According to media reports citing insiders, investors in the social media platform X are obtaining huge returns, thanks to the soaring valuation of the ai startup xAI under the world's richest man Elon Musk, as Musk allocated xAI shares to the investors who previously helped him acquire X.

Musk acquired X (then known as Twitter) for 44 billion dollars in October 2022 and completed its privatization. When Musk proposed the acquisition of X, his quote was nearly 40% higher than X's market cap at the time. After Musk took control of X, the company's value significantly decreased. In September of this year, some investment institutions reported that X's valuation has shrunk to 9.4 billion dollars, down nearly 80% from the acquisition price.

During Musk's acquisition of X, some investors collectively contributed 7.1 billion dollars, while the remaining funds came from bank loans and Musk's own wealth. These investors include Fidelity Investments,$Oracle (ORCL.US)$co-founder Larry Ellison, 'Middle Eastern Buffett' Alwaleed, Twitter founder Jack Dorsey, as well as Silicon Valley venture capital firms Sequoia Capital and Andreessen Horowitz.

It is reported that Musk provided the above-mentioned investors with 25% of xAI shares.

Musk established xAI last year to compete with OpenAI. According to media reports, xAI raised 5 billion dollars in its latest round of financing, reaching a valuation of 50 billion dollars, doubling in just six months.

In May of this year, xAI conducted its first round of financing with a valuation of 24 billion dollars, raising 6 billion dollars. At that time, investors X, including Sequoia Capital, Andreessen Horowitz, Alwaleed, and Fidelity Investments, chose to continue injecting funds into xAI.

Insiders revealed that in the latest round of financing of 5 billion dollars, only investors who participated in the first round were allowed to continue investing.

Musk stated on X in November 2023 that X investors would own 25% of xAI, but he did not specify the details at that time.

Insiders said that in the two rounds of financing, X investors obtained a quarter of xAI, and the new shares issued in this financing did not dilute their ownership ratio.

Many investors view their support for Musk's acquisition of X as a vote of confidence in Musk himself and a way to integrate into his business network. Given Trump is about to return to the White House and Musk has his deep trust, this strategy seems particularly wise.

An investor from Musk's company stated, "There are very few maxims in the tech world that truly hold up, and 'Never bet against Elon' is one of them."

Editor/Rocky