New York: Billionaire Elon Musk says his xAI artificial intelligence startup has acquired the X platform at a valuation of US$33bil , marking a surprise twist for the social network formerly known as Twitter.
“The combination values xAI at US$80bil and X at US$33bil,” he wrote in an X post last Friday.
The value of X is US$45bil when including US$12bil of debt, he said. It was an all-stock transaction.
“xAI and X’s futures are intertwined,” he said. “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.”
Both companies are privately held, which means they are not required to disclose their finances to the public.
Musk, the world’s richest person, acquired Twitter for US$44bil in 2022, a transaction that included debt.
Musk, who serves as chief executive of Tesla and SpaceX as well as an adviser to President Donald Trump, bought the site then called Twitter for US$44bil in 2022, gutted its staff and changed its policies on hate speech, misinformation and user verification and renamed it X.
After taking control of the platform, he slashed jobs, revamped features and allowed some banned accounts to return.
He also has used the service to promote Grok, a chatbot developed by xAI. The startup is competing with AI firms such as OpenAI, which Musk co-founded before an acrimonious split with that company.
“This helps integrate the system quite nicely,” said Shweta Khajuria, a Wolfe Research analyst who views the deal as a positive for both of Musk’s businesses.
“This gives Grok a unique advantage by providing access to vast amounts of training data while also allowing xAI to control – or even cut off – that data flow to other companies.”
Musk had previously canvassed potential investors for an xAI funding round at a valuation of about US$75bil, Bloomberg News reported in February.
xAI investors have included Sequoia Capital, Andreessen Horowitz, Fidelity Investments and BlackRock Inc.
“Since its founding two years ago, xAI has rapidly become one of the leading AI labs in the world, building models and data centres at unprecedented speed and scale,” Musk said in the post.
X, meanwhile, “has been transformed into one of the most efficient companies in the world, positioning it to deliver scalable future growth”, he said.
The social network raised close to US$1bil in new equity from investors, Bloomberg reported this month, in a deal that gave the company a valuation in line with when Musk took it private in 2022.
The company also is on pace for its first year of advertising revenue growth since the Musk takeover.
The company is projected to generate US$1.31bil in US advertising sales this year, an increase of 17.5%, according to research firm Emarketer.
Globally, X’s ad sales are estimated to be US$2.26bil this year, up 16.5%.
X’s CEO, Linda Yaccarino, acknowledged the xAI deal in her own post last Friday, saying, “The future could not be brighter.” — Bloomberg
