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xAI Secures Acquisition of Social Media Platform X in All-Stock Transaction
In a significant move for the artificial intelligence (AI) and social media sectors, Elon Musk’s AI venture, xAI, has acquired the social media platform X, formerly known as Twitter, several years after Musk’s initial purchase of X for $44 billion. Musk disclosed the all-stock agreement via a post on X, valuing xAI at $80 billion and X at $33 billion, which accounts for $12 billion in debt assumed during Musk’s initial acquisition. “This integration will unlock substantial potential by merging xAI’s cutting-edge AI capabilities and expertise with X’s expansive reach,” Musk stated.
X CEO Linda Yaccarino Expresses Optimism
Despite the deal potentially reflecting an approximate $11 billion reduction in value compared to the 2022 acquisition price, X CEO Linda Yaccarino responded positively, declaring, “The future could not be brighter.”
Strategic Rationale: Integrating AI with Social Media Data
While efforts to transform X into a comprehensive “everything app” have not yet fully materialized, Musk has consistently linked xAI and X since xAI’s inception in the summer of 2023. He has emphasized that access to the extensive data resources of X would provide xAI with a considerable advantage. xAI’s Grok AI tool has been prominently featured within the X application. Recently, Grok’s accessibility expanded beyond X with its integration into the Telegram messaging platform.
Precedent of Company Mergers Under Musk’s Control
This arrangement echoes a prior instance of Musk consolidating his business interests. In 2016, Tesla, then known as Tesla Motors, acquired SolarCity for $2.6 billion. Musk was SolarCity’s largest individual shareholder, and his cousin Lyndon Rive served as CEO. Following the merger, Tesla Motors dropped “Motors” from its corporate name. Musk did not reference the Tesla-SolarCity merger in his announcement regarding xAI and X. His recent remark at a company-wide Tesla meeting about having “17 jobs” adds a layer of complexity, leaving unclear whether this new transaction increases or decreases his total commitments.
Focus on “Digital Town Square” and Future Ambitions
Musk’s announcement also reiterated his vision of X as the “digital town square,” though it omitted previous pronouncements about the platform managing “someone’s entire financial life.” As reported in January, xAI personnel were also employees of X, utilizing company-provided laptops and possessing access to X’s codebase. Musk previously suggested that X investors would possess a 25 percent stake in xAI, but this had not been realized for X employees holding company shares as of January.
Valuation Trends and Market Context
While X’s assessed value reportedly declined following the 2022 takeover before a recent recovery, xAI’s valuation has surged, mirroring the growth of other AI-focused entities such as Nvidia and OpenAI. Musk’s relationship with OpenAI has evolved from co-founder and early investor to competitor and legal adversary since his departure in 2018. The Wall Street Journal reported that xAI’s valuation reached $50 billion in a funding round last November, exceeding double its $24 billion valuation in a prior funding round in spring 2024.
Elon Musk’s Official Statement
@xAI has acquired @X in an all-stock transaction. The combination values xAI at $80 billion and X at $33 billion ($45B less $12B debt).
Since its founding two years ago, xAI has rapidly become one of the leading AI labs in the world, building models and data centers at unprecedented speed and scale.
X is the digital town square where more than 600M active users go to find the real-time source of ground truth and, in the last two years, has been transformed into one of the most efficient companies in the world, positioning it to deliver scalable future growth.
xAI and X’s futures are intertwined. 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. The combined company will deliver smarter, more meaningful experiences to billions of people while staying true to our core mission of seeking truth and advancing knowledge. This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress.
I would like to recognize the hardcore dedication of everyone at xAI and X that has brought us to this point. This is just the beginning.
Thank you for your continued partnership and support.