He has done this move before with Tesla buying Solar City. When you do a deal with yourself you can assign any value you want to assets, it isn’t a competitive process. In the previous case Solar City was dying but its acquisition by Tesla was pitched as a great synergy.
Its not like the courts are investment banks with an evaluation arm. They are just judging if anything reaches the point where shareholders were legally harmed, which still gives a lot of gray area to the acquiring company.
Grandparent is not correct, you can’t just assign “whatever” value in self-dealing transactions.
The SEC and IRS weren’t born yesterday. It reminds me of people who come up with basic self-dealing transactions with some tax benefit and act like the idea wasn’t around 100 years ago and that regulations aren’t already in place.
Regardless of the faith you have in the courts assessment time has shown the more critical opinion to be true. Solar City was a dead company, none of the promises they made has amounted to anything, they aren’t producing any products or revenue, and the deal has been shown to be self dealing in order to bail out his brother.
Where are the solar roof tiles? What’s happened to the tax payer funded factory in NY?
Surely a theoretically disgruntled xAI shareholder is going to have a harder time here since they're both private companies and given Elon's proximity to any potential regulators.
Company directors are generally given wide latitude in what they can do without breaching fiduciary duty, so such lawsuits were always going to be an uphill battle.
"Surely a theoretically disgruntled xAI shareholder"
they know what they buying when elon promotes his lmao, elon twitter deal is backed by saudi. elon himself come to saudi asking for an investment from royal prince saudi
safe to say that if they want spent 40 billion for twitter, they would spent more with AI flavored company (they are saudi after all)
The only way to determine fair market value is by having a free market sale.
For example, I had a run-in with the property tax assessor. He assessed my house at an unreasonably high price. I filed a protest, and then had a conversation with him. I offered to sell him the house at a considerably lower price, and he could then flip it for what he assessed it at.
He refused.
I eventually did sell it, for considerably less than the assessed value.
As anyone following stocks knows, the fair market value of a company can vary dramatically minute by minute.
The solar city acquisition was for "only" $2.6 billion. This deal is way bigger. I'm not sure what the Tesla valuation was at the time of that deal, but I have to imagine it's proportionally way bigger too. A $45 billion acquisition when the acquirer, xAI, has an $80 billion valuation will threaten the integrity of xAI. Particularly because that's just a paper valuation and xAI doesn't have much of any revenue.
If I were an investor in xAI I would be furious about this. They're almost certainly overpaying for Twitter and there's definitely going to be litigation.
Edit: It sounds like the combined entity is taking on Twitter's $12 billion of debt from when it originally went private. As of last December xAI had raised "more than $12 billion" in total [1], so the deal attaches Twitter's debt to that ~12 billion pot of VC money. Unless I'm really misunderstanding something this deal looks like a bailout of Twitter and a huge new liability for xAI.
It's definitely possible my hot take is wrong and the xAI investors support the transaction. I hope so because if not there's going to be some brutal lawsuits over this.
xAI is a private company. I very much doubt that the current VC investors will ever litigate this.
They are all waiting for some other favour for taking this on either explicitly or implicitly.
Also, I would like to see a Venn diagram of the investors in xAI and SpaceX.
Solar City was a debacle, it died immediately. Tesla's story in court was they were about to go bankrupt, and it was a financial necessity to redeploy all Solar City assets, including all employees, to Model 3 production.
It breaks my heart because my rust belt hometown got a substantial investment from the state they had been chasing for a couple decades.
$700M of the Buffalo Billion went to a Solar City facility, Elon even said they were going to build the solar roofs there!
New York State didn't dare pick a fight with him as the factory set empty for years.
Putting aside the fact that you can't justify fraud by post-hoc outcomes (Shkreli and SBF also claimed that they didn't commit fraud because they would or did win it back), I doubt any of the Tesla Energy division income (even assuming the accounting is okay) is a result of businesses that can be traced back to Solar City.
I suspect most of the business is battery storage and the Powerwall was introduced by Tesla before the acquisition.
So what, Tesla energy is a separate division? Tesla solar products are basically dying in the solar roof failed. It's a great idea, who wouldn't want to buy it if it lasted and was practical.
You can sell your house to a family member for $1. (There might be tax implications if you sell a $100,000 property for $1 to avoid gift tax limits or whatever, but that’s a separate issue.) I sold my car to my sister in law for $1.
Self dealing is also permissible with companies. Corporate officers and directors must still meet their fiduciary duties to shareholders. And the potential for conflict of interest changes how courts will evaluate the transaction if a shareholder complains about a breach of fiduciary duties. Ordinarily, in Delaware, operate transactions are protected by the “business judgment rule” that gives wide latitude to corporate officers and directors. https://plusblog.org/2023/11/28/the-business-judgement-rule-.... But if there is self dealing, courts will scrutinize the actual fairness of the transaction. But self dealing isn’t per se impermissible.
> I can’t sell my family member my house for $1 for example
In most countries you absolutely can. The difference between market value and the sale price might be considered and taxed as a gift, but such a deal is generally not prohibited.
Yes, self-dealing is illegal when taken to mean a precise legal term; a fiduciary using that position to carry out a transaction in their own self-interest and against the interests of their beneficiaries.
Obviously you can sell house for $1 to a family member, this will not help to avoid taxes though, as tax office for taxing purposes evaluates value of the house independently.
I know for certain that in Virginia you can sell a house for any price you want, because I transferred one to a family member for zero. Of course the county's assessor had other ideas about the value for tax purposes, but the official deed was recorded at $0.
My guess is that there's an added grift, er...benefit here; since the federal government is now (apparently) in the business of subsidizing AI companies, we'll effectively see the failing social media platform get subsidized by the federal government.
I'm certain we'll see a pile of public funds handed over the xAI in the future.
Beyond the valuation, I think there's 3 things that are interesting to think about:
1. Musk owned an estimated 80% of X and an estimated 50% of xAI [1]. We don't know the specifics of the deal, but we do know it's an all-stock deal, so in theory this should help Musk own more of xAI, which sounds like better-performing and more promising company atm.
2. Tesla has been a big name in AI for a while now, but has been awfully MIA when it comes to generative AI. It's always focused most on vision, sure, but it's not hard to see how other types of AI could fit it's strategy.
Imagine a conversational virtual assistant in your car, or in their robots, or the possible manufacturing applications. In my opinion the device manufacturer + AI lab combo, especially for a device that sells on its promise of cutting-edge technology, makes more sense social network/LLM combo. Beyond the product applications Tesla would greatly benefit from the prestige and marketing of cutting-edge AI.
Nonetheless Musk owns only about 12% of Tesla [2]. It makes more sense for Musk's fortune to ride the wave of this new industry with a private venture he owns. This 12% ownership is down from 22% in 2018 btw [3], before the Twitter acquisition in 2022, which was largely funded by liquidating his Tesla stock [4]. Musk seems to be very much divesting from Tesla— both in effort and in money.
3. Where does this leave Musk, Tesla, and xAI?
- I think it leaves xAI in the position of being the most important company for Musk right now. Best-case, it becomes a "big tech" company. I'm sure we'll keep hearing much more about it, although I don't rule that Musk could try to sell it or merge it if it gives him control of a tech company with a solid business model or strategic importance.
- Musk I think is definitely in a better position than before, fortune and power-wise. He's been diversifying away from a company that's had an insane PE ratio for a while [5], but most importantly, he's been doing so in a pretty smart way. If he had just sold Tesla to buy government bonds, the share price would've crashed. Instead everyone buys into the "he's eccentric and went through a divorce" story. Social network ownership has given him plenty of political power— I don't doubt unbanning Donald Trump is how he got close to him the first place. And now he's converted imaginary wealth from unattainable hype at Tesla into ownership of private company riding the hot tech wave of the moment, concrete political power and self-regulation via his seat in government, and evergreen influence/relevance via his own social network— a tech baron's dream.
- Tesla is not doing great, and Tesla investors are the ones getting the short end of all this. I think Musk realized self-driving is too hard, be it due to tech or regulation. I think he realized he can't compete vs Chinese automakers. I think he's pumping and dumping. If he can get a good deal he might try to merge it with xAI in a way that offers him full control of the company (maybe even private ownership), but otherwise I think Musk is ready to let go of it. He's used its insane valuation to get himself better assets.
In similar news: my left hand acquired my right hand today in an all stock deal valuing the combined hands at $1T. Praising the announcement my arms noted on the deal: “With these two hands now together, there’s nothing our combined fist of might can’t do.” Competitors, my left and right feet, declined to comment on the merger but are said to be in their own separate talks about a deal.
right but you don't have $1T to do that, whereas clearly he has however much money he's paid for it. it's a weird thing to do, but if he has the money to do it then meh?
In similar news: my left hand acquired my right hand today in an all stock deal valuing the combined hands at $250,000. Praising the announcement my arms noted on the deal: “With these two hands now together, there’s nothing our combined fist of might can’t do.” Competitors, my left and right feet, declined to comment on the merger but are said to be in their own separate talks about a deal.
Except there is no money involved. xAI has nowhere near that amount of money in cash or in any liquid assets. The valuation hardly means anything, it might be worth $10 billion, it might be worth $100 billion nobody can tell at this point.
So he just sold himself a company he already owns for a valuation that he himself assigned to that company but that was less than what he paid for it, and he paid entirely using “money” that has a made up value and which he issues himself?
This also lets all of his co-investors in X, who were likely pissed that their shares tanked, exchange their shares at an inflated value (but one that still sees them losing 25% of their original investment) for shares in a trendy yet likely overvalued AI company that they consider to have more upside.
The other part of this is that if TSLA stock drops to $100-ish he'll be at risk of being margin called on the loans he took against his holdings to buy X. I wouldn't be surprised if this deal involves some X shares being sold for cash (that was raised from VCs) to pay down those loans, and/or the lenders agreeing to take xAI stock in lieu of cash.
This whole thing seems like a big pyramid scheme. I don't think this is the last time we've seen this type of move: he'll keep starting companies that are at the forefront of whatever the current hype cycle is, then leverage the extremely inflated valuations to benefit himself.
> This whole thing seems like a big pyramid scheme.
That's because his scam of charging $8k over the price of a Tesla for "self driving" was complete vaporware. It never worked and it never was going to work. I am disappointed I fell for it.
There should be a class action lawsuit against TESLA for everyone that purchased the $8k self driving "feature". We were all told it was "being rolled out". It was a total lie.
The outside investors in X made a profit on paper; Twitter was bought for $44B but the deal was financed with like $31B in equity and $13B in debt. It’s not a big profit (in fact it’s worse than you would have done in T-bills), and of course they’re swapping one illiquid and hard-to-value asset for another, but Elon isn’t giving them a 25% haircut at all.
He's simply moving Twitter losses to xAI investors - because he's the largest Twitter loser - and would prefer those losses go to other patsies instead.
Yeah these fantasies where musk would somehow go bankrupt by tanking Tesla and overpaying for Twitter were also wild
He’s literally the richest person the earth has ever known. He’s never going to suffer financially. He has countless levers of power he can pull.
The same fantasy applies to any past or current president ever spending a day in jail. He literally commands the most powerful military apparatus the world has ever seen. Even a sliver of that capability and influence ensures nobody will ever dare to try and slap some cuffs on him
I don’t want to downplay your point, I basically agree, but in real terms I believe there have been several people richer than him, and it is hard to judge the relative wealth of people long ago.
Well his wealth can decrease by 200x and no sane person could claim that he's "suffering" financially with what he has left.
> somehow go bankrupt .. were also wild
That depended entirely on how Tesla's stock performed. If he had to liquidate $20 billion of his stocks to pay back the Twitter loans his wealth would have decreased by much, much more than that.
Him being a Trump associate is a lever, but not a financial one… unless and until they have a falling-out. I'd be surprised if that's any less than 6 months away, or more than 3 years away.
> The same fantasy applies to any past or current president ever spending a day in jail. He literally commands the most powerful military apparatus the world has ever seen. Even a sliver of that capability and influence ensures nobody will ever dare to try and slap some cuffs on him
Depends if he dies in office (~10% all causes, he's old etc.), and if the dems regain congress in two years.
Trump was already very close to getting one day in jail due to inability to behave himself in the trial where he got all those felony convictions, and he did get impeached twice.
I have no opinion about Musk or Trump. I just want to give counter-examples to your claims: Saddam Hussain, Mussoloni, Ceausescu. At the peak of their power, they all seemed untouchable. Would they even have thought, when they were ruling their countries, that one day their fortunes would turn?
Quoting Gandhi: "There have been tyrants and murderers, and for a time, they can seem invincible, but in the end, they always fall. Always."
Past presidents don't hold command over any military. France sent a former president to jail just a few months ago. Brazil and South Korea are in the process of putting a former president on trial. El Chapo was billionaire and had a private army of murderers – he's currently in prison.
The main reason Trump hasn't been impeached and (possibly) jailed is because the political system in the US is dysfunctional. Party because it's not a great system to start with, and partly because a critical section of people made the decision to intentionally break it for selfish gain. But there is nothing that says it needs to be like this.
IMHO the US is turning into an oligarchy / autocracy like Russia. Musk is one of the oligarchs. We all know what happens to oligarchs when they get too close to eclipse the top dog and go near a window.
He only holds ~15% of Tesla. His real money is in SpaceX... 50% ownership there. I wish people would think just a little before parroting the "hit Musk where it hurts" drivel.
Is he really rich? He started a car company, one that is known to make shit cars. All of their big bets failed. So what was supposed to be "not just a car comoany", which is what all the insane valuations were based on, is now "just a car comoany" and a shit one at that. So why is this car comoany still valuated at such insane hype levels? Is his wealth not entirely tied to the hyper-valuation of this car company?
I just borrowed a hundred trillion dollars from myself, then paid it back instantly. This means the majority of 2025 US GDP is now my financial activity, right? Seems newsworthy.
All money is made up. The banks literally "lend" money into existence without having it backed by anything, the banks don't need to have the money in the first place, the bank reserve requirement has been dropped to 0% in 2020.
It’s true that all money is made up, but not in the same sense OP means.
Like I could give you 20 dollars and it’s made up in a sense, it’s just a piece of paper, but also you can go to the store and buy things with it.
Whereas if you’re an investor in a company and the CEO does some self dealing which nominally values your shares at 20 million, you can’t go spend that. It’s even more made up
Musk threw in xAI ownership to sell those bonds, which themselves have an 11% rate. Musk basically backstopped the bonds by giving a heads up of this.
No, that was absolute fantasy numbers, and in no universe did it verify any value of Twitter.
Musk really, really knows how to play people. He deserves that credit.
And I mean, bond discounts or not have nothing to do with the value of a company. The discount on a bond is based upon the likelihood they'll ever be paid off, and after it was clear that Musk would save the failure of X by using one of his other companies and AI hype to do so (as others have said, just like SolarCity), the bond lost its discount. X's value could be $1, but if the bonds are going to be repaid they'll sell at no discount.
But all the armchair business experts assured me that the value of Twitter had completely tanked since Elon bought it because he’s such a stupid fool who ruins everything, so shouldn’t it be worth less? Just a few months ago everyone was confident it was only worth $8 billion.
He bought it with stock from another company that has no clear value and is a meaningless hype monster. What is xai going to do that 10 other AI companies aren't going to build, anthropic, openai, etc.
Newspeak phrase of the day: Conglomerate Discount.
Some inverters believe they suffer from "conglomerate discount" [1]: that their whole conglomerate can be worth less than the sum of its parts. Who decides what the parts are worth? The investors, of course. Buying shares of their own company is a pretty standard way to fix the "discount".
you might want to check who owns majority of FAANG stocks. once you identified those, check how much they own of each others. Musk is just doing what everyone else does
I'll do you one better. The Market Makers are Vanguard, Blackrock and State Street which are majority shareholders of 80% of the SP500. They control the price using swarms of HFT bots, most likely running Blackrock's Aladdin algo which they license. The largest shareholder of Blackrock, is Vanguard.
It's all private capital. The only people who are exposed to this deal are the banks who make loans to Musk and Twitter, and the investors who put capital in to take Twitter private or to invest in xAI. If one of those entities is mad they will sue, and the legal system works pretty well for fights between different capital holders. Doesn't really matter what the general public's opinion is.
Trump pardoned Trevor Milton today, who scammed investors out of millions doing things like his now infamous "rolling a truck down a hill to make it looks functional" demo.
Milton donated $1.8M to Trump, and Miltons lawyer's sister is Pam Bondi, the Attorney General.
This is nakedly corrupt and a strong signal that you can get away with all manner of financial fuckery if you are on Trumps "good list".
And if you can get the right people to believe in the arbitrarily large numbers you invented out of thin air you can get away with just about anything because the wealthy don't have any real consequences.
>
So he just sold himself a company he already owns for a valuation that he himself assigned to that company but that was less than what he paid for it, and he paid entirely using “money” that has a made up value and which he issues himself?
And that is for sure either illegal or immoral. /s
This move makes it more likely that the internal number for TSLA is not good, and Elon is expecting the price to go down.
He has access to the real revenue number. If it's going well, he wouldn't have to perform this maneuver. xAI was relatively separated from X and TSLA, and wasn't having the backlashes associated with the two. Now he risks having the xAI branding tarnished too. He wouldn't do this unless the TSLA internal numbers are bad and he has to protect himself first, at the cost of xAI brand.
It's interesting in conjunction with the SEC/DOGE move.
For ever, companies wanted to cook their own profitability metrics - see the famous (pre-Musk) Twitter revenue per click or something, or adjusted by size of community.
Public company disclosure rules, however, dictate fairly strictly what is and isn't revenue, profit, capital and so on. Right now, you can publish any wacky statistics you like, so long as you also provide the GAAP ones - "generally accepted accounting practice".
But who knows, perhaps DOGE in SEC relaxes that, giving companies more scope to hide bits of their business they don't like.
xAI was seperated from X in what sense? xAI employees were X employees [1]. X reportedly had a stake in xAI, although The Verge says that hasn't materialized yet [0]. xAI's primary UI was X.
(This is primarily around your backlash comments, I'm sure some shareholder malarkey could make them technically separate).
> xAI was relatively separated from X and TSLA, and wasn't having the backlashes associated with the two.
I don't understand this point: why would these backlashes care about the on-paper separation? (I'm assuming by backlash, you mean that of public opinion, which already knows about the xAI-Musk association).
Seems to me he's just scammed xAI investors, who thought they were investing in an AI company, into bailing him out of his failed Twitter purchase - they are now the idiots who paid $44B for Twitter (recently valued by Fidelity at $10B), and Musk gets his money back.
“Musk did not ask investors for approval but told them that the two companies had been collaborating closely and the integration would drive deeper integration with Grok.”
Unlike the shareholders of a company being acquired, the shareholders of an acquiring company do not need to be asked prior to the company making an acquisition.
IANAL, but this might be brought to court, if the company mission (as defined in their operating agreement) is to invest in AI, then buying X is not in the best interest of the company and not what the investors signed up for. It could be fraud.
Am a lawyer, this is an incredibly silly and unlikely thing to suggest for a for-profit company set up on behalf of an even mildly sophisticated party in the USA.
Nearly ever such company is "limited" to engage "in any lawful activity" so as avoid exactly this issue.
I thought I also heard that the people who agreed to buy Twitter's debt got the deal sweetened with some XAi stock.
Sooo, did that debt get paid off, and they got XAi stock. If so, buying that Tesla debt might not have been the complete bloodbath it should have been.
Fidelity valuing at $10B is ancient outdated news no longer reflective of reality, the value had skyrocketed in recent months, given the profits which now exceed profits as a public company. [1] [2]
In fact, Twitter debt is selling at 97% of value, indicating high confidence in the company. [3]
> Twitter debt is selling at 97% of value, indicating high confidence in the company
I helped some friends buy this debt. It has nothing to do with Twitter’s strength as an enterprise, but Musk’s brand as a political one. There is a great book on 90s Russia before Putin took power—the pre-Berezovsky playbook looks like the way to go in America right now.
Okay, I know Tesla's extremely high P/E ratio is because it's worth is not just tied to cars, and so xAI priced at $20B more than Anthropic does not necessarily mean xAI's AI products are that much better than Anthropic's (e.g. presumably xAI's worth is tied to synergies with Tesla FSD, Optimus, and maybe even Neurolink)...but what products does xAI actually offer, other than Grok being an add-on for premium X subscriptions?
Not only does the Grok API not have access to Grok 3, which was released more than a month ago, it doesn't even have it's own SDK? [0]
> Some of Grok users might have migrated from other LLM providers. xAI API is designed to be compatible with both OpenAI and Anthropic SDKs, except certain capabilities not offered by respective SDK. If you can use either SDKs, we recommend using OpenAI SDK for better stability.
(every code example has a call for `from openai import OpenAI`)
How would using Grok be viable for any enterprise? And if Grok's API is designed to be drop-in replacement for OpenAI's, how are they not able to just use Grok to whip up their own SDK variant based on OpenAI's open-sourced SDK [1] and API spec?
Not a fan of Grok by any means but an SDK isn't that much of a requirement. We use liteLLM as it gets really annoying to roll your own router when you have so many viable providers with various specialties.
Grok is also a stand-alone product with an optional $30/month subscription. Perhaps they are seeing a huge increase in usage here and are hoping that subscriptions follow.
The OpenAI library is used pretty much everywhere in the LLM world, every serious AI provider has an OpenAI-compatible API, or you can use something like OpenRouter which is also OpenAI-compatible. Standardization is good.
It bails out Elon and means his Tesla shares (borrowed against to purchase Twitter) won’t be liquidated as Tesla’s share price continues to decline, using xAI investor funds. He uses hype and sentiment (inflating valuations) in the capital markets to always stay slightly ahead of consequences.
Tesla shares are higher than when Twitter was acquired. 'Continues to decline' sounds like weasel wording that the media likes to use to push a narrative that doesn't exist.
Edit: Comment flagged for pointing out inconvenient facts, it's wild out there
Still, you have to give it to him, it works, and this has allowed him to do some incredible things beyond just hype.
What he's pulled off with xAI more recently is really quite incredible. And obviously this isn't first time Elon proved he can execute better almost anyone else.
I don't really have opinions on him as a person, but as a an entrepreneur you cant flaw him imo. He always finds a way to beat the odds.
Weren't they already doing that? I recall before I bailed from X/Twitter they already added an AI training consent toggle, which silently defaulted to "I consent" for all existing users of course.
I don’t really see how X data, being riddled with spam and bots, is all that uniquely useful to an AI company. Even if it was, it’s not all that clear that access to data is a defensible moat.
So he can use the funds he raised for xAI to pay out the lenders for the initial Twitter purchase? Otherwise the lenders are just getting xAI stock (all stock deal) which I assume is illiquid?
Seems like anyone who has three "shares" of X now has 1 share of xAI+X, which by Musk's valuation is three times as valuable as X. Assuming the xAI share price is wildly inflated, it seems that the inflated valuation has devalued their actual holdings.
Eg, for an extreme example, if xAI is worth zero, their actual holdings are now a third of what they were.
And he scammed the taxpayers of New York State for a billion dollar factory to build solar roofs. Factory built, stock was pumped, no solar roofs though.
The puffery about waste and fraud is pure projection coming from a scammer like Musk.
I'm not sure the SEC would obviously have jurisdiction, since neither Twitter nor xAI were public companies. The FTC might care about such a merger, however, and I suppose minority investors in xAI would have some ability to file a lawsuit if they think that X was acquired over its fair value.
> I'm not sure the SEC would obviously have jurisdiction, since neither Twitter nor xAI were public companies.
The Securities and Exchange Commission deals with private securities, and also with public securities exchanges and the firms listed on them. Public firms have more oversight from the SEC, but private securities are not outside of their purview.
This is a very mistaken impression, the SEC certainly is the regulator with jurisdiction over private share trades. The onus for reporting is just much higher for public companies.
What do you mean, what's going on? The judge rejected Musk's motion to dismiss the lawsuit. Meaning that the suit against him is going forward. Which is the correct outcome, because yeah he's obviously guilty.
Readit News
https://www.businessinsider.com/solarcity-tesla-energy-belea...
There were a few lawsuits from Tesla shareholders about the acquisition regarding self dealing but they didn’t succeed:
https://en.wikipedia.org/wiki/SolarCity
Its not like the courts are investment banks with an evaluation arm. They are just judging if anything reaches the point where shareholders were legally harmed, which still gives a lot of gray area to the acquiring company.
Not sure the court was capable of that judgement.
and
"paid a fair price"
are two entirely different things.
Grandparent is not correct, you can’t just assign “whatever” value in self-dealing transactions.
The SEC and IRS weren’t born yesterday. It reminds me of people who come up with basic self-dealing transactions with some tax benefit and act like the idea wasn’t around 100 years ago and that regulations aren’t already in place.
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Where are the solar roof tiles? What’s happened to the tax payer funded factory in NY?
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they know what they buying when elon promotes his lmao, elon twitter deal is backed by saudi. elon himself come to saudi asking for an investment from royal prince saudi
safe to say that if they want spent 40 billion for twitter, they would spent more with AI flavored company (they are saudi after all)
For example, I had a run-in with the property tax assessor. He assessed my house at an unreasonably high price. I filed a protest, and then had a conversation with him. I offered to sell him the house at a considerably lower price, and he could then flip it for what he assessed it at.
He refused.
I eventually did sell it, for considerably less than the assessed value.
As anyone following stocks knows, the fair market value of a company can vary dramatically minute by minute.
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If I were an investor in xAI I would be furious about this. They're almost certainly overpaying for Twitter and there's definitely going to be litigation.
Edit: It sounds like the combined entity is taking on Twitter's $12 billion of debt from when it originally went private. As of last December xAI had raised "more than $12 billion" in total [1], so the deal attaches Twitter's debt to that ~12 billion pot of VC money. Unless I'm really misunderstanding something this deal looks like a bailout of Twitter and a huge new liability for xAI.
It's definitely possible my hot take is wrong and the xAI investors support the transaction. I hope so because if not there's going to be some brutal lawsuits over this.
[1] https://www.nytimes.com/2024/12/24/technology/elon-musk-xai-...
The valuation of those 2 companies combined should be < $10 billions if we are very very generous.
X is heavily in debt, diminishing user base, and bleeding money. 0 profits
xAI is yet to make any actual revenues outside of ... X. Also bleeding money
Although I would admit, that these companies are not valued based by their economics, but rather on political power they provide to the owner.
The levels of .. self-fertilizing transactions here boggles the mind. I guess that's the idea.
xAI does have some pretty massive datacenters with 200K+ GPUs.
It breaks my heart because my rust belt hometown got a substantial investment from the state they had been chasing for a couple decades.
$700M of the Buffalo Billion went to a Solar City facility, Elon even said they were going to build the solar roofs there!
New York State didn't dare pick a fight with him as the factory set empty for years.
Full story via Bethany McLean, 2019:
https://www.vanityfair.com/news/2019/08/how-elon-musk-gamble...
I suspect most of the business is battery storage and the Powerwall was introduced by Tesla before the acquisition.
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Self dealing is also permissible with companies. Corporate officers and directors must still meet their fiduciary duties to shareholders. And the potential for conflict of interest changes how courts will evaluate the transaction if a shareholder complains about a breach of fiduciary duties. Ordinarily, in Delaware, operate transactions are protected by the “business judgment rule” that gives wide latitude to corporate officers and directors. https://plusblog.org/2023/11/28/the-business-judgement-rule-.... But if there is self dealing, courts will scrutinize the actual fairness of the transaction. But self dealing isn’t per se impermissible.
In most countries you absolutely can. The difference between market value and the sale price might be considered and taxed as a gift, but such a deal is generally not prohibited.
I'm certain we'll see a pile of public funds handed over the xAI in the future.
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1. Musk owned an estimated 80% of X and an estimated 50% of xAI [1]. We don't know the specifics of the deal, but we do know it's an all-stock deal, so in theory this should help Musk own more of xAI, which sounds like better-performing and more promising company atm.
2. Tesla has been a big name in AI for a while now, but has been awfully MIA when it comes to generative AI. It's always focused most on vision, sure, but it's not hard to see how other types of AI could fit it's strategy.
Imagine a conversational virtual assistant in your car, or in their robots, or the possible manufacturing applications. In my opinion the device manufacturer + AI lab combo, especially for a device that sells on its promise of cutting-edge technology, makes more sense social network/LLM combo. Beyond the product applications Tesla would greatly benefit from the prestige and marketing of cutting-edge AI.
Nonetheless Musk owns only about 12% of Tesla [2]. It makes more sense for Musk's fortune to ride the wave of this new industry with a private venture he owns. This 12% ownership is down from 22% in 2018 btw [3], before the Twitter acquisition in 2022, which was largely funded by liquidating his Tesla stock [4]. Musk seems to be very much divesting from Tesla— both in effort and in money.
3. Where does this leave Musk, Tesla, and xAI?
- I think it leaves xAI in the position of being the most important company for Musk right now. Best-case, it becomes a "big tech" company. I'm sure we'll keep hearing much more about it, although I don't rule that Musk could try to sell it or merge it if it gives him control of a tech company with a solid business model or strategic importance.
- Musk I think is definitely in a better position than before, fortune and power-wise. He's been diversifying away from a company that's had an insane PE ratio for a while [5], but most importantly, he's been doing so in a pretty smart way. If he had just sold Tesla to buy government bonds, the share price would've crashed. Instead everyone buys into the "he's eccentric and went through a divorce" story. Social network ownership has given him plenty of political power— I don't doubt unbanning Donald Trump is how he got close to him the first place. And now he's converted imaginary wealth from unattainable hype at Tesla into ownership of private company riding the hot tech wave of the moment, concrete political power and self-regulation via his seat in government, and evergreen influence/relevance via his own social network— a tech baron's dream.
- Tesla is not doing great, and Tesla investors are the ones getting the short end of all this. I think Musk realized self-driving is too hard, be it due to tech or regulation. I think he realized he can't compete vs Chinese automakers. I think he's pumping and dumping. If he can get a good deal he might try to merge it with xAI in a way that offers him full control of the company (maybe even private ownership), but otherwise I think Musk is ready to let go of it. He's used its insane valuation to get himself better assets.
[1] https://www.barrons.com/articles/xai-buys-x-musk-twitter-2e5...
[2] https://www.investopedia.com/articles/insights/052616/top-4-...
[3] https://www.thestreet.com/investing/stocks/how-elon-musk-con...
[4] https://abc7.com/post/elon-musk-accused-improperly-selling-7...
[5] https://www.macrotrends.net/stocks/charts/TSLA/tesla/pe-rati...
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(Or more, if you're a middle-out sort)
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Wild.
The other part of this is that if TSLA stock drops to $100-ish he'll be at risk of being margin called on the loans he took against his holdings to buy X. I wouldn't be surprised if this deal involves some X shares being sold for cash (that was raised from VCs) to pay down those loans, and/or the lenders agreeing to take xAI stock in lieu of cash.
This whole thing seems like a big pyramid scheme. I don't think this is the last time we've seen this type of move: he'll keep starting companies that are at the forefront of whatever the current hype cycle is, then leverage the extremely inflated valuations to benefit himself.
That's because his scam of charging $8k over the price of a Tesla for "self driving" was complete vaporware. It never worked and it never was going to work. I am disappointed I fell for it.
There should be a class action lawsuit against TESLA for everyone that purchased the $8k self driving "feature". We were all told it was "being rolled out". It was a total lie.
These Reddit level takes with zero research are making threads like this really annoying to read. All emotions, zero facts.
He’s literally the richest person the earth has ever known. He’s never going to suffer financially. He has countless levers of power he can pull.
The same fantasy applies to any past or current president ever spending a day in jail. He literally commands the most powerful military apparatus the world has ever seen. Even a sliver of that capability and influence ensures nobody will ever dare to try and slap some cuffs on him
This is arguable in real terms.
After 2028 elections, all of that umbrella cover will go away. Optimistically speaking it could happen as soon as after Nov of 2026 (midterms).
That’s disputable
> He literally commands the most powerful military apparatus the world has ever seen.
That’s also disputable
Well his wealth can decrease by 200x and no sane person could claim that he's "suffering" financially with what he has left.
> somehow go bankrupt .. were also wild
That depended entirely on how Tesla's stock performed. If he had to liquidate $20 billion of his stocks to pay back the Twitter loans his wealth would have decreased by much, much more than that.
Rich people become poor people all the time. Its hardly unheard of.
Just being rich doesn't mean he's got all the power to stop that: https://en.wikipedia.org/wiki/Bernie_Madoff
Him being a Trump associate is a lever, but not a financial one… unless and until they have a falling-out. I'd be surprised if that's any less than 6 months away, or more than 3 years away.
> The same fantasy applies to any past or current president ever spending a day in jail. He literally commands the most powerful military apparatus the world has ever seen. Even a sliver of that capability and influence ensures nobody will ever dare to try and slap some cuffs on him
Depends if he dies in office (~10% all causes, he's old etc.), and if the dems regain congress in two years.
Trump was already very close to getting one day in jail due to inability to behave himself in the trial where he got all those felony convictions, and he did get impeached twice.
Quoting Gandhi: "There have been tyrants and murderers, and for a time, they can seem invincible, but in the end, they always fall. Always."
Putin might well be richer.
Also it is hard to compare his wealth to historical figures, such as Mansa Musa.
https://en.wikipedia.org/wiki/Mansa_Musa
The main reason Trump hasn't been impeached and (possibly) jailed is because the political system in the US is dysfunctional. Party because it's not a great system to start with, and partly because a critical section of people made the decision to intentionally break it for selfish gain. But there is nothing that says it needs to be like this.
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Like I could give you 20 dollars and it’s made up in a sense, it’s just a piece of paper, but also you can go to the store and buy things with it.
Whereas if you’re an investor in a company and the CEO does some self dealing which nominally values your shares at 20 million, you can’t go spend that. It’s even more made up
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No, that was absolute fantasy numbers, and in no universe did it verify any value of Twitter.
Musk really, really knows how to play people. He deserves that credit.
And I mean, bond discounts or not have nothing to do with the value of a company. The discount on a bond is based upon the likelihood they'll ever be paid off, and after it was clear that Musk would save the failure of X by using one of his other companies and AI hype to do so (as others have said, just like SolarCity), the bond lost its discount. X's value could be $1, but if the bonds are going to be repaid they'll sell at no discount.
When debt is worth near par that only means that equity is very likely positive (not null). Doesn't tell you anything about how positive.
When xAI was founded, the X investors got 25% of xAI.
So he didn’t sell for less than he paid for it.
https://www.hindustantimes.com/business/investors-who-backed...
He valued it at the same price minus debt.
I now own a $1 billion dollar water bottle
Do you understand where money comes from, cause Elon and you seem to not understand.
Some inverters believe they suffer from "conglomerate discount" [1]: that their whole conglomerate can be worth less than the sum of its parts. Who decides what the parts are worth? The investors, of course. Buying shares of their own company is a pretty standard way to fix the "discount".
[1]: https://en.wikipedia.org/wiki/Conglomerate_discount
Well, I invented a new name, sold it to myself and now people say I’m worth more money.
Anything productive, Musky?
No. Nothing else.
You're fired Musky!
It's not wild, it's - if there is malfeasance - unprosecutable.
Self dealing. Nobody cares anymore.
Milton donated $1.8M to Trump, and Miltons lawyer's sister is Pam Bondi, the Attorney General.
This is nakedly corrupt and a strong signal that you can get away with all manner of financial fuckery if you are on Trumps "good list".
https://apnews.com/article/nikola-trevor-milton-fraud-trump-...
And if you can get the right people to believe in the arbitrarily large numbers you invented out of thin air you can get away with just about anything because the wealthy don't have any real consequences.
The cope is alive and well.
"aaaany time now it will all fall apart"
And that is for sure either illegal or immoral. /s
It’s more than he paid. There’s 12 billion of debt you’re not accounting for.
I don’t think this is a change in the human condition; we’re extremely greedy hairless apes. But guys like Elon really show how low we can go.
but what I really wanted to say (because I'm a special interests person)
is that hair is a mammal trait. all mammals have hair!!! how cool is that?
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He has access to the real revenue number. If it's going well, he wouldn't have to perform this maneuver. xAI was relatively separated from X and TSLA, and wasn't having the backlashes associated with the two. Now he risks having the xAI branding tarnished too. He wouldn't do this unless the TSLA internal numbers are bad and he has to protect himself first, at the cost of xAI brand.
The external number for TSLA is not doing very good either
For ever, companies wanted to cook their own profitability metrics - see the famous (pre-Musk) Twitter revenue per click or something, or adjusted by size of community.
Public company disclosure rules, however, dictate fairly strictly what is and isn't revenue, profit, capital and so on. Right now, you can publish any wacky statistics you like, so long as you also provide the GAAP ones - "generally accepted accounting practice".
But who knows, perhaps DOGE in SEC relaxes that, giving companies more scope to hide bits of their business they don't like.
(This is primarily around your backlash comments, I'm sure some shareholder malarkey could make them technically separate).
[0]: https://www.theverge.com/news/638933/elon-musk-x-xai-acquisi...
[1]: https://www.theverge.com/2025/1/10/24339249/elon-musk-xai-x-...
I don't understand this point: why would these backlashes care about the on-paper separation? (I'm assuming by backlash, you mean that of public opinion, which already knows about the xAI-Musk association).
https://www.theguardian.com/technology/2025/mar/29/elon-musk...
Nearly ever such company is "limited" to engage "in any lawful activity" so as avoid exactly this issue.
Sooo, did that debt get paid off, and they got XAi stock. If so, buying that Tesla debt might not have been the complete bloodbath it should have been.
In fact, Twitter debt is selling at 97% of value, indicating high confidence in the company. [3]
[1] https://www.theguardian.com/technology/2025/mar/19/value-elo...
[2] https://finance.yahoo.com/news/elon-musk-paid-high-price-114...
[3] https://finance.yahoo.com/news/musks-value-on-wall-street-is...
I helped some friends buy this debt. It has nothing to do with Twitter’s strength as an enterprise, but Musk’s brand as a political one. There is a great book on 90s Russia before Putin took power—the pre-Berezovsky playbook looks like the way to go in America right now.
Not only does the Grok API not have access to Grok 3, which was released more than a month ago, it doesn't even have it's own SDK? [0]
> Some of Grok users might have migrated from other LLM providers. xAI API is designed to be compatible with both OpenAI and Anthropic SDKs, except certain capabilities not offered by respective SDK. If you can use either SDKs, we recommend using OpenAI SDK for better stability.
(every code example has a call for `from openai import OpenAI`)
How would using Grok be viable for any enterprise? And if Grok's API is designed to be drop-in replacement for OpenAI's, how are they not able to just use Grok to whip up their own SDK variant based on OpenAI's open-sourced SDK [1] and API spec?
[0] https://docs.x.ai/docs/guides/migration
[1] https://github.com/openai/openai-python
DeepSeek docs just point users to use OpenAI SDK: https://api-docs.deepseek.com/
Anthropic recently did some something similar: https://docs.anthropic.com/en/api/openai-sdk
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Edit: Comment flagged for pointing out inconvenient facts, it's wild out there
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What he's pulled off with xAI more recently is really quite incredible. And obviously this isn't first time Elon proved he can execute better almost anyone else.
I don't really have opinions on him as a person, but as a an entrepreneur you cant flaw him imo. He always finds a way to beat the odds.
"xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent."
Eg, for an extreme example, if xAI is worth zero, their actual holdings are now a third of what they were.
And he scammed the taxpayers of New York State for a billion dollar factory to build solar roofs. Factory built, stock was pumped, no solar roofs though.
The puffery about waste and fraud is pure projection coming from a scammer like Musk.
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The Securities and Exchange Commission deals with private securities, and also with public securities exchanges and the firms listed on them. Public firms have more oversight from the SEC, but private securities are not outside of their purview.
As a high-profile example, the SEC sued Theranos, a private company with only accredited investors, for making misrepresentations to their investors. https://www.sec.gov/newsroom/press-releases/2018-41
https://www.reuters.com/world/us/us-securities-exchange-comm...
https://news.ycombinator.com/item?id=43510093
https://www.sec.gov/resources-small-businesses/capital-raisi...
U.S. JUDGE REJECTS ELON MUSK'S BID TO DISMISS LAWSUIT ALLEGING HE DEFRAUDED TWITTER SHAREHOLDERS BY WAITING TOO LONG TO REVEAL STAKE
What's going on ?? Because he very obviously is guilty of this.
Here is the article - I get a feeling that this is very much related:
https://www.reuters.com/legal/elon-musk-must-face-fraud-laws...