With X merger, Elon Musk just had his own Liberation Day

“Our use of users is stagnant, the revenue is not impressive and we are just breaking,” it is said that he has written in an e -mail to x employees.

This month, The New York TimesQuoting another e -internal x email, he said that on March 3 x he generated $ this year from $ 91 million advertising compared to a goal for the March of March of $ 153 million.

Loading

In December, the management giant of Fidelity funds, which has a small participation in the X, evaluated its participation in almost 72 % less than the one he paid for it. On this basis, the 33.5 billion dollars of fairness in the purchase of Twitter by Musk would vary less than $ 10 billion before considering any acquisition prize.

So, in what way a company that one of the largest investors in the world values ​​less than $ 10 billion dollars is evaluated today at $ 33 billion?

There is an element of symbiosis in the XAI/X deal. Musk has declared in the past that he would give x a 25 % participation in XAI as a payment for access to the vast user database of X that XAI used to form the learning model for its Grok Chatbot. There is therefore a strong link between the value of X and that of XAI (assuming that Musk delivered the participation of 25 %).

Xai was launched by Musk in 2023 and collected what was, until recently, a boom in the Ai actions.

At the end of December, he collected $ 6 billion dollars at an evaluation of the company between $ 40 billion and $ 50 billion and, until last month, he was trying to touch investors for other $ 10 billion in a fundraising that evaluated him at $ 75 billion. Now, apparently, it is evaluated at $ 80 billion.

It is a huge lifting and one that was against the trend of the AI ​​sector, with Nvidia – the equivalent of the 21st century of a supplier of choices and blades during the gold race – losing more than 21 % of its value in the same period in which the value of Xai was apparently increasing more than half. The “magnificent seven” Mega Tech Stocks, who also led the Boom of the AI, have decreased by 20 % since the end of December.

There was a lot of activity around Xai and x last month, just before the announcement of the merger.

X himself also raised new funds last month, collecting about 900 million dollars to an assessment at the corporate level of breeding of eyebrows of … just over $ 44 billion. Musk is said to have contributed to this lifting.

It was convenient that, just before the merger was agreed – presumably while it was still aimed – the XAI evaluation had revoked $ 80 billion and X had risen to $ 44 billion (including debt).

Where, only weeks ago, [Musk and X’s minority shareholders] They were sitting on paper leaks of over $ 20 billion, they came out … at about their purchase prices.

25 % of Xai Xai had gone from $ 10 billion or $ US12 billion three months earlier to $ 20 billion and his fundraising contributed to validating an equity value of about $ 33 billion.

There is a circularity for those numbers and relationships that, in addition to being curious, makes the transaction work – and the evaluation of X -.

Both XAI and X are, of course, private companies controlled by Musk, so it could be argued that he is only mixing pieces of his empire around.

It should also be said that, leaving the numbers aside, the combination of artificial and social media intelligence companies, with their traits of user data and vast user bases, makes sense. In fact, the Facebook Mother House Meta Platform is pursuing a similar strategy.

It is conceivable that the combination will create value that could never be made by an autonomous X and recover, within XAI, the unrealized losses that flow from the absurd Musk Premium paid for Twitter and from the way in which it has managed it since then.

In any case, the minority shareholders of X, many of whom are Musk’s friends and supporters, will not complain for the agreement. They and Musk were saved by Xai, regardless of what that comfortable fundraising last month could have reported.

Where, only weeks ago, they were sitting on paper leaks of over $ 20 billion, they came out, although in an exchange of paper, at about their purchase prices.

There is a large overlap between the shareholders in X and XAI (beyond Musk) but there may be some investors exposed only to XAI. If someone were discontent from the agreement, they would have been, having had their own interest to dilute to acquire an activity, with a swollen value, which is struggling and breaking at best.

Loading

Musk is, however, riding on the top inside the Trump administrationwho gave him power and benefited his activities, and has also made enormous quantities of money for his faithful supporters over the years. Unless the next XAI evaluation does not arrive markedly less than $ 113 billion, complaints are unlikely.

One of the unusual aspects of the agreement is that there was only one external consultant in the investment bank, Morgan Stanley, which helped both parts of the transaction.

Morgan Stanley acted for Musk when he acquired Twitter and led the banking group that financed that agreement and, until recently, when some lenders sold some of their debts to 97 cents in the dollar, was trapped in the debt structure.

In more normal circumstances, when banks sell their debt with a discount, it implies that the net heritage has no value.

But with Musk, his companies and his relationships are never conventional.

The corporate briefing newsletter offers important stories, exclusive coverage and expert opinion. Sign up to get it every morning on weekdays.