Elon Musk said Friday that his social media company X sold his artificial intelligence startup Xa in an unusual arrangement showing financial manipulation within the world's wealthiest man's business empire.
Total stock trading valued Xai at $80 billion and X at $30 billion, with X price falling from the $44 billion it paid to social media companies in 2022, but higher than the $12 billion valuation that some X investors recently allocated. Xai's final valuation in the December funding round was about $40 billion.
The two companies are private and already share important resources such as engineers. A chatbot created by Xai called Grok is trained with data posted by X users and is available in X. Last month, a banker at X for X told investors that a portion of the social media company's revenue came from Xai.
In his post, Musk wrote, “The future of Xai and X are intertwined.”
“Today,” he said, “We have officially taken a step towards combining data, models, calculation, distribution and talent,” he added, “The total company will provide a smarter, more meaningful experience to billions of people, while still remaining true to our core mission of improving knowledge in search of truth.”
The deal shows how Musk can play with different parts of his business empire. In this case, he folded the company that had lost its value, the company that had acquired its value, the company Xai. Musk previously performed the same thing in 2016. He used Tesla's stocks to purchase SolarCity, a clean energy company where he was the largest shareholder and his cousin, Lyndon Lib, was the chief executive.
Tesla is a publicly traded company that requires shareholders to disclose financial and other information, but most of Musk's companies are private and more opaque. These include Rocket Manufacturer SpaceX, tunneling startup The Boring Company, and Brain Interface Company Neuralink. Musk often moves resources and employees between his businesses, running his various businesses as one large company, contrary to traditional business norms.
X's CEO Linda Jaccarino wrote to X, “The future didn't brighten.” X declined to comment.
X and XAI are in various orbits. X is much more widely known, and Musk uses it as an abuse ram to advance political views, whipping up campaigns on the platform for President Trump, support for government cost-cutting efforts known as government efficiency.
However, X's financial outlook has declined since Musk acquired the company. The majority of the revenue from social media sites comes from advertising, but brands have become more cautious about spending on X as Musk has been controversial and abandoning the company's content moderation rules in favor of more vibes.
X's valuation slumped to $12 billion in December, according to Fidelity, one of the investors who took part in Musk's acquisition.
Some advertisers have recently returned to X, but they hope for Curry's favor as Musk has become Trump's close adviser, but the company has not yet regained financial stability. In January, Musk told employees that the revenues were “unimpressive” and that the company was “barely not broken.”
X continued to struggle to reach its revenue target this month, according to an internal email seen by The New York Times. As of March 3rd, X was offering $91 million this year. The message says it is well below its first quarter goal of $153 million.
“It's time to sprint to the finish line,” the email said, urging salespeople to pick up the pace.
The company also has its roots in Memphis, where Musk built what he says will become the world's largest supercomputer.
Musk started Xai in 2023 and competed with Openai, the AI ​​lab that he co-founded and created ChatGpt. Musk left Openai in 2018 and has since sued the company and offered to win it.
(New York Times sued Openai and its partner Microsoft in December 2023 for copyright infringement of news content related to AI Systems. Openai and Microsoft denied the claim.)
Last month, X's banker sold much of the company's debt. This is a task that was considered nearly impossible before Trump took office. Because Xai had paid X to license the data, the investment that X's revenue had improved and the debt bought its debt concentrated its funds from one of Musk's companies.
News of Friday's trading was celebrated within X.
“This is a very exciting step for all of us,” Jaccarino wrote in an email to employees seen by the Times.
Ryan Mac Reports of contributions.
