Elon Musk denies $500 million investment in xAI – key information

• Elon Musk has denied reports of a $500 million investment in xAI, sparking controversy in the market and stressing that the information is not accurate.
• Current talks are for a valuation of xAI in the $15-20 billion range, and Musk and investors plan to agree on the terms of the investment in the coming weeks, also considering alternative forms of support.
• Musk is encouraging equity investors in X to invest at least 25% of their investment amount in xAI, as a financial strategy to increase investors’ commitment to the new project.
• xAI has conducted an $865.3 million private placement of securities to accredited investors with resale restrictions, gaining market attention as an alternative to OpenAI.

Controversy surrounding the investment!

Elon Musk has vehemently denied reports of a $500 million investment in his artificial intelligence company, xAI, sparking controversy in the market. According to a Bloomberg article, talks about xAI’s valuation are settling in the $15 to $20 billion range, but Musk strongly denied this, responding to a user’s post on X. It is speculated that Musk and investors are intensively negotiating the terms of the investment, and are considering alternative forms of support, such as obtaining additional computing power, instead of buying back xAI shares.

xAI’s financial strategy

In November 2023. Elon Musk announced that equity investors in X, his other company, would receive a 25% stake in xAI. This means they are encouraged to invest at least 25% of the amount they invested in X in the new xAI project. For example, if they invested $10 billion in X, Musk is encouraging them to invest $2.5 billion or more in xAI. Discussions are also underway about the possibility of obtaining computing power as an alternative or complement to xAI stock.

Summary

In December 2023, xAI secured a private sale of unregistered equity securities worth $865.3 million. An application filed with the U.S. Securities and Exchange Commission revealed that the securities are targeted at accredited investors with resale restrictions under Rule 506(b). So far, $134.7 million worth of securities have already been sold, with the first sale taking place on November 29, 2023. xAI, founded by Musk in 2023 as an alternative to OpenAI, is gaining more and more market attention with its innovative projects, such as chatbot Grok, powered by social media content from X.