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The xAI–X merger is a good deal — if you’re betting on Musk’s empire | TechCrunch

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Elon Musk announced that his AI startup, xAI, had acquired his social media company, X (formerly known as Twitter ), in an all-stock deal, it raised some eyebrows.

But in many ways, the deal made sense.

It also pointed to something deeper about how Musk ’s empire works: investing in any one of his companies isn’t about a quick return on investment.

Investors are buying into the mysticism around Musk and swallowing whole a narrative of success.

X is facing an ongoing lawsuit from the Securities and Exchange Commission .

The suit accuses Musk of misleading investors by delaying the disclosure of his previous investments in Twitter .

The SEC has argued that this allowed Musk to buy more Twitter shares at artificially low prices.

Dan Wang , a professor at Columbia Business School , said the biggest immediate risk factor for investors is the ongoing lawsuit.

Wang listed a few other risk factors, such as anticompetition and user privacy concerns.