Elon Musk has sold his social media company X to his artificial intelligence start-up xAI in an all-stock deal valued at $80 billion for xAI and $33 billion for X. Both privately held companies already shared resources like engineers, and the move combines their data, models, and talent to deliver better experiences to users. The deal reflects Musk’s ability to maneuver within his business empire, as he merges a company losing value with one gaining value.
X, known for Musk’s political views campaign, has seen a decline in revenue and valuation since its acquisition by Musk in 2022. On the other hand, xAI raised $6 billion in December, valued at $35-40 billion, and has experienced rapid growth. The symbiotic relationship between X and xAI has led investors to welcome the transaction, as revenues from xAI are paying X to license its data.
The deal’s success will depend on how shares in the new combined company are distributed to investors from each. While the move has been celebrated within X, some experts question Musk’s method of merging companies to make one look like a success using another. This unusual arrangement shows Musk’s unconventional approach to managing his various companies, including Tesla, SpaceX, Neuralink, and the Boring Company, under his Musk enterprise. Investors will be watching closely as the impact of the deal unfolds on both X and xAI.
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