What Happened?
Elon Musk announced the sale of the social media platform X to his artificial intelligence company xAI, stating that after the merger, the data, computational capabilities, and technical talents of both entities will be deeply integrated.
Musk is currently embroiled in legal issues due to delays in disclosing his Twitter (the predecessor of X) holdings, and foreign media speculate that the merger of the two companies will complicate this lawsuit further. Additionally, analysts point out that Musk’s method of purchasing X through xAI may lead to losses for investors.
Musk Announces Sale of X to xAI
Last week, Musk posted on social media announcing that he would sell X to his own artificial intelligence company, xAI, for a transaction amount of $45 billion, slightly above the price he paid for X in 2022. However, this transaction includes $12 billion in debt, thus the actual valuation of X is only $33 billion.
Although X’s valuation is lower than the price Musk acquired it for, reports from several investment institutions indicate that X’s recent business condition has improved after experiencing advertiser withdrawals and an influx of controversial content, with some major brands like Amazon and Apple beginning to reinvest in advertising expenditures.
Musk mentioned that after the merger, the data, computational capabilities, and technical talents of xAI and X will be deeply integrated, 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 future new AI features are expected to be introduced, providing users with a more diverse experience.
Legal and Financial Controversies
This transaction involving X occurs at a time when Musk is facing legal troubles. Not long ago, Musk was accused of delaying the disclosure of his Twitter (the predecessor of X) holdings, causing harm to shareholders, and a federal judge in Manhattan rejected Musk’s request to dismiss the case last week. Foreign media indicate that this transaction between the two companies will complicate the lawsuit situation further, and it is believed that this matter may not only involve X, but also potentially affect xAI.
In addition to legal controversies, 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 state of loss after the deal is concluded.
Cochran believes that such maneuvers will adversely affect investors in both xAI and X, causing them losses. He further hinted that there may be deeper motives behind the deal, suggesting that Musk might 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, legal issues, and technology will be a key test he continues to face in the future.
Source: Cointelegraph, CNN