Remember when Elon Musk "overpaid" for Twitter?  He was widely panned for the purchase, with many stating how it was going bankrupt.

Over the past couple years, there was a lot said about advertisers leaving, the politics of the platform, and the rise of other applications.

All of this aligns with the Elon is going bankrupt narrative.

It appears the reports of the demise of X were greatly exaggerated.  In reporting based upon the sale of some of the debt, there appears to be a turnaround that few considered.

This caused Elon to tweet out the title of this article.

<center>https://cdn.forbes.com.mx/2023/08/twitter-x-logo-640x360.webp
[Source](https://forbes.com.mx/x-antes-twitter-de-elon-musk-es-un-agujero-negro-cada-vez-con-menos-valor/) </center>

# Elon Musk: It's Almost Like I Am Good With Money

Why did Elon Musk buy Twitter?  Was it for the free speech narrative?  That is something that I never bought into.  To me, that was far down on his list.

The main reason be purchased the social media network, in my view, is data.  Musk has never stated this publicly but it is logical.  These days, the push into AI is well known.  While the general public wasn't to caught up on things in the middle of 2022, Musk certainly was aware of what is needed.  Remember, he was one of the founders of OpenAI.

Twitter's price tag was $44 billion.  This was underwritten by investment banks and private investors.  The banks decided to sell some of the debt, reducing their exposure.

Here is what took place:

* As per the WSJ, banks wrapped up the sale of $5.5 billion in debt backed by X on Wednesday.
* Citing people reportedly familiar with the matter, the publication noted that the banks had initially planned to sell about $3 billion at about 95 cents on the dollar.
* However, due to demand from investors, the deal was upsized. 
* Ultimately, investors ended up buying the loans at 97 cents on the dollar.
* The floating-rate debts carry an interest rate of about 11%, the WSJ reported.

It seems investors were quick to jump on the debt, something that doesn't happen when people are worried about insolvency.

There is reason for the optimism.  X CEO Linda Yaccarino highlighted the financial situation for the social media giant.

* During the last full year prior to Musk’s takeover, Twitter reported adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of about $682 million and about $5 billion in revenue.
* In 2024, X had an EBITDA of about $1.25 billion and annual revenue of $2.7 billion.
* While X’s revenue is about half of what it used to be, the company’s costs are just about a quarter of what they were before.
* As per the WSJ, investors noted that these were better figures than they had anticipated.

[Source](https://www.teslarati.com/elon-musk-x-doubled-ebitda-since-2022-takeover-report/)

While revenues were cut in half, profitability doubled.  This is something that makes the debt holders feel a lot more confident.

# xAI

One of the reasons why I think the purchase of Twitter was data driven, is the fact that we have the success of xAI.  This is the gem in the entire process.

X owns a 25% stake in xAI.  This was recently valued at $50 billion based upon the latest funding round.  That means the X stake is worth $12.5 billion.

Remember, the entire company was purchased for $44 billion, with lower EBITA and zero stake in xAI.

The xAI stake is going double in value, at a minimum, by the end of the year.  Grok3 is rolling out in the near future, improving the functionality of the model.  We also are going to have that LLM integrated into Tesla vehicles (and eventually robots).  No word on what the deal is there.

Another factor is OpenAI.  Here is where that company stands with funding.

>OpenAI is in talks to raise up to $40 billion in a funding round that would lift the artificial intelligence company's valuation to as high as $340 billion, CNBC has confirmed.

[Source](https://www.cnbc.com/2025/01/30/openai-in-talks-to-raise-up-to-40-billion-at-340-billion-valuation.html)

It is likely Sam Altman gets the money.  Softbank has already committed $25 billion to the next round.  This, naturally, sets the market with xAI have some fraction of that total valuation.  In my view, it is only a matter of time before xAI catches up to OpenAI.  The latter simply doesn't have the compute to keep growing at an accelerated pace.

Musk does not seem to have that problem due to his relationship with Jensen Huang and the ability to get tens of thousands of GPUs online quickly.

The integration of payments, called X Money, will bring in added revenue to the platform.  This is going to start to cut into other services.  

The future comes down to the platform.  That is what Musk is building with X.


Posted Using [INLEO](https://inleo.io/@taskmaster4450le/elon-musk-its-almost-like-i-am-good-with-money-nr)