Elon Musk announced on Friday that his social media company, X, sold its artificial intelligence startup, Xa, in a rare financial arrangement within the business empire of the world’s wealthiest man.
The total stock trading valued Xai at $80 billion and X at $30 billion. X’s price fell from the $44 billion it paid to social media companies in 2022, but it was still higher than the $12 billion valuation given by some X investors recently. 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. Xai’s chatbot, Grok, is trained with data posted by X users and is available in X. A banker at X for X informed 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, we have officially taken a step towards combining data, models, calculation, distribution, and talent. 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 highlights Musk’s ability to manipulate different parts of his business empire. He merged the company that had lost value, X, with the company that had gained value, Xai, in a strategic move. Musk previously executed a similar strategy in 2016 when he used Tesla’s stocks to acquire SolarCity.
While Tesla is publicly traded, most of Musk’s other companies, like SpaceX, The Boring Company, and Neuralink, are private and less transparent. Musk often reallocates resources and employees among his businesses, operating them as a single entity.
X’s CEO, Linda Jaccarino, expressed concerns about the future, indicating a downturn in fortunes. X and Xai operate in different orbits, with X being more widely known. Since Musk’s acquisition, X has struggled financially due to controversial decisions and a decline in advertiser confidence.
According to Fidelity, X’s valuation plummeted to $12 billion in December. Some advertisers have returned to X recently, hoping for Musk’s favor, but the company has not yet achieved financial stability.
Xai was founded by Musk in 2023 to compete with OpenAI. Musk’s strategic moves and financial decisions have had a significant impact on X’s performance and revenue generation.
Despite challenges, the company remains resilient and continues to work towards its revenue targets. X’s focus on innovation and growth reflects its commitment to delivering value in the tech industry.
Musk’s vision for Xai and X reflects a strategic alignment of data, technology, and talent. The convergence of these resources aims to revolutionize the user experience and enhance knowledge discovery.
With Musk at the helm, X and Xai are poised to unlock new potentials and drive growth in the tech ecosystem. The integration of their capabilities will redefine the boundaries of innovation and propel the companies to new heights.
As Musk continues to navigate the complexities of business and technology, his visionary leadership will shape the future trajectory of X and Xai. The synergy between these entities promises a transformative journey towards excellence and impact in the digital landscape.
News of the trading deal on Friday was met with enthusiasm within X. Jaccarino’s message to employees underscores the excitement and optimism surrounding the company’s future prospects.
As X and Xai embark on a new chapter of growth and innovation, the resilience and determination of the team will drive them towards success. Musk’s strategic vision and leadership will guide the companies towards a future filled with limitless possibilities and achievements.
Ryan Mac Reports of contributions.
Source: www.nytimes.com
