Elon Musk’s $44 Billion Gamble on X Might Finally Pay Off

When Elon Musk acquired Twitter for $44 billion in October 2022, many believed he had overpaid. The sweeping changes he implemented – mass layoffs, relaxed content moderation policies, and a complete rebranding to X – threw the company into turmoil. Advertisers fled, the platform’s value plummeted, and it seemed like an impossible investment to recover.

However, recent reports suggest Musk may be on the verge of proving his critics wrong. Bloomberg revealed that X is in discussions to secure funding at a valuation of $44 billion – the same amount Musk originally paid. While negotiations are still ongoing, and a deal isn’t guaranteed, the platform has seen an unexpected revival.

Advertisers Are Returning

One of the biggest challenges X faced under Musk was the loss of major advertisers, many of whom distanced themselves after their ads appeared alongside controversial content. However, companies like Amazon and Apple are reportedly reinvesting in campaigns on X, signalling a shift in perception.

This return of advertisers has also helped bondholders recover losses. According to recent reports, a group of investors was able to sell billions of dollars in X-related debt at 97 cents on the dollar – an improvement from the deep financial hole they were in just months ago.

The Role of xAI in X’s Valuation

Beyond ad revenue, X’s financial boost may be linked to Musk’s artificial intelligence company, xAI. Reports indicate that X holds a stake in xAI, which is currently seeking a $75 billion valuation. If successful, this connection could further elevate X’s worth and reinforce Musk’s vision of an interconnected tech empire.

The Trump Factor

Perhaps the most significant element of X’s resurgence is Musk himself – specifically, his growing political influence. As a special government employee under President Donald Trump, Musk has positioned himself at the centre of policy discussions, granting X a unique relevance in today’s political landscape.

X has become a major platform for pro-Trump narratives, echoing the strategy that helped Truth Social, Trump’s social media company, secure a market valuation exceeding $6 billion despite minimal revenue. Musk has leveraged X to amplify political messages, engage with conservative audiences, and drive conversations that align with his views on free speech and governance.

Wedbush analyst Dan Ives suggests that Trump’s reelection alone may have doubled X’s valuation. The platform’s renewed importance as a hub for political discourse could be a key factor in attracting investors and advertisers alike.

From Crisis to Stability

X’s potential return to its original $44 billion valuation is remarkable given its financial struggles over the past two years. Fidelity, which holds a stake in X, valued the company at just 20% of its purchase price in October 2024. By December, that figure had risen to 30%, but it was still far below Musk’s investment.

Musk’s early decisions after acquiring Twitter – firing 80% of the workforce, reinstating previously banned accounts, and altering the verification system – contributed to instability. His confrontations with advertisers, including a public outburst at Disney CEO Bob Iger, further strained business relationships.

The company also faced legal battles, including a lawsuit against the Center for Countering Digital Hate (CCDH) over reports criticizing X’s handling of hate speech. A judge ultimately dismissed the case, stating that Musk’s company was attempting to punish critics rather than defend its policies.

Despite these challenges, X has made some progress in diversifying its offerings. A recent partnership with Visa aims to introduce digital wallet services, bringing Musk’s vision of an “everything app” closer to reality. However, many of X’s core features, including the Spaces audio tool, continue to experience technical issues, underscoring the platform’s ongoing struggles.

The Uncertain Future of X

While Musk has managed to stabilize X for now, the long-term outlook remains uncertain. The return of major advertisers may be influenced by broader efforts to align with Trump’s administration, but it’s unclear whether they will stay if the platform’s reputation faces further risks.

Additionally, X continues to face fierce competition from emerging social media platforms. Alternatives like Bluesky and Threads have attracted users who previously relied on Twitter, and Musk’s unpredictable leadership could drive further defections.

Still, the fact that Musk has managed to steer X away from the brink of financial collapse is no small feat. Whether he can sustain this momentum and turn X into the all-encompassing digital ecosystem he envisions remains to be seen.