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Comment by andrewstuart | Hacker News Reader

Can someone please explain this with more words?

My take is that its super obvious X is a rapidly failing social media platform that is reportedly very dangerously leveraged with Tesla stock value... but xAI still has that Zombo.com magic where anything is possible and the unattainable is unknown.

I was watching the US NCAAM basketball tournament last night, and all the announcers had their Twitter handles displayed under their names.

I had a thought that Twitter will eventually become a group of: famous people, media, and bots all just tweeting at each other.

Or people do still use the platform. I never have, so I can’t say one way or the other.

For celebrities it is a bullet point on their CV.

- Control of high engagement Twitter account with 50 bazillion followers.

Like commits on Github for tech bros. All those spelling mistakes won't fix themselves.

Clearly the $44B price was too high for what it was really worth as a platform - Musk tried to get out of the deal, or at least decrease the price, but was forced to buy it at his initial offer by the courts. But I don't think there's any basis to say it's rapidly failing, at least from an engagement perspective - if BlueSky or Threads were going to kill X, they would have done so by now, or at least be well on their way. Besides, the real value of X is to seize control of a powerful propaganda platform from progressives, and in that he succeeded, maybe even beyond his wildest dreams.

What’s the point though if more and more real people delete the app and their accounts? He owns the equivalent of Lake Aral.

I gave up an early 5 letter word account on Twitter because I refuse to support a bully that has clear fascist intentions and the entire platform seemed to be turning into bots spouting racist Nazi tropes.

>rapidly failing social media platform

What suggests that? It seems neutral to me. It gained a billion dollar valuation since the acquisition. Ad revenue is returning back to the levels it was at. There were other revenue streams added to more effectively monetize it.

Elon bought Twitter for $44B, with a combination of his own money, money raised from investors, and $12B worth of debt secured by his Tesla shares.

Since that time Twitter's valuation continued to drop, and by late 2024 several investors (like Fidelity) had marked the company's overall value down to as little as $9B.

Now with the recent stock market turmoil and Tesla's massive share price drop, his Twitter loan is in danger of getting margin called, and that would spell disaster for Tesla, Twitter and his own finances.

Separately Elon also started xAI, which received $6B of funding at a $40B valuation, and is in talks to raise more.

So now he is doing some financial engineering to "sell" Twitter (X) to xAI. This means (1) whoever owns shares in Twitter can mark up their books again and (2) he can raise more funding for the combined entity and use that to pay off the Twitter loan.

so twitter shares were converted to xai shares but where did the 12B debt go?

The debt still exists, but it is now xai's debt

What was in it for existing xAI investors to agree to this? Haven’t they lost value here?

Probably enough convincing math that trading 42% of stock for whole of Twitter is still good valuation play for future funding and maybe flipping it to someone else... Was xAI worth 57B at time of the sale?

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