Billionaire investor Elon Musk has completed the sale of his social media platform X to his AI company xAI in an all-stock transaction, igniting debate as it comes on the heels of a US judge dismissing his attempt to throw out a related lawsuit involving the platform.
The shift in ownership of X to xAI on March 28 intensifies the class-action lawsuit against Musk, which alleges he misled former Twitter shareholders by procrastinating on disclosing his initial investment in the platform. According to Adam Cochran, a partner at Cinneamhain Ventures, this development has made the case “significantly more complicated,” as he remarked in a March 28 post on X.
### Acquisition Could Enhance xAI’s Profile
On the very day Musk announced that “xAI has acquired X in an all-stock transaction,” a US judge reportedly rejected Musk’s motion to dismiss the lawsuit. Cochran noted that this move has “exposed his AI venture to greater scrutiny, creating a much larger scenario.”
Musk stated that the deal assigns a value of $80 billion to xAI and $33 billion to X, taking into account $12 billion in debt from the $45 billion valuation. Musk first acquired X, formerly known as Twitter, for about $44 billion in April 2022.
“xAI and the future of X are now intertwined. Today, we officially take a step to merge our data, models, computing power, distribution, and talent,” Musk declared.
“This union will unlock vast potential by combining xAI’s advanced artificial intelligence expertise with X’s extensive reach,” he added, saying, “This will help us construct a platform that not only mirrors the world but also actively promotes human advancement.”
However, Cochran argued that “Musk utilized his inflated xAI stock to pay a significantly higher price for X while still incurring an $11 billion loss on the transaction.” He claimed Musk is “shortchanging xAI investors and X investors,” with intentions to sell user data to xAI.
The AI startup is particularly recognized for its chatbot “Grok,” integrated into the X platform. When Musk introduced Grok in November 2023, he claimed it had the capability to outperform the initial version of ChatGPT in several academic assessments.
Musk explained his rationale for developing Grok was to create AI tools designed to support humanity by driving research and innovation.
While Cochran criticized Grok’s $80 billion valuation as “absurdly high,” crypto developer “Keef” held a different view, stating, “This situation is dubious in many aspects, but given the circumstances, Grok is genuinely likely one of the best models for various tasks.”