Phoenix Technology News Beijing time, April 9, the Wall Street Journal posted on Tuesday that after being acquired by Elon Musk, X was once in a critical situation and was on the verge of bankruptcy. However, Musk used his other company, xAI, and his close relationship with US President Trump to pull X back from the cliff and make it an AI giant with a valuation of over 800 billion yuan.

In January, a group of investors gathered at the Morgan Stanley New York office to listen to X's sales pitch, eager to invest in a debt that Wall Street once avoided. At the event, the phone was banned and listeners were told to stay in a seat until X CEO Linda Yaccarino and others left the room. Jacarino and others made brief speeches at the event and did not accept questions from the audience.

In 2022, Musk spent $44 billion to acquire Twitter (now called X), of which $13 billion was loaned by seven banks including Morgan Stanley. Banks usually sell these debts to investors in the form of tradable bonds after issuing loans, thereby transferring the risk to subscribers.

Banks such as Morgan Stanley originally planned to sell $3 billion in bonds at 95 cents a dollar, but ended up selling more than $10 billion in bonds at a higher price. The success of this bond sale proves that investors believe X has the ability to attract advertisers to return, thanks in large part to Musk's close relationship with Trump .

X

X

In addition, another important factor that contributed to the successful sale of the bond is that X may one day merge with a more popular and more upward potential company, Musk's artificial intelligence company xAI. X executives said in a private meeting with Wall Street investors that X is likely to eventually merge with xAI. xAI develops Grok chatbots.

On the verge of bankruptcy

Musk said he never let investors suffer losses, but for a long time, he looked like he was going to fall on X. After Musk acquired X in 2022, advertisers evacuated due to content review concerns. X's income declines, and loans are expected to become a non-performing asset of banks. One month after Musk took over, he said the company was on the verge of bankruptcy.

X's revenue in 2023 fell to $3 billion from about $4.6 billion in 2022 , people familiar with the matter said . At the beginning of 2023, asset management company Fidelity Investment valued X only about one-third of Musk's acquisition price.

Musk tried to convince worried advertisers to return, offering big advertising offers at one point, and even threatened advertisers that they would lose their certification if they spend less on ads.

Make a comeback

First, X gets the pull of xAI. xAI is a startup founded by Musk in the spring of 2023, aiming to compete with OpenAI. X provides xAI with the chips and other critical hardware needed to build AI models. In return, X acquired a 25% stake in xAI.

As xAI valuation soared, these shares became one of the most valuable assets on X's balance sheet.

Then last year, Musk's relationship with Trump got closer and closer and made great contributions to Trump's victory. Musk's intimate relationship with Trump helped convince some advertisers to return to X.

Although X's revenue in 2024 fell again to about $2.6 billion , it rebounded in the last quarter of last year, people familiar with the matter said. Moreover, X is actively cutting costs.

Make a big move

Musk and his advisers have long considered merging X and xAI , a plan that will speed up after the U.S. election, people familiar with the matter said . To achieve this, they knew they needed to successfully perform a few operations in the right order, and also needed a little luck.

After the US election, Musk's influence increased greatly. X has adopted a new strategy to increase advertising revenue. In December, a lawyer from X called an attorney for advertising group EPG, implying that EPG’s $13 billion merger deal with rival EPG could be hampered by Trump’s administration intervention, as Musk could play an important role in the deal (threatening). Ephi then reached a new annual agreement with X on advertising spending .

Then, other advertisers also began to increase their advertising investment in X. Among them, Amazon's attitude has also changed, increasing advertising spending on X starting in January.

In early March this year, X raised about $900 million from new and old investors, a valuation just slightly higher than the price Musk had when he initially acquired X. This financing made X's valuation readjust, making it more consistent with Musk's valuation when he acquired X.

Musk and Trump

Musk and Trump

Just before announcing the merger of X and xAI, Musk spoke at a summit organized by JPMorgan Chase’s global technology banking chairman Madhu Namburi, recalling his early days after his acquisition of X.

He boasted to listeners including Ivanka Trump, former Alphabet CEO Larry Page, OpenAI CEO Sam Altman and Trump's cryptocurrency head David Sacks that X's valuation is higher than when he acquired it and that the company's current profitability is greatly improved.

800 billion AI giant was born

At the end of last month, Musk announced on X that it would merge X with xAI, and the valuation of the new company reached US$113 billion (about RMB 829.3 billion). For X, it incorporates a larger company that participates in global competitions to develop cutting-edge generative AI, which will allow it to raise funds at a higher valuation. This valuation was unimaginable a few years ago.

Moreover, Musk reached the deal before Trump announced his new tariff policy. Trump's tariff policy essentially shut down the trading market.

In addition, this also brings Musk closer to his long-term goal: to build X into a "universal application" where users can share news, pay bills and entertain themselves. The merged company will first focus on integrating xAI's chatbot Grok with X to make it the core of the app experience, similar to Google's integration of AI capabilities into search, people familiar with the matter said. (Author/Xiao Yu)

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