When Elon Musk announced that his startup in Ai, Xai, had acquired his social media company, X (formerly known as Twitter), in a stock agreement, he raised eyebrows. But in many ways, the agreement made sense. The Xai chatbot, Grok, was already deeply integrated into X, X waded financiallyAnd Musk needed a way to ensure that his acquisition of Twitter of $ 44 billion looks less like an impulsive takeover and more as a strategic piece for AG domination.
He also underlined something deeper on the functioning of the Musk Empire: investing in one of his companies does not concern a rapid return on investment. It is a question of buying in mysticism around musk and making a successful story that goes beyond real numbers.
Some call it a pointemphasizing the story of Musk on overpromization and subdisposition. But the market is increasingly tolerant – welcoming, even – investments focused on the story, especially when the thread linking history is one of the men in the president’s right hand.
“All Elon’s companies are today essentially one company,” said Techcrunch Yoni Rechtman, Slow Ventures director. “It’s already Elon, Inc., there are people who work simultaneously in several companies. They share a network of capital connections. They are dealing, and he treats them all effectively as a single company. [the xAI-X merger] finished part of the fiction that the two companies were separated. »»
Thought among the Musc bulls like Ron Baron, the founder of the Investment Management Company Baron Capital, is that “everything [Musk] helping everything he does, “like Baron the formulated. Other companies under the control of Musk include Tesla, SpaceX, The Boring Company and Neuralink – some of which Would share resources.
“When [Musk] Buyed Twitter, did he in his mind that there is a possibility of having this data, an enormous value for licenses? When he decided that he wanted to go on Mars with SpaceX, did he really think that there was a real opportunity here for the Internet in the world, and that there will be hundreds of billions of dollars in income opportunity? When he started with electric vehicles for Tesla, he really thought that it will merge in self-deputy, where you can earn hundreds of billions of dollars per year of additional profits and grok […] And are you going to have connected cars all over the world? […] All these companies are linked. It is the ecosystem. It is Elon’s ecosystem, and I think it’s really interesting when you look at it in this way. “”
Baron Capital has invested in the Musk ecosystem, an example of the crossing of investors between the various companies in the billionaire. Companies like 8VC, Andreessen Horowitz, DFJ Growth, Fidelity Investments, Manhattan Venture Partners, Saudi Arabia, Sequoia Capital, Vy Capital, and others also occupy positions on the web of Musk companies.
This brings us back to the XAI-X agreement. Experts wondered how the acquisition could enhance X at 33 billion dollars, more than triple its assessment a few months ago, and how it could enhance Xai at 80 billion dollars given the company of IA would have has little income. But the evaluations are not always based on what exists today. On the contrary, they take into account what investors hope – and this is particularly true with regard to Musk companies.
Just look at Tesla. The manufacturer of electric vehicles has been treated as a stock of technology for years despite the fact that it has margins of automaker, largely on the conviction that Tesla will one day unlock revolutionary autonomy in the form of autonomous cars and humanoid robots.
“The reason why [Tesla’s] The actions are negotiated at 80 times the profits and the group comp is negotiating the profits at 25 times, it is that people make a long -term bet, and it is not what is happening to the figures this year, “said Gene Munster, partner of the management of deep water, told Techcrunch.” It is one of Elon’s superpowers, this ability to maintain investors committed for the long term. “”
Munster’s company has invested in XA, XAI and Tesla. This is exactly the type of Musk All-In funder who has the most from one case like Xai Buying X, assuming that Musk can indeed deliver his commitment to marry the data platform and data distribution of X with the infrastructure and expertise of XAI AI.
Of course, the consolidated value also includes an increased risk.
Dan Wang, professor at Columbia Business School whose research is at the intersection of business and the company, told Techcrunch that the largest immediate risk factor for investors is the current trial that was faced with the Securities and Exchange Commission (SEC). The costume accuses Musk of having deceived investors by delaying the disclosure of his previous investments in Twitter. The dry argued that it allowed Musk to buy more Twitter units at artificially low prices.
Wang has listed some other risk considerations, such as user anticoncurable and confidentiality concerns, in particular how X discreetly opted all users in data collection for AI model training. The change of opt-in has already raised the anger of a regulator, the DPC of Ireland, which recently began to investigate its potential violation of the European GDPR law.
“Another type of risk here is that there is no consensual framework on how the AI market will be regulated, but you already see traces in Europe and, until recently, in California,” said Wang. “Many of these executives have to do with the way AI models are deployed in terms of information distribution […] They attribute responsibility to companies that create AI models, as well as access to these models. »»
Musk could also simply lose any interest in a project, said Rechtman.
“I think that is what many Tesla shareholders are feeling right now,” he said, “where for the last months, the number one company in Elon has been the Trump campaign, and its other projects have been Langui.”
Asked about some of these risk factors, Munster appeared without queue. He suggested that they are without consequence given the enormity, for example, the value proposition of XAI and the potential to become a dominant actor in AI.
“We bet the company on the conviction that AI will be more transformative than people think,” he said. “What is the value […] One of the four brains on which the world will work? »»
Rechtman said that muscular bulls are not blindly faithful, in itself, but simply trust Musk’s superpower to “fold the capital markets to his will” in a way that allows him to do things and create companies that no one else can.
“People who are part of those companies have just passed to Long Elon, and they will continue to go to Long Elon,” said Rechtman. “It is therefore not surprising for me that they continue to tell you that the emperor is wearing clothes.”
Not for nothing, the purchase of Musk’s more speculative bets, like X, is a way of potentially unlocking more investment opportunities in Muskverse, said Rechtman.
“SpaceX is a real thing, and that will never make public,” he said. “So the only way to invest in SpaceX is to access offers. And the only way to access tenders is to be in the good graces of Elon.”
