It looks like I was right again in predicting Elon would recover his losses from his Twitter/X purchase. On November 5th, after Trump had won, I wrote:
Musk’s AI venture, xAI, was recently valued at $40 billion–that alone pays for Twitter. Tesla’s stock surge, up 11%, on Trump’s win also made Elon that much richer. In theory, Twitter/X was profitable for Musk if its spinoff is worth more than the actual service it originated from. It was quite ingenious what Musk had done: he rebranded X/Twitter as an AI company and integrated AI heavily into some of X’s features, so now he recouped his loss with the spinoff.
On March 28th, 2025, xAI repurchased Twitter at its original price, thanks to the valuation of xAI having risen so much over the past year from $20 to $120:
By late 2022, after the ink had dried and all legal options to contest the sale had been availed, it became immediately obvious Elon had gravely overpaid for Twitter. He had two choices: to continue where Dorsey had left off and just eat the loss, or make a pivot. Early on, Elon had tried to pivot Twitter to being a ‘free speech’ platform, but with little success. It’s not like the internet needed another ‘free speech zone’, as that is what 4chan and various decentralized Twitter alternatives had already accomplished.
Moreover, there was no way Elon could ever hope to recover his loss this way, due to advertisers and users defecting. Twitter becoming desanitized only helped to drive more advertisers away.
By 2024, things were looking grim. Twitter’s valuation had fallen to a quarter of the $54 billion originally paid. Even as recently as September 2024, Fidelity had revalued twitter to only 25% of what Elon had paid for it. The premium posts/subscriptions didn’t help much either, nor did his pivot to longer tweets and streaming. Nobody asked for yet another streaming platform, and streaming technology is buggy and resource-intensive compared to merely text tweets.
This has always been the problem with alt-tech: People do not need alternatives when the mainstream platforms, despite censorship, are superior already, or at least good enough. For an alternative platform to succeed, it has to be a true gamechanger, like Google in 2002, Facebook in 2004, or YouTube in 2005, in which it’s head and shoulders above the others and captures market share, or creates the market ex nihilo. Changing the name of the site to ‘X’ only added to the confusion. At least ‘to tweet something’ is a memorable and catchy verb phrase, but there is no equivalent for ‘X’.
And then it all changed, starting around mid-2024. Elon’s first smart move was endorsing Trump after the July 13 assassination attempt, when no other billionaire would. This allowed Twitter and Musk to access Trump’s huge base of supporters. Up until this point, many conservatives were still ambivalent about Musk. Trump returned the support in a series of livestreams, solidifying marriage. Also, with the 2024 U.S. Presidential election months away, the news cycle intensified, and people began to return to Twitter, as Twitter became seen as more relevant in what was becoming a more chaotic and uncertain world.
The second move, as mentioned above, was repurposing or rebranding Twitter as an extension of xAi, thank to Grok, which started out as a quirky distraction, but by late 2024 was a centerpiece of the site and heavily promoted. By riding the wave of the post-2023 AI boom elsewhere, like OpenAI and Deepmind/Gemini, and with the help of Twitter, xAi attainted a huge valuation, even if its language model is inferior compared to some of its competitors. Elon went all-in on pushing Grok to users, such as adding Grok/xAi icons everywhere and letting the Grok chatbot run loose on the site, which can be summoned by tagging it. This was the final rebranding or pivot, and by far the most successful.
It’s hard to escape Grok, unless you block it, I suppose.
AI is a sort of exception when it comes to tech, in that unlike Apple, Meta, Microsoft, or Google’s total dominance over phones, social networking, operating systems, or search engines respectively, the AI marketplace has managed to accommodate many players, without the monopolistic or winner-take-all pattern observed with operating systems or social networks. It’s possible for a new chat bot to debut overnight, and quickly gain a sky-high valuation and tons of users without the valuation or market share of existing chat bots falling.
So yet again, Elon has managed to defy the doubters. Twitter had lost much of its old valuation and many users and advertisers. But rather than trying to repair or restore Twitter, which was likely irreparably damaged, he pivoted instead.