Elon Musk's xAI Startup Acquires Platform X (formerly Twitter) for $33B

In a surprising move, Elon Musk's xAI startup has just acquired the platform X, formerly known as Twitter, at a jaw-dropping $33 billion valuation

Elon Musk has made a surprising move by acquiring his own startup, xAI, in a deal that values the platform at $33 billion, according to a Friday announcement.

This follows a turbulent period for the social media platform, which was renamed X from Twitter earlier this year.

The billionaire said in an X post that the total value of his xAI company is now $80 billion, while the social media platform X (formerly Twitter) is valued at $33 billion.

He noted that the value of X is $45 billion when including $12 billion of debt. Musk added that the purchase of X by xAI was done through an all-stock transaction.

XAI Holdings, the newly formed company following the merger, is valued at over $100 billion, excluding debt. Morgan Stanley served as the sole banker for the deal, representing both sides.

Elon Musk shared that the futures of xAI and X are now closely linked. By combining xAI’s cutting-edge AI technology with X’s vast audience and resources, he believes that this move will unlock huge potential for both companies. Since Musk owns both X and xAI, the deal is likely a stock swap, with X investors getting xAI shares.

Both the companies have mutual investors including venture firms like Andreessen Horowitz, Sequoia Capital, Fidelity, Vy Capital, and Saudi Arabia’s Kingdom Holding Co.

Linda Yaccarino, whom Musk hired as CEO of X, wrote in a post after Friday’s announcement, “The future could not be brighter.”

“The move appears sensible, considering the current trend of increased investments in AI, data centres, and computing,” said analyst Paolo Pescatore, founder of PP Foresight.

Elon Musk’s AI startup, xAI, which was founded earlier this year, recently secured $6 billion in funding, bringing its valuation to $40 billion.

Earlier this year, Musk bought Twitter for $44 billion, focusing on cutting costs and reducing content moderation at the platform. This move led to a significant drop in advertising revenue.

Meanwhile, Musk’s xAI startup, which is an emerging rival to OpenAI, has been promoting its chatbot, Grok, using data from X users.

After donating nearly $300 million to Trump and other Republican causes for the 2024 campaign, Musk was appointed head of the Department of Government Efficiency (DOGE), where he is focused on cutting government jobs, reducing spending, and rolling back regulations.

This position gives Musk the power to make changes that could benefit his business empire. With Trump back in office and Musk now in the executive branch, X has become the go-to platform for staying updated on the Trump administration.

Musk is also using X to share updates on his work with the Department of Government Efficiency.