What happened?
Elon Musk announced the sale of the social platform X to his artificial intelligence company xAI, stating that after the merger, the data, computing power, and technical talent of both companies would be deeply integrated.
Musk is currently embroiled in a lawsuit due to delays in disclosing his Twitter (the predecessor of X) holdings. Some foreign media believe that the merger of the two companies will complicate this litigation, and analysts have pointed out that Musk’s method of acquiring X through xAI could result in losses for investors.
Musk announces the sale of X to xAI
Last week, Musk posted on the social platform, announcing that he would sell X to his own artificial intelligence company, xAI, for a transaction amount of $45 billion, slightly higher than the price he paid when acquiring X in 2022. However, this transaction includes $12 billion in debt, meaning the actual valuation of X is only $33 billion.
Although X’s valuation is lower than the price Musk paid for the acquisition, reports from several investment institutions indicate that X’s recent operating conditions have improved after experiencing advertiser withdrawals and an influx of controversial content. Some major brands, such as Amazon and Apple, have begun to reinvest in advertising expenditures.
Musk mentioned that after the merger of xAI and X, the data, computing power, and technical talent of both entities will undergo deep integration, accelerating the development and application of AI technology on both platforms. The “Grok” AI chatbot under xAI has already been integrated into the X platform, and more new AI features may emerge in the future, providing users with a more diverse experience.
Legal and financial disputes arise
This transaction of X occurs at a time when Musk faces legal troubles. Not long ago, Musk was accused of delaying the disclosure of his Twitter (the predecessor of X) holdings, which resulted in shareholder losses, and a U.S. Manhattan federal judge rejected Musk’s motion to dismiss the case last week. Foreign media pointed out that this transaction between the two companies will complicate the ongoing litigation and believe that this matter involves not only X but may also affect xAI.
In addition to legal disputes, Adam Cochran, a partner at the crypto investment firm Cinneamhain Ventures, stated that Musk used overvalued xAI stock to acquire X in this transaction, and he remains in a loss position after the deal. Cochran believes that such actions could adversely affect investors in both xAI and X, resulting in losses. He further hinted that there might be a deeper purpose behind the transaction, suggesting that Musk may intend to sell user data to xAI.
Musk’s sale of X to xAI demonstrates his ambition in the artificial intelligence industry. However, the financial maneuvers and legal controversies behind the transaction will undoubtedly complicate matters further. For Musk, balancing the triple challenges of business, law, and technology will be a key test he continues to face in the future.
Sources: Cointelegraph, CNN