Twitter-X has valued Elon Musk’s xAI project at $50 billion, higher than the $44 billion it spent to buy the social network. Not to mention its influence on American politics.
When Elon Musk bought Twitter for $44 billion, the deal was criticized as one of the worst tech acquisitions in history.
But in just 2 years, the artificial intelligence (AI) craze along with the US presidential election has shown how successful Elon Musk's vision is in targeting a large number of users on Twitter-X as well as the influence of this social network on the US.
Super Genius
Shortly after Elon Musk's $44 billion acquisition of Twitter-X closed in October 2022, Wedbush Securities expert Dan Ives called it one of the most overpriced and expensive tech acquisitions in Wall Street history.
In theory, the $13 billion Elon Musk borrowed to buy Twitter-X would be the worst bank loan since the 2008 financial crisis as of 2022.
After taking over Twitter-X, a number of advertising agencies withdrew from the platform due to concerns that Elon Musk would affect their image. The company also had to lay off 80% of its staff, leading to service disruptions.
Investors have even reduced the platform's valuation to $9.4 billion, which is only 21% of what Elon Musk spent to buy Twitter-X.
However, everything changed rapidly after only 2 years when Elon Musk's vision gradually became evident. All the laughter was extinguished when Donald Trump was elected, bringing political influence that is difficult to quantify in money to Elon Musk for the Twitter-X platform.
Now in his role as “Minister of Government Efficiency” (DOGE), Elon Musk is tasked with cutting the budget deficit and will likely start with a campaign to streamline the government.
Even Donald Trump himself called the billionaire a "super genius" in his victory speech at the Mar-a-Lago resort in Palm Beach after the 2024 US presidential election results.
It turns out that Elon Musk's acquisition of Twitter-X, despite being so expensive that it was ridiculed by everyone as "the worst deal in history," actually brought significant benefits to the Tesla boss as calculated.
Elon Musk's targeting of Twitter-X's large user base and the social network's influence on US politics has given him the opportunity to approach Donald Trump and have significant influence in the 2024 presidential election.
Although Elon Musk spent at least $119 million on a political action committee to support Donald Trump's campaign, Business Insider (BI) believes that Twitter-X played a big role in the Tesla boss's support.
Elon Musk himself has long been an avid tweeter on Twitter-X, but the billionaire has stepped up his postings during this year's US presidential election.
Analysis by The Economist found that the proportion of Elon Musk's political posts on Twitter-X has increased from less than 4% in 2016 to more than 13% this year.
Since endorsing Donald Trump, billionaire Elon Musk has posted more than 100 times on some days to his more than 200 million followers.
A study released this month by the Queensland University of Technology found that Elon Musk may have tweaked Twitter-X's algorithm to increase the reach of himself and other accounts with a pro-Republican bias.
Target Global co-founder Shmuel Chafets said Twitter-X has become a powerful tool in Musk's ecosystem, serving as "a platform for promotion and influence, similar to how Warren Buffett leverages Berkshire Hathaway's annual shareholder meeting and his shareholder letters."
50 billion USD
According to BI, Twitter-X not only serves as a political megaphone for Elon Musk but also a lucrative source of training data for the AI project.
It should be noted that Elon Musk's xAI project was valued at $50 billion just 16 months after its launch.
This new valuation means xAI has surpassed the $44 billion purchase price of Twitter-X paid by Elon Musk.
The xAI project has raised $5 billion in a funding round that the Wall Street Journal (WSJ) reported was backed by the Qatar Investment Authority and Sequoia Capital.
In fact, Elon Musk launched xAI in July 2023 as a springboard to join the AI race after OpenAI's success with ChatGPT. Ironically, Elon Musk was a co-founder of OpenAI but later left due to disagreements.
Elon Musk's xAI startup is said to have significantly narrowed the gap with its rivals by using Twitter-X's user data source to train AI models.
Ellen Keenan O'Malley, an expert at law firm EIP, believes that the Twitter-X user database is a huge advantage for xAI over ChatGPT, and even a potential driver of the project's increasing valuation.
Although the number of Twitter-X users has decreased, as of May 2024, this social network still has 600 million monthly active users.
“This is a level that neither OpenAI nor any other third party can access, or at least not easily, which gives xAI a huge competitive advantage and therefore makes it a valuable company,” O’Malley added.
Wired previously reported that access to 0.3% of Twitter-X's data is valued at around $500,000 a year by Elon Musk, making it a lucrative business.
Clearly, Elon Musk's previous $44 billion bid for a user database shows the billionaire's foresight.
"Critics can say whatever they want, but it's clear that Elon Musk has been able to leverage Twitter-X for both business and personal purposes, demonstrating foresight and thinking many steps ahead of his contemporaries. This deal could even be profitable if Elon Musk decides to sell or take Twitter-X public now," admitted Chafets, founder of Target Global.
*Source: BI, WSJ, Wired
