Elon Musk Folds X Into xAI, Creating a $113 Billion Juggernaut

X and xAI Merge in All-Stock Transaction

Introduction

In a significant move, xAI, a leading AI lab, has acquired X, formerly Twitter, in an all-stock transaction. The merger values xAI at $80 billion and X at $33 billion, according to Elon Musk, the owner of both companies.

The Merger

The acquisition is a consolidation of Musk’s tech businesses, with xAI, the developers of Grok, acquiring X. Musk purchased Twitter for $44 billion in April 2022, and by October 2024, Fidelity Investments adjusted the valuation of its stake in X, estimating the company’s overall value to be approximately $9.4 billion.

Valuation

Though its valuation had recovered somewhat by December 2024, it was still down a whopping 77% from Musk’s purchase price. The $33 billion valuation of X, therefore, raises questions about the methodology used to arrive at this figure.

Context

Musk launched xAI in July 2023, a year after purchasing Twitter. The goal of xAI was to "understand reality," and an ongoing feud with former business partner OpenAI CEO Sam Altman was also a driving factor. xAI has rapidly become one of the leading AI labs in the world, building models and data centers.

The Deal

The combined company will deliver smarter, more meaningful experiences to billions of people while staying true to their core mission of seeking truth and advancing knowledge. The platform boasts over 600 million active users, but Meta’s rival social media platform, Threads, and Bluesky have been trying to woo away users.

Reactions

Some social media users have jeered at the announcement, mocking the apparently sizable valuation boost in a deal between two of Musk’s own companies. "I also sold my 2008 Honda Accord to myself for $1 million," said New York Times tech reporter Ryan Mac on Bluesky. "Wait a minute…what’s different though… other than on paper?" an X user asked.

Conclusion

The merger between xAI and X is a significant development in the tech industry, with potential implications for the future of social media and AI research. The combined company’s focus on delivering smarter, more meaningful experiences to billions of people is an exciting prospect, but the valuation of X raises concerns about the methodology used to arrive at this figure.

FAQs

Q: What is the value of xAI and X following the merger?
A: The merger values xAI at $80 billion and X at $33 billion.

Q: Why did Elon Musk launch xAI?
A: Musk launched xAI to "understand reality," and an ongoing feud with former business partner OpenAI CEO Sam Altman was also a driving factor.

Q: What is the current valuation of X?
A: The current valuation of X is $33 billion, according to Elon Musk.

Q: What are the implications of the merger for social media and AI research?
A: The combined company’s focus on delivering smarter, more meaningful experiences to billions of people is an exciting prospect, but the valuation of X raises concerns about the methodology used to arrive at this figure.

Q: What is the current user base of X?
A: The platform boasts over 600 million active users.

Q: What are the plans for the combined company?
A: The combined company will deliver smarter, more meaningful experiences to billions of people while staying true to their core mission of seeking truth and advancing knowledge.