Elon Musk’s X Just Got More Valuable, Fidelity Says

Ignore the high-profile exodus of users to BlueSky and Meta’s Threads. Elon Musk’s X, née Twitter, is doing just fine.

At least according to Fidelity, which marked up the value of its X holdings by 32% in October, according to reporting from Axios this weekend. Could it be due to the rise of xAI, a sister company in the Musk empire? 

xAI Marks the Spot

Fidelity helped back Musk’s $44 billion Twitter takeover in 2022, and in the time since, it has continually marked down the valuation of its stake as high-profile advertisers have fled the site for more corporate-safe pastures. Even with the October markup, Fidelity still sees its position in X as worth 72% less than when it first got involved.

But now the tide may be turning. Musk has emerged — for now at least — as a key ally of the Trump 2.0 administration, placing X closer to the center of political culture. Meanwhile, the EV-solar panel-satellite-social media mogul has gone all-in on growing his artificial intelligence firm, xAI. Last month, sources told The Wall Street Journal that the firm scored a $5 billion fundraising round at a $50 billion valuation, more than double its value from earlier this year. And it’s slowly becoming clearer that the fate of X and xAI may be closely intertwined:

• According to Axios, X Holdings itself may have an equity stake in xAI, which could help explain Fidelity’s X markup. Separately, Musk has promised his X backers a 25% stake in xAI — a giant, delicious cherry on top of their melting social media sundae.
• Meanwhile, Musk’s ascent in Washington will likely see major corporate sponsors increasing their ad budget allocations to X as “political leverage,” one marketing consultant told the Financial Times last month. Speculation remains that Musk could ultimately merge X Holdings with Trump Media Technology Group.

Injunction Function: Musk certainly sees the rise of xAI as a race against industry first-mover OpenAI, where he served as an initial backer and member of the board of directors until resigning in 2018. Over the weekend, attorneys representing Musk and xAI filed a preliminary injunction against OpenAI asking a federal court to stop the company from re-organizing as a for-profit organization (xAI is for-profit). Musk’s attorneys also alleged OpenAI engaged in anticompetitive behavior when it asked investors not to back rivals.