Elon Musk Sells X to AI
Elon Musk on Friday announced that he has sells off his social media company, X (formally twitter), to xAI, his artificial intelligence AI company.
The new deal includes $12 billion of debt on X making the deal valuation of $33 billion.
Musk said that the combined platform will “deliver smarter, more meaningful experiences.” In his post, he said the value of the combined company was $80 billion.
“xAI and X’s futures are intertwined,” Musk said in a post on X. “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.”
Musk didn’t announce any immediate changes to X, although xAI’s Grok chatbot is already integrated into the social media platform.
Why did Musk Sell X
Musk has made a slew of changes to the platform once known as Twitter since he purchased it in 2022, prompting some major advertisers to flee. He also laid off 80% of the company’s staff, suspended the platform’s verification system and restored suspended accounts of White supremacists within months of the acquisition.
Musk has been working to establish himself as a leader in the AI space, a big focus for both the Trump administration and the tech industry. Earlier this year, he led a group of investors attempting to purchase ChatGPT maker OpenAI for nearly $100 billion, causing another escalation in the longtime rivalry between Musk and OpenAI CEO Sam Altman.
It’s unclear precisely how the acquisition will benefit Musk’s AI ambitions. But the tighter integration with X could allow xAI to push its latest AI models and features to a broad audience more quickly.
A significant reversal of X’s fortunes
Big advertisers, who had largely abandoned X after hate speech surged on the platform and ads were seen running alongside pro-Nazi content, have begun to return. Amazon and Apple are both reportedly reinvesting in X campaigns again, a remarkable endorsement from two brands with mass appeal.
According to several recent reports, the brand’s stabilization helped a group of bondholders, who had been deep underwater in their investments, sell billions of dollars in their X debt holdings at 97 cents on the dollar earlier this month — though with exceedingly high interest rates.
A big part of why X’s valuation has rebounded in recent months is xAI, which X reportedly held a stake in. Last month, xAI was seeking a $75 billion valuation in a funding round, according to Bloomberg.
But the biggest factor in X’s stunning bounce-back is almost certainly Musk himself: Musk’s elevation to a special government employee under President Donald Trump has empowered the world’s richest person with large sway over the operations of the federal government, which he has rapidly sought to reshape.
Investors betting on X are probably making a gamble on its leader, not its business. Last year, Musk turned X into a pro-Trump machine, using the platform to boost president Trump’s campaign. In posts to his 200 million followers, he pushed racist conspiracy theories about the Biden administration’s immigration policies and obsessed over the “woke mind virus,” a term used by some conservatives to describe progressive causes.
And now, with Trump back in office and Musk working in the executive branch, X has once again become the most important social media platform for following and interacting with the Trump administration. Musk has also used X to broadcast some of his changes with his Department of Government Efficiency.
