In a recent Twitter post Elon Musk announced that “xAI has acquired X in an all-stock transaction. The combination values xAI at $80 billion and X at $33 billion ($45B less $12B debt).” Musk had bought Twitter/X for $44 billion in 2022. Therefore, for all practical purposes, there is a clear loss of over $11 billion ($12 billion debt notwithstanding). What exactly happened? Did the world’s richest man make a losing deal or is he using one company to bail out another.
@xAI has acquired @X in an all-stock transaction. The combination values xAI at $80 billion and X at $33 billion ($45B less $12B debt).
Since its founding two years ago, xAI has rapidly become one of the leading AI labs in the world, building models and data centers at…
— Elon Musk (@elonmusk) March 28, 2025
— Elon Musk (@elonmusk) Analysis of X valuations
A recent report by Benzinga highlighted the recovery in X valuation after a sharp drop. In fact the Benzinga report quoted Fidelity marking the value down by as much as 72% as of December, 2024. As per reports, the valuation bounced back to $44 billion after having reportedly dropped to a low of $12 billion since Musk’s takeover in 2022. This valuation is as per Financial Times after a “secondary deal was carried out earlier this month.”
$44 billion is almost the same amount that Musk paid for buying Twitter 3 years ago. Interestingly, this report comes close on the heels of another report by Bloomberg that indicated that Musk had put in an additional $150 million in X last year. This is through a share buy at the rate similar to the valuations in 2022.
What’s fuelling X recovery?
One of the first blows that X received after the takeover by Musk in 2022 was advertisers abandoning the popular social media platform. However, that might now be a thing of the past. Apple, Disney and many similar advertisers are again resuming partnership with X.
The cost cutting measures since Musk took over also helped spruce up the balance sheet. The Financial Times report highlighted that the EBITDA(earnings before interest, tax, depreciation, and amortization) for X last year was at $1.2 billion. The difference is quite evident when you compare this with its last reported earnings from 2021. Twitter had posted over $220 million loss in 2021 for the full year. Before that, 2018 and 2019 were the only profitable years in the recent past when the company reported earnings of $1.2 billion and $1.45 billion, respectively.
Musk introduced measures like the option to pay for a blue check mark and Grok also added to the bottomline. Musk’s ties with US President Donald Trump is also seen as a key advantage for the business prospects of X. Trump had openly come out in support of Tesla after the recent backlash against the electric car worldwide. In fact, the Tesla stock jumped nearly 5% after a 38% drop since the beginning of the year. Analysts and market observers do not rule out similar support for X if needed.
Did Musk really turnaround Twitter
X is no longer a public listed company and it is hard to make exact calculations. But it is safe to assume the White House connection may aid the Musk portfolio companies. Moreover, in terms of business fundamentals, though there are many other social media platforms that have been positioned as Twitter rivals and several high profile users have left Twitter, it still has a significant global relevance. However, is that sufficient to boost valuations for the social media platform. Why is the world’s wealthiest man keeping the $12 billion debt on X’s books?
The situation now
Musk’s original 2022 buying price was seen as expensive even back then. Currently though the extent of the recovery seems significant at 70% plus, it is also important to understand the said values cannot be corroborated. Moreover, Twitter or X owns a $6 billion stake in xAI, Musk’s artificial intelligence firm.
According to Musk’s recent post, “xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent. This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach. The combined company will deliver smarter, more meaningful experiences to billions of people while staying true to our core mission of seeking truth and advancing knowledge. This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress.”
One must not forget, xAI’s valuation is primarily speculative. It is based on future potential and there is no definitive or proven revenue or profit thus far.