By Kristen Kelly & Jen Saarbach, Co-Founders of The Wall Street Skinny
Elon Musk just bought Twitter…again. But this time, he bought it from himself — sort of. His artificial intelligence startup, xAI, acquired X (formerly Twitter) for a headline valuation of $33 billion in an all-stock deal.
So, if he paid $44 billion for Twitter back in 2022, why is the price now $33 billion? Did he score a discount?
Not really. Let’s break it down.
Equity Value vs. Enterprise Value
What the media’s calling a $33 billion “valuation” is actually the equity value of X — the value of its stock. But X also has about $12 billion in debt, most of which was added after Elon bought it in 2022.
So, the enterprise value (which includes debt) is actually closer to $45 billion.
That’s almost exactly what Elon paid for Twitter originally: $44 billion in equity + $600 million in debt.
$33B + $12B = $45B.
Think of it like buying a house. If you put $300K down and take out a $700K mortgage, you didn’t buy a $300K house — you bought a million-dollar one. Same thing here.
So Where Did the $33B Price Come From?
X is a private company. So its value isn’t set by a stock market ticker, but rather by recent fundraising rounds.
X raised capital earlier this year at — surprise — a $33 billion equity valuation. That’s the same price Elon is now using for the sale.
Guess who also participated in that funding round? Elon Musk. So he helped set the price.
Meanwhile, Fidelity — which invested in the original Twitter take-private — marked down its investment by 80% as of October 2024. So, despite the tech sector’s decline, X is somehow still being valued at 2022 levels.
Interesting.
How Ownership Dilution Works
Let’s say you owned 25% of xAI when it was valued at $80 billion.
Now, xAI is “buying” Twitter for $33 billion in stock. That means xAI is issuing new shares to X shareholders. The combined company is now worth $113 billion.
Your stake? It’s no longer 25%. It’s now 20 / 113 = ~17.7%.
Your piece of the pie just shrank — that’s dilution. Even if you gained Twitter in the deal, your ownership percentage of the company (and future earnings) went down.
So Who Really Wins?
Was Twitter worth $33 billion? Or $45 billion when you factor in the debt?
Was this a strategic merger between two aligned companies… or a valuation game that lets Elon say he didn’t overpay?
And what about the investors?
This isn’t a traditional deal. xAI and X share leadership, employees, data, and investors. Firms like Sequoia and Fidelity are investors in both companies. BlackRock invested in xAI, but not in Twitter — at least not directly. Even then, big firms often have multiple funds managing separate assets, so crossover can get murky.
So when xAI raises at $80 billion and buys X at $33 billion, it may not be cash changing hands — but it definitely changes how ownership is structured.
The Valuation Game
xAI raised in December at a $51 billion valuation. Suddenly it’s worth $80 billion… because Elon might raise again soon at $75 billion?
This deal essentially values X at 33/80 of xAI. That’s the exchange ratio — and that’s the real math driving the merger.
Strategically, the deal makes sense. These companies already functioned as one. Now it’s official. As Bloomberg columnist Matt Levine put it:
“Two companies that were owned by the same person (and some slightly non-overlapping friends) and shared employees and data and revenue and, you know, a name, are now one company. They were informally one company before, and they are formally one company now, and no money changed hands. It feels like a silly technicality to call this a big M&A deal.”
Still, the $33 billion price tag? It might be more about optics than economics.
We break all of this down — from dilution mechanics to Elon’s fundraising strategy — in this episode of the podcast.
Listen to the full discussion on The Wall Street Skinny Podcast