Elon Musk's Twitter Investors Could Strike Gold with xAI's Soaring Valuation
New York Post 3 days ago
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Elon Musk's Twitter Investors Could Strike Gold with xAI's Soaring Valuation

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Summary:

  • Elon Musk's investors could benefit from a massive valuation increase in xAI.

  • xAI's valuation could reach $50 billion after a $5 billion fundraising round.

  • Key investors include Fidelity, Larry Ellison, and Jack Dorsey.

  • Concerns over conflicts of interest arise from stakes in both xAI and X.

  • Musk's influence extends into politics, closely aligning with President-elect Trump.

Surging Stakes for Twitter Investors

High-profile investors who faced significant losses from Elon Musk's Twitter takeover may be on the verge of a major comeback thanks to the burgeoning value of Musk's artificial intelligence startup, xAI. Reports indicate that Musk has allocated 25% of xAI shares to investors who supported his $44 billion acquisition of Twitter, now rebranded as X.

xAI's Rapid Growth

xAI is reportedly closing a $5 billion fundraising round, which could double the company's valuation to $50 billion in just six months. This surge in xAI's valuation offers a potential lifeline for investors who have been sitting on billions in unrealized losses from their Twitter investments.

Notable Investors

Key investors poised to benefit from this unique arrangement include:

  • Fidelity
  • Larry Ellison, co-founder of Oracle
  • Saudi Prince Alwaleed bin Talal
  • Jack Dorsey, Twitter's founder
  • Venture firms Sequoia Capital and Andreessen Horowitz

Musk's strategy of intertwining his companies reflects his broader business approach, where he emphasizes investments in himself over individual companies.

Investor Sentiment

Despite the challenges faced by X, including a mass exodus of advertisers and users, the sentiment among Musk's backers remains optimistic. One investor noted, "Never bet against Elon" as a guiding principle in the tech industry.

Financial Dynamics

After this week’s funding round, xAI will have raised approximately $11 billion in total investments. This growth is particularly significant for Twitter investors, who collectively invested about $7 billion in Musk's acquisition.

Conflicts of Interest

However, some investors express concerns regarding potential conflicts of interest, given their dual stakes in both Musk's companies. Despite these concerns, the investor base remains committed, with many viewing their investments as a bet on Musk's capabilities.

Musk's Political Influence

Musk's influence extends beyond the tech world, as he has become a close ally of President-elect Donald Trump, even proposing to lead a new Department of Government Efficiency. His political contributions have also been substantial, with over $100 million funneled into pro-Trump campaigns.

Challenges for X

Since Musk's takeover and the rebranding of Twitter to X, the platform has seen a decline in value, with advertisers leaving due to content regulation issues. Recent reports suggest that banks are sitting on $13 billion worth of Twitter debt, and Fidelity has significantly reduced its valuation of X by nearly 80%.

Elon Musk at 2024 Breakthrough Prize Ceremony

Image Source: Getty Images

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