- Elon Musk has transferred ownership of X (formerly Twitter) to his AI startup xAI in an all-stock transaction, valuing X at $33 billion and xAI at $80 billion.
- The timing coincides with a US judge rejecting Musk’s attempt to dismiss a class-action lawsuit that accuses him of defrauding former Twitter shareholders.
- Critics argue the transaction may expose xAI to legal liabilities while potentially undervaluing X and overvaluing the AI startup.
Elon Musk has sold his social media platform X to his Artificial Intelligence company xAI in an all-stock transaction, a move that has generated significant controversy in both tech and financial circles. The ownership transfer occurred on March 28, the same day a U.S. judge rejected Musk’s bid to dismiss a lawsuit related to his initial Twitter acquisition.
According to Musk’s announcement, the deal values xAI at $80 billion while placing X’s worth at $33 billion, which accounts for $12 billion in debt from the original $45 billion acquisition price. This represents a significant markdown from the approximately $44 billion Musk paid to acquire Twitter in April 2022.
"xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent," Musk said in his announcement post on X.
Venture partner Adam Cochran from Cinneamhain Ventures said the timing makes the class-action lawsuit against Musk "a whole lot spicier," potentially extending legal exposure to xAI. The lawsuit, which a judge reportedly refused to dismiss, accuses Musk of defrauding former Twitter shareholders by delaying disclosure of his initial investment in the platform.
Cochran further criticized the transaction, suggesting Musk "used his pumped up xAI stock to pay multiple times over value for X, but still take an $11B loss on the transaction." He argued this move disadvantages both xAI and X investors, while facilitating the sale of user data to xAI.
The AI startup is best known for its chatbot "Grok," which is integrated into the X platform. When Musk launched Grok in November 2023, he claimed it outperformed OpenAI‘s first ChatGPT version on several academic benchmarks.
"This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach," Musk stated, adding that the merger would create "a platform that doesn’t just reflect the world but actively accelerates human progress."
While some critics like Cochran described the $80 billion valuation for xAI as "insanely dumb," others disagree. Crypto developer "Keef" said, "This is shady all around, but given the day, Grok is genuinely probably the top model for various tasks."
When Musk initially introduced Grok, he explained that the AI tool was designed to assist humanity by supporting research and innovation – a mission that now appears intertwined with X’s massive user base and data resources.
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