Billionaire Elon Musk transferred a 25% stake in his artificial intelligence company xAI to investors who supported his $44 billion acquisition of Twitter. This decision was a reward for loyalty and made it possible to partially compensate for the losses that arose after the fall in the value of the network. social network, writes the Financial Times.
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The entrepreneur founded xAI to compete with OpenAI and Anthropic. According to the newspaper’s sources, xAI is going to close a new round of financing worth $5 billion, doubling its valuation to $50 billion in just six months. Investors set to benefit from xAI’s growth include Fidelity, Oracle founder Larry Ellison, Twitter co-founder and former CEO Jack Dorsey, Saudi Arabia’s Prince Alwaleed bin Talal, and venture capital firms Sequoia Capital and Andreessen Horowitz.
By the time the funding round closes, xAI will have attracted a total of around $11 billion in investments, the FT writes. These funds are needed to cover the costs of developing AI and creating one of the largest supercomputer clusters in the world.
Since the purchase of Twitter in 2022, the company’s value has plummeted. Fidelity has reduced the valuation of its stake by almost 80%, to $9.4 billion, writes FT. However, many of the company’s investors have invested additional funds into xAI in the hope that it will develop successfully.
In November 2023, Musk said Twitter (now X) investors would own 25% of xAI, but did not reveal details. X investors received a quarter of xAI’s capital in both funding rounds, according to Financial Times sources familiar with the matter. Its stake was not diluted by the new shares issued after the completion of the latest fundraising round (the $6 billion deal was announced in mid-November, xAI’s valuation was $50 billion) .
Twitter Inc. was founded in 2006. Elon Musk acquired it in the fall of 2022. The transaction was valued at $44 billion. Since May of the same year, the SEC has been investigating the businessman for possible violations in the purchase of the company.
- In December 2022, the revenue and net profit of the Twitter platform decreased by 40% year-on-year. Analysts attributed the decline to advertisers leaving the social network after Elon Musk joined the company.
- To reduce business costs, Elon Musk reduced the company’s staff by 50%. The wave of layoffs in February 2023 was the eighth since the purchase of the social network by the American billionaire.
- In July 2023, Elon Musk renamed Twitter to X. The x.com domain now automatically redirected users to the Twitter website.
Author:
Karina Pardaeva
Source: RB
I am a professional journalist and content creator with extensive experience writing for news websites. I currently work as an author at Gadget Onus, where I specialize in covering hot news topics. My written pieces have been published on some of the biggest media outlets around the world, including The Guardian and BBC News.
