The social media site X — formerly Twitter — has been acquired by Elon Musk’s A.I. company xAI. Interface. The deal, structured as an all-stock transaction, gives X a $33 billion valuation, for a $45 billion total valuation including $12 billion of existing debt. This is a strategic combination to merge both organisations’ data, models, processing capacity, distribution strength and talent. The news was announced by Mr. Musk, who is also the chief of Tesla and SpaceX, on X, a sign of how closely intertwined the futures of those two companies are. The buy is aimed at helping xAI accelerate the training of its chatbot, Grok, with X’s troves of data.
The Financial Cost — and What Investors Need to Know
It gave xAI an $80 billion valuations for the acquisition. Saudi Arab investor His Royal Highness Prince Alwaleed bin Talal said through his investment company holding the transaction would take the value of their investments to $4 billion to $5 billion. That means the valuation of the X — debt included — is extremely similar to D.A. Davidson analyst Gil Luria tweet — 2022 take-private transaction for Twitter. One investor in xAI, who spoke on the condition of anonymity, said the deal was indicative of what he viewed as Mr. Musk consolidating leadership across all of his various companies. Mr. Musk also told stakeholders about how closely the companies were working together and how integral the deal was expected to be to Grok, but he didn’t formally seek approval from investors, the investor said. This will ideally improve the financial aspects of the deal for all parties, particularly the experience of those who purchased X’s debt from the banks, but are now reassessing their positions with a dramatically higher price and based on increased investor interest in AI.
How xAI is differentiating and building its technology
Founded some two years ago, xAI just scored funding of $10 billion, pushing the company’s valuation to $75 billion. It works in a competitive space that includes Microsoft-backed OpenAI and Chinese startup DeepSeek. The company’s foray into data centre capacity, especially the “Colossus” supercomputer cluster in Memphis, Tennessee, reflects its aspirations in AI. Grok-3 is the newest version of its chatbot tech, released in February. Similar to GPT-4, the xAI Large Language Model now acts as text bots for X’s text inputs.
X And the State of The Market Evolution
Mr. Musk’s purchase of Twitter came with many changes to how the platform functioned, including layoffs and a new approach to selling advertising. The latest indicators that brands are returning to X come as Mr. Musk wields greater power in the US administration. The $13 billion of loans that financed the deal, which banks originated two years ago, was issued and retained by seven banks before getting sold successfully. There was also a recent increase in investor interest in AI, a better operating performance from X Adapt over its last two quarters, and this deal supported this narrative. That is indeed a good sign for the entity those who accepted its debt obligations.
Analysing the Legal Framework and Regulatory Exposure
Separately, in the US, a judge has denied Mr. Musk’s bid to dismiss a lawsuit from former Twitter shareholders who accused the billionaire of fraud. The lawsuit centres on the timing of Mr. Musk’s disclosure of his initial investment in the company. Such a massive scale may invite regulatory scrutiny in and of itself, specifically regarding the unusual pairing of xAI and X —a pair that also hasn’t previously been clarified regarding how the leadership of X will be structured going forth. The regulatory environment around AI and social media companies is very fluid, and a merged company may have regulatory headache over data privacy, competition and content moderation.
