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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

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. [1] https://www.nytimes.com/2024/12/24/technology/elon-musk-xai-funding.html https://www.nytimes.com/2024/12/24/technology/elon-musk-xai-...

TheAlchemist 2y ago
Just keep in mind this is all funny money ! 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.
- dzhiurgis 2y ago
  I’m guessing Tesla is paying xAI to train their FSD model?
  - TheAlchemist 2y ago
    That would be a shocking conflict of interest - a public company paying a private company, which is owned by the CEO of the public one ? All while the same CEO claims that the public company is the leader in the field ? Even by Tesla & Musk lawlessness standard that would be too wild.
    - Alive-in-2025 2y ago
      Don't worry, the Tesla board is totally on top of things.
    - ketzo 2y ago
      We already have multiple news stories about xAI receiving 10,000s of GPUs that were originally meant for Tesla. That's about as close to "public company giving private company owned by CEO money" as you could possibly get without cartoon sacks of cash. > Even by Tesla & Musk lawlessness standard that would be too wild. Not to be overly snarky here, but, uh: what standard? They have proven over and over that they could not give less of a shit about either societal norms or the laws of the nation.
      - TheAlchemist 2y ago
        Now that you say that, Tesla is already paying the Boring Company, to build a highly advertised ... short tunnel for Tesla Giga factory. Which they spend 3 years or so building and which seem completely useless. The only big unknown would be how much Tesla did Boring Company for that. So yeah...
        AtlasBarfed 2y ago
        The entire stack is based on TSLA valuation, which is going to tank. IMO this is going to be meteoric in nature. As in the meteor hits the ground. If the world wasn't perceptibly irrational, I'd short.
        TheAlchemist 2y ago
        Yep, I also believe that we will have a Minsky Moment on the entire Muskonomy. Given his political involvement, I would assume that the maximum end date for this house of cards is the date when Trump is no longer in power - which is less than 4 years away. The real date is probably much sooner, but who knows when ?
        2y ago
  - bigtones 2y ago
    No, Tesla has their own seperate training supercomputer called Dojo that it optimized for computer vision. Its one of the top 20 supercomputers in the world by compute.
    - sroussey 2y ago
      That’s all marketing. They have had lots of issues getting it put together and working, and is more akin to really really really self driving in 2018 we were told. BTW: find it: https://top500.org/lists/top500/list/2024/11/ https://top500.org/lists/top500/list/2024/11/
      - TheAlchemist 2y ago
        Yes - it's really really close to FSD as you say ! Here is also a nice chart they published 2 years ago: https://electrek.co/2023/06/21/tesla-dojo-supercomputer-is-finally-coming-next-month/ https://electrek.co/2023/06/21/tesla-dojo-supercomputer-is-f... Definitely on the FSD timeline right now - they are maybe at 1% of what they announced they would be today. But hey, it's Optimus now !
- whats_a_quasar 2y ago
  As best I can tell the deal includes paying off $12 billion of Twitter debt. So that's real money, though that seems like it's basically all of the cash that xAI has raised, so if that's the case that's pretty wild. Edit: I misread, Musk said it's an all-stock deal, so you're right, it's all funny money. I think that means the combined entity is taking on that debt. It's still great for Twitter and bad for xAI investors because the combined entity now has both the $12 billion debt and all the VC xAI raised.
  - wraaath 2y ago
    Definitely great for the Twitter investors to be able to convert. I think they took a haircut relative to the 42B that they came in on, as the 45B includes the 12B debt. (42 gets reduced to 33, so 21-22% haircut) xAI also raised 6B in December last year at a 45B valuation, and then in February, reporting was that xAI was trying to raise 10B more at the 75B valuation... so this is where the frothiness of AI helps to mask the fundamentals. Can gets kicked down the road.
    - whats_a_quasar 2y ago
      Definitely, and a lot of that haircut actually happened in between when the deal was signed and when it closed, too. That was right when interest rates went up and Musk tried to wriggle out of the purchase agreement. So it's a great outcome for Twitter investors, assuming it sticks.
      - j4coh 2y ago
        And assuming the xAI stock they traded their X stock for is worth anything.
        wraaath 2y ago
        Also - the wording on the deal: xAI being valued at 80B X being valued at 33B Is the xAI 80B number inclusive of the 33B (45B including debt)? That would back into xAI's valuation moving backwards since the December round. Usually when venture-backed companies tout a valuation after a capital raise, it's post-money... and they're not chest-thumping a 113B number (which they surely would have given 9 figures)
- chatmasta 2y ago
  This doesn’t strike me as an objective assessment of the state of affairs. You could make the same “bleeding money” comment about many historical social media acquisitions – at least Twitter has advertising and subscription revenue. And it’s similarly suspect to argue that xAI is failing due to lack of revenue, without mentioning the astronomical valuations of its peers in the AI space, many of which are not only lacking revenue but also have no distribution channel comparable to the scale of Twitter/X. xAI has one of the leading models in terms of investment and user base, and it’s rapidly improving on its evaluation metrics. Twitter/X is one of the Top 10, if not Top 5, social media properties worldwide. It has hundreds of millions of monthly active users and maintains the lead in public consciousness as the “go to” place for 1-N broadcasting of information. While Bluesky shows promise, it won’t be dethroning Twitter any time soon. When has Bluesky been the source of breaking news? And you cannot separate these two businesses. Twitter/X and X.ai are fundamentally coupled to one another. Twitter is not only a data source for X.ai but also a distribution and retention channel. There is an “ask Grok” button under every Tweet. And it’s not the only LLM that can be summoned via Tweet – with similar automations from companies like Perplexity proving there is value in the channel – but it is the only LLM with a native integration into the interface and first dibs on freshly-generated user content and breaking news.
  - tsimionescu 2y ago
    You're missing the fact that Twitter has essentially 0 advertising revenue compared to the other major social networks, as all major ad networks have stopped doing business with Twitter (this in turn being because of the very high likelihood that their ads would be shown next to content that their clients didn't want to be associated with, such as images of Hitler).
- ekianjo 2y ago
  > diminishing user base Where are you getting this from? All numbers I see indicate the user base has been growing globally. https://backlinko.com/twitter-users https://backlinko.com/twitter-users
  - cycomanic 2y ago
    Mmh, that source is showing a 10% drop in users for September 2023 the last point, which was notably before alternatives like bluesky and others were starting off. Also note that since Musk took the company private we don't really know how accurate these numbers are. So I'd argue that the statement theat Twitter/X is bleeding users can't be conclusively decided, but it seems your statement that Twitter has been growing globally is incorrect at least for the last reported quarter.
  - rockskon 2y ago
    Elon made a post about user growth being stagnant.
  - FranzFerdiNaN 2y ago
    And how many of those are real people and not ever increasing numbers of bots?
  - skinnymuch 2y ago
    Elon saying what the numbers are is the most unreliable thing.
1024core 2y ago
> and xAI doesn't have much of any revenue or assets. xAI does have some pretty massive datacenters with 200K+ GPUs.
- whats_a_quasar 2y ago
  Fair enough, edited to just revenue. But those are just datacenters bought with VC money - my intent was to say that xAI's resources are basically just the investment they've received.
  - User23 2y ago
    You can’t just pull out the corporate Amex and buy a world class datacenter. There is considerable value add there.
    - sroussey 2y ago
      They used Tesla’s Amex for that one.
    - tsimionescu 2y ago
      We don't know that it's a world class data center, we only know how many GPUs they bought. For all we know, half of them could be staying on shelvez, and the whole data center could run for 5 hours a day: there's no public info on how well they're doing.
      - anon3459 2y ago
        Bro why are you so negative on every comment haha you really leak your negativity on musk companies. It is a fact that grok3 is a strong competitive model. Surely it had to be trained somewhere? They went from 0 to what they have now in 1 year
        pqtyw 2y ago
        Doesn't mean the company is worth $40 billion though... Or even a quarter of that.
michaelwilson 2y ago
Wait, wasn't there a "sweetener" for recent X debt buyers that they'd get XAI stock? The levels of .. self-fertilizing transactions here boggles the mind. I guess that's the idea.
knowriju 2y ago
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.
samr71 2y ago
They're gonna go public and the market cap will be at ~$300B within a year or two

TheAlchemist 2y ago

Just keep in mind this is all funny money ! 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.

dzhiurgis 2y ago
I’m guessing Tesla is paying xAI to train their FSD model?
- TheAlchemist 2y ago
  That would be a shocking conflict of interest - a public company paying a private company, which is owned by the CEO of the public one ? All while the same CEO claims that the public company is the leader in the field ? Even by Tesla & Musk lawlessness standard that would be too wild.
  - Alive-in-2025 2y ago
    Don't worry, the Tesla board is totally on top of things.
  - ketzo 2y ago
    We already have multiple news stories about xAI receiving 10,000s of GPUs that were originally meant for Tesla. That's about as close to "public company giving private company owned by CEO money" as you could possibly get without cartoon sacks of cash. > Even by Tesla & Musk lawlessness standard that would be too wild. Not to be overly snarky here, but, uh: what standard? They have proven over and over that they could not give less of a shit about either societal norms or the laws of the nation.
    - TheAlchemist 2y ago
      Now that you say that, Tesla is already paying the Boring Company, to build a highly advertised ... short tunnel for Tesla Giga factory. Which they spend 3 years or so building and which seem completely useless. The only big unknown would be how much Tesla did Boring Company for that. So yeah...
      - AtlasBarfed 2y ago
        The entire stack is based on TSLA valuation, which is going to tank. IMO this is going to be meteoric in nature. As in the meteor hits the ground. If the world wasn't perceptibly irrational, I'd short.
        TheAlchemist 2y ago
        Yep, I also believe that we will have a Minsky Moment on the entire Muskonomy. Given his political involvement, I would assume that the maximum end date for this house of cards is the date when Trump is no longer in power - which is less than 4 years away. The real date is probably much sooner, but who knows when ?
        2y ago
- bigtones 2y ago
  No, Tesla has their own seperate training supercomputer called Dojo that it optimized for computer vision. Its one of the top 20 supercomputers in the world by compute.
  - sroussey 2y ago
    That’s all marketing. They have had lots of issues getting it put together and working, and is more akin to really really really self driving in 2018 we were told. BTW: find it: https://top500.org/lists/top500/list/2024/11/ https://top500.org/lists/top500/list/2024/11/
    - TheAlchemist 2y ago
      Yes - it's really really close to FSD as you say ! Here is also a nice chart they published 2 years ago: https://electrek.co/2023/06/21/tesla-dojo-supercomputer-is-finally-coming-next-month/ https://electrek.co/2023/06/21/tesla-dojo-supercomputer-is-f... Definitely on the FSD timeline right now - they are maybe at 1% of what they announced they would be today. But hey, it's Optimus now !
whats_a_quasar 2y ago
As best I can tell the deal includes paying off $12 billion of Twitter debt. So that's real money, though that seems like it's basically all of the cash that xAI has raised, so if that's the case that's pretty wild. Edit: I misread, Musk said it's an all-stock deal, so you're right, it's all funny money. I think that means the combined entity is taking on that debt. It's still great for Twitter and bad for xAI investors because the combined entity now has both the $12 billion debt and all the VC xAI raised.
- wraaath 2y ago
  Definitely great for the Twitter investors to be able to convert. I think they took a haircut relative to the 42B that they came in on, as the 45B includes the 12B debt. (42 gets reduced to 33, so 21-22% haircut) xAI also raised 6B in December last year at a 45B valuation, and then in February, reporting was that xAI was trying to raise 10B more at the 75B valuation... so this is where the frothiness of AI helps to mask the fundamentals. Can gets kicked down the road.
  - whats_a_quasar 2y ago
    Definitely, and a lot of that haircut actually happened in between when the deal was signed and when it closed, too. That was right when interest rates went up and Musk tried to wriggle out of the purchase agreement. So it's a great outcome for Twitter investors, assuming it sticks.
    - j4coh 2y ago
      And assuming the xAI stock they traded their X stock for is worth anything.
      - wraaath 2y ago
        Also - the wording on the deal: xAI being valued at 80B X being valued at 33B Is the xAI 80B number inclusive of the 33B (45B including debt)? That would back into xAI's valuation moving backwards since the December round. Usually when venture-backed companies tout a valuation after a capital raise, it's post-money... and they're not chest-thumping a 113B number (which they surely would have given 9 figures)
chatmasta 2y ago
This doesn’t strike me as an objective assessment of the state of affairs. You could make the same “bleeding money” comment about many historical social media acquisitions – at least Twitter has advertising and subscription revenue. And it’s similarly suspect to argue that xAI is failing due to lack of revenue, without mentioning the astronomical valuations of its peers in the AI space, many of which are not only lacking revenue but also have no distribution channel comparable to the scale of Twitter/X. xAI has one of the leading models in terms of investment and user base, and it’s rapidly improving on its evaluation metrics. Twitter/X is one of the Top 10, if not Top 5, social media properties worldwide. It has hundreds of millions of monthly active users and maintains the lead in public consciousness as the “go to” place for 1-N broadcasting of information. While Bluesky shows promise, it won’t be dethroning Twitter any time soon. When has Bluesky been the source of breaking news? And you cannot separate these two businesses. Twitter/X and X.ai are fundamentally coupled to one another. Twitter is not only a data source for X.ai but also a distribution and retention channel. There is an “ask Grok” button under every Tweet. And it’s not the only LLM that can be summoned via Tweet – with similar automations from companies like Perplexity proving there is value in the channel – but it is the only LLM with a native integration into the interface and first dibs on freshly-generated user content and breaking news.
- tsimionescu 2y ago
  You're missing the fact that Twitter has essentially 0 advertising revenue compared to the other major social networks, as all major ad networks have stopped doing business with Twitter (this in turn being because of the very high likelihood that their ads would be shown next to content that their clients didn't want to be associated with, such as images of Hitler).
ekianjo 2y ago
> diminishing user base Where are you getting this from? All numbers I see indicate the user base has been growing globally. https://backlinko.com/twitter-users https://backlinko.com/twitter-users
- cycomanic 2y ago
  Mmh, that source is showing a 10% drop in users for September 2023 the last point, which was notably before alternatives like bluesky and others were starting off. Also note that since Musk took the company private we don't really know how accurate these numbers are. So I'd argue that the statement theat Twitter/X is bleeding users can't be conclusively decided, but it seems your statement that Twitter has been growing globally is incorrect at least for the last reported quarter.
- rockskon 2y ago
  Elon made a post about user growth being stagnant.
- FranzFerdiNaN 2y ago
  And how many of those are real people and not ever increasing numbers of bots?
- skinnymuch 2y ago
  Elon saying what the numbers are is the most unreliable thing.

1024core 2y ago

> and xAI doesn't have much of any revenue or assets. xAI does have some pretty massive datacenters with 200K+ GPUs.

whats_a_quasar 2y ago
Fair enough, edited to just revenue. But those are just datacenters bought with VC money - my intent was to say that xAI's resources are basically just the investment they've received.
- User23 2y ago
  You can’t just pull out the corporate Amex and buy a world class datacenter. There is considerable value add there.
  - sroussey 2y ago
    They used Tesla’s Amex for that one.
  - tsimionescu 2y ago
    We don't know that it's a world class data center, we only know how many GPUs they bought. For all we know, half of them could be staying on shelvez, and the whole data center could run for 5 hours a day: there's no public info on how well they're doing.
    - anon3459 2y ago
      Bro why are you so negative on every comment haha you really leak your negativity on musk companies. It is a fact that grok3 is a strong competitive model. Surely it had to be trained somewhere? They went from 0 to what they have now in 1 year
      - pqtyw 2y ago
        Doesn't mean the company is worth $40 billion though... Or even a quarter of that.

michaelwilson 2y ago

Wait, wasn't there a "sweetener" for recent X debt buyers that they'd get XAI stock? The levels of .. self-fertilizing transactions here boggles the mind. I guess that's the idea.

knowriju 2y ago

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.

samr71 2y ago

They're gonna go public and the market cap will be at ~$300B within a year or two