Why Elon Musk sold X to xAI? How will it benefit the users? World’s richest man explains

In a shock move, Elon Musk on Friday sold his social media platform X to his own xAI artificial intelligence company in a $33 billion all-stock deal.
While making the announcement, Musk further said that the deal included $12 billion of debt — which raises the overall valuation for X to $45 billion.

Why Musk sold X to xAI?

On why he decided to merge the two companies, he said in statement on X, “xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent.

Speaking about xAI, Musk said, “Since its founding two years ago, xAI has rapidly become one of the leading AI labs in the world, building models and data centers at unprecedented speed and scale.”

He also pointed out highlighted that X, digital town square where more than 600M active users go to find the real-time source of ground truth, has also undergone a profound change, and stated, “has been transformed into one of the most efficient companies in the world, positioning it to deliver scalable future growth.”

“The combination values xAI at $80 billion and X at $33 billion,” Musk revealed.

Musk acquired Twitter for $44 billion in late 2022, incurring substantial debt. Since then, he has cut jobs, changed user features, reinstated banned accounts, and rebranded Twitter as X. The merger is strengthen xAI, especially with the addition of its chatbot, Grok.

How will it benefit the users?

Musk explains, “This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.”

“The combined company will deliver smarter, more meaningful experiences to billions of people while staying true to our core mission of seeking truth and advancing knowledge. This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress”

• AI powered functionalities: Users can expect new AI-powered functionalities, including AI-generated content suggestions, personalized feeds, and improved moderation tools to refine user experiences, Reuters said.
• Privacy concerns: Experts have raised concerns that the merger may lead to increased data collection and analysis to train AI models, potentially impacting user privacy, TechCrunch said.
• Move towards ‘everything app’: Musk has repeatedly mentioned his vision of turning X into an “everything app,” which could lead to significant changes and service expansions on the platform, The Verge revealed.

X CEO Linda Yaccarino echoed Musk’s optimism regarding the deal, posting, “The future could not be brighter.”

X recently raised nearly $1 billion in new equity, bringing its valuation close to Musk’s 2022 purchase price. The platform is also set for its first year of ad revenue growth since his takeover.

Musk did not ask investors for approval for the merger but told them that the two companies had been collaborating closely and the integration will drive deeper integration with Grok.

What analyst say about the deal?

"This development feels surprising and somewhat unexpected," PP Foresight analyst Paolo Pescatore said, as reported by Reuters. "To a certain extent, it closes a chapter in the turbulent saga of X."

"The choice of $45 billion is not a coincidence," said D.A. Davidson & Co. analyst Gil Luria. "It is $1 billion higher than the take-private transaction for Twitter in 2022" and he can share the value of the xAI business with Twitter co-investors.