When Elon Musk announced that his beginning of his, Xai, had won his social media company, X (previously known as Twitter), in an agreement of all shares, she raised some eyebrows. But in many ways, the deal made sense. Xai’s chatbot, Grok, was already deeply integrated with X, X was financially blazing, and Musk needed a way to make his 44 billion dollars look less like a strategic game for Agi.
She also showed something deeper about how Musk’s empire works: investing in any of its companies is not about a rapid investment return. It is about buying mysticism about Musk and swallowing the whole story of success that exceeds current numbers.
Some call it harsh, telling the story of the excess and underestimated musut. But the market is increasingly tolerant-perpetrating, even-invested by narrative, especially when the start connecting the tale together is one of the president’s right-hand men.
“All Elon’s companies today are essentially a company,” Yoni Rchtman, a director at Slow Ventures, told Techcrunch. “It is all now Elon, Inc. There are people who work in numerous companies at the same time. They share a network of capital connections. They do business with each other, and he treats them all effectively as a company. So (Xai-X Union) just finishes some of the fiction that both businesses were separated.”
The thought among Musk’s bulls like Ron Baron, the founder of the investment management firm Baron Capital, is that “everything only (Musk) does is to help everything else he does”, as Baron said. Other businesses under musk control include Tesla, Spacex, The Boring Company and Neuralralk – some of which are reported to share resources.
“When (Musk) bought Twitter, did he have in his mind that there is an opportunity to have this data, a tremendous value for licensing? When he decided he wanted to go to March with Spacex, did he really think that there is a real opportunity here for the Internet all over the world, and there will be hundreds of billions of dollars? You letter.
Baron Capital has invested throughout Musk’s ecosystem, an example of investor intersection among different billionaire companies. Firms like 8VC, Andreessen Horowitz, DFJ growth, Fidelity investments, Manhattan Venture Partners, Saudi Arabia PIF, Sequoia Capital, Vy Capital, and others also hold positions across the musk corporations.
This restores us to the Xai-X deal. Pundits asked how the purchase could estimate X by $ 33 billion, more than three times its estimate just a few months ago, and how XA can estimate $ 80 billion given that the company is reported to have little in revenue. But estimates are not always based on what exists today. On the contrary, they take into account what investors hope for – and this is especially true when it comes to Musk’s ventures.
Just look at Tesla. The manufacturer of electric vehicles has been treated as a technology action for years, despite having a car, largely based on the belief that Tesla will one day unlock the autonomy of foundation in the form of cars and humanoid robots.
“The reason why (Tesla’s) shares trades 80 times revenue and the Comp group trades 25 times profits is that people are making a bet for a long term, and has nothing to do with the numbers this year,” Gene Munster, managing partner at the Deepwater Asset Management, told Techcrunch. “This is one of Elon’s superpowers, this ability to keep investors engaged for a long term.”
Munster’s firm has invested in X, Xai and Tesla. Exactly exactly the type of supporter of all moss that will benefit more from an agreement like Xai by buying X, assuming that Musk can truly provide his commitment to marry real -time data and real -time distribution platform with Xai’s infrastructure and his expertise.
Of course, the consolidated value also comes with increased risk.
Dan Wang, a professor at the Columbia Business School, whose research stands at the business and society’s intersection, told Techcrunch that the biggest immediate risk factor for investors is the constant lawsuit X is facing the insurance and exchange commission (SEC). The lawsuit accuses Musk of fraudulent investors by delaying the discovery of his previous investments on Twitter. The SEC has argued that this allowed Musk to buy more shares on Twitter at low prices artificially.
Wang listed several other risk considerations, such as anti -compliance and user intimacy concerns, especially in terms of how X selected all users in the model training data collection. The change of choice has already raised the anger of a regulator, the DPC of Ireland, who recently began to investigate it as a possible violation of Europe’s GDP law.
“Another type of danger here is that there is no consensus framework for how the market will be regulated, but you are already seeing traces of this in Europe and, until recently, in California,” Wang said. “Many of these frames are about how the models of it are placed in the dissemination of information (…) they attribute the responsibility to the companies that are creating its models, and providing access to those models.”
Musk can also simply lose interest in a project, Rchtman said.
“I think this is what many Tesla shareholders are feeling now,” he said, “where for the last few months, Elon’s number one company has been the Trump campaign, and his other projects have fallen.”
When asked about some of these risk factors, Munster appeared undoubtedly. He suggested that they are indecisive given the size of, for example, the proposal of Xai’s value and the potential to become a predominant player in him.
“We are basting the firm with the belief that it will be more transformer than what people think,” he said. “What is the value (…) of one of the four brains the world will continue?”
Rechtman said Bulls Musk are not blindly loyal, but simply believe in Musk’s superpower to “bend capital markets with his will” in a way that allows him to do things and build businesses that no one else can.
“The people who are in these businesses have just gone during Elon, and they will continue to go during Elon,” Rechtman said. “So it is not surprising that I will simply continue to tell you that the emperor is wearing clothes.”
Not for nothing, buying in the most speculative bets of musk, like X, is a way to potentially unlock more more investment opportunities in muskverse, Rechtman said.
“Spacex is a real thing and will never go to public,” he said. “So the only way to invest in Spacex is to get access to the tender. And the only way to get into the tender is to be in Elon’s good graces.”
