.
Advertiser Returns
X has recently seen major advertisers return to the platform after many departed following Musk’s initial takeover. Amazon and Apple are reportedly reinvesting in X campaigns, providing crucial revenue support. This advertiser return helped bondholders sell billions in X debt holdings at 97 cents on the dollar earlier this month, though with high interest rates.
Musk’s Government Role
Analysts note Musk’s recent appointment to head the Department of Government Efficiency (DOGE) in the Trump administration has likely influenced investor confidence in X. After contributing nearly $300 million to Trump and Republican candidates in the 2024 campaign, Musk now oversees efforts to reduce government jobs, spending, and regulations.
Linda Yaccarino, CEO of X, responded to the announcement with: “The future could not be brighter.”
https://twitter.com/lindayaX/status/1905737074298572880
The transaction mirrors Musk’s previous corporate consolidation when Tesla acquired SolarCity for $2.6 billion in 2016, though that deal later faced shareholder lawsuits.
In a separate development, a U.S. judge on Friday rejected Musk’s bid to dismiss a lawsuit claiming he defrauded former Twitter shareholders by delaying disclosure of his initial investment in the company.
