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.
Source
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.
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.
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.
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Say what you will about his personality. Some folks idolize him. Others vilify him. One thing is plain to see, he has been a rather savvy businessman.
He's an early-adopter who sees things before most folks know what's coming. More importantly he isn't afraid to take action. He is usually criticized for taking action until the rest of the world catches up. Then he's considered a genius.
The interesting thing is that he isn't secretive about anything he does. He tells everyone why he is doing what he is doing. Faces the criticism head on, gathers a talented team around him, and makes the impossible possible.
He also doesnt try to bring out a slightly better app or an upgrade on a new product.
The targets he sets are huge.
X Money
💰
Why did Willy Sutton rob banks? Because that’s where the money is.
Why did Mark Zuckerberg and now Elon Musk try to build a payment system onto Social Media? Because that’s where the money is. Why did the banks stop Zuckerberg? Because they couldn’t control it and he didn’t have enough powerful friends. Elon May succeed where Mark failed.
Time will tell.
As for X AI. A stroke of genius to own a data machine like X in a time when AI will start running out of free data.
It will be interesting to see if an enterprising Hive entrepreneur will figure out how to monetize Hive data.
I used to like Elon, but I believe he crossed over to the dark side. He is skilled at exploiting people and making money off of US taxpayers. I don't think that he is a good leader.
Not sure how he is making money off US taxpayers. Is he getting subsidies that arent available to others?
Here is how: https://fortune.com/2025/02/06/elon-musk-conflicts-interest-doge-tesla-spacex/
"The only problem is that Musk and his empire of businesses are significant government contractors—estimated to have won around $15.4 billion in work over the past decade."
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I always tell people that Elon Musk is more smarter than we all think. He is after something beyond the money. This man wants to claim huge ownership right