Tesla Shares Fall After Musk Merges xAI and X in All-Stock Deal Valued at $113 Billion

Tesla Inc. (TSLA, Financials) shares fell 3.5% Friday and extended losses by another 6% in premarket trading Monday after CEO Elon Musk said his artificial intelligence company xAI acquired social media platform X in an all-stock transaction.

Musk said the deal assigns xAI a valuation of $80 billion and X $33 billion, based on $45 billion in equity minus $12 billion in debt. He posted the announcement on X, formerly known as Twitter, which he acquired in October 2022 for $44 billion.

The acquisition formalizes ongoing integration between the two companies. xAI’s Grok chatbot, trained on user content from X, already operates on the platform and became available as a standalone iOS app in January 2025.

Musk said the deal will consolidate both firms’ data, compute infrastructure, model development, user reach and personnel. He described the merger as a step toward delivering more intelligent user experiences and promoting xAI’s broader mission to seek truth and advance knowledge.

Founded in 2023, xAI raised $5 billion in recent funding, which valued the company at $50 billion. Musk previously said he would bring a proposal to Tesla’s board of directors for a $5 billion investment in xAI following a favorable result from an online poll. Tesla has not issued a statement on the proposal.

X had reportedly been seeking to raise capital at a $44 billion valuation prior to the acquisition. Musk did not say how the transaction might affect that effort.

This article first appeared on GuruFocus.