[WORLD] In October 2022, Elon Musk acquired Twitter for $44 billion, a move that many analysts deemed overvalued. The acquisition was swiftly followed by significant operational changes, including substantial workforce reductions and policy overhauls. These actions led to a sharp decline in advertising revenue, as major brands withdrew their support due to content moderation concerns. By early 2023, the company's valuation had plummeted, and it faced mounting debts, pushing it to the brink of bankruptcy.
Strategic Partnership with xAI
In a bid to stabilize the company, Musk orchestrated a strategic partnership with his artificial intelligence startup, xAI. X secured a 25% stake in xAI, which was later adjusted to 10%. As xAI's valuation surged, this investment became a crucial asset for X, providing much-needed financial relief and helping to cover operational costs.
Political Alliances and Advertising Rebound
Musk's growing political influence, particularly his alignment with President Donald Trump, played a pivotal role in luring back advertisers. His appointment to the Department of Government Efficiency (DOGE) underscored his political clout. This renewed confidence among advertisers contributed to a rebound in ad spending, bolstering X's revenue streams.
Merger and Financial Recovery
In March 2025, Musk announced a merger between X and xAI, valuing the combined entity at over $100 billion. This move was complemented by aggressive cost-cutting measures and successful debt sales totaling over $10 billion, which restored investor confidence. The merger facilitated Musk’s vision of transforming X into an “everything app” powered by xAI’s Grok chatbot, marking a significant turnaround from the company's previous financial distress.
Current Financial Standing
As of early 2025, X's financials appear to be recovering. Wall Street banks are preparing to sell up to $3 billion in debt holdings from the 2022 acquisition, with financial data showing about $1.2 billion in adjusted EBITDA for 2024. Despite these positive indicators, the company still faces challenges, including decreased cash reserves and the need to fully regain advertiser trust.
Elon Musk's multifaceted strategy—encompassing strategic partnerships, political alliances, and financial restructuring—has been instrumental in rescuing X from the brink of collapse. While the company has made significant strides towards recovery, ongoing efforts will be essential to ensure sustained growth and stability in the competitive social media landscape.
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