By Allan Sloan

This is commentary by Allan Sloan, an independent business journalist and seven-time winner of the Loeb Award, business journalism's highest honor.

Elon Musk is not only a financial genius who has become the wealthiest person on earth. But even though his political star is dimming in Trumpworld, it is clear from one of Musk's recent, relatively-little-noticed maneuvers that he is a marketing genius, too.

I'm talking about the pronouncement that Musk issued on March 27, before his and President Donald Trump's Wisconsin Supreme Court campaign came a cropper, that he is having the xAI branch of his empire buy another branch: X, formerly Twitter, which has been a financial fiasco.

This deal helps mitigate a serious embarrassment that helped lead to a twelve-digit reduction in Musk's financial wealth this year, as calculated by the Bloomberg Billionaires Index.

Let's look at the numbers behind the X-into-xAI deal, which many media outlets keep getting wrong. Think of this article as my personal cliché -- what I call a fun with numbers story.

When Musk acquired Twitter three years ago, he paid $44 billion for the stock, including a batch that he owned personally. But there were also $2.5 billion of expenses, which many articles have overlooked when calculating what the deal cost. Hence the total cost was $46.5 billion, not the often-repeated $44 billion.

Musk and his co-investors put about $33 billion -- the same valuation that Musk placed on xAI's purchase of X's stock -- into the deal. The other $13.5 billion needed to take the social-media network private came from debt that X took on. As best I can tell -- I've never gotten anyone in Musk-land to respond to any of my queries -- the xAI purchase of X is a $45 billion deal. That is $33 billion for the stock, plus assuming $12 billion of debt.

For X shareholders, it is a break-even 33-for-33 deal. Which is the point, no doubt, of the $33 billion stated purchase price. Now, let me show you why these numbers matter to Musk's reputation even more than they matter to his pocketbook.

One of the largely-overlooked aspects of Musk's Twitter takeover is that he had 19 Wall Street partners who bore part of the cost and until now have been suffering losses.

In all, Musk's co-investors put a bit more than $7 billion into his Twitter buyout, and Musk put in about $26 billion.

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Even though X didn't trade publicly, one of his co-investors -- Fidelity Investments -- swapped Twitter shares in some of its mutual funds for stock in X rather than cashing them in at $54.20. (A price that seems to be a drug-related inside joke, given that 420 is a reference to smoking marijuana.) Because investors buy and sell the X-holding Fidelity funds at the funds' net asset value, Fidelity had to do the best it could to attribute an accurate value to X.

So I began to use the valuation that Fidelity's Contrafund attributed to its X stake in its monthly filings so I could track X's value decline, and wrote several articles about it for Fast Company.

As of Jan. 31 of this year, Fidelity's funds showed a decline of 70.5% on their X stakes.

That decline implies an $18 billion decline in Musk's wealth. More important, his co-investors were looking at a $5 billion paper loss. But now, by shifting X from one of his pockets to another, the loss for his co-investors has disappeared.

That helps his reputation, for sure, the next time players have to decide if they want to become his partners.

Pretty neat, isn't it?

Tesla's sales and stock price have been dropping sharply this year, in another hit to his reputation as a financial and management genius. Musk had a brief personal financial triumph Wednesday when Politico reported that he might step away from his partnership with Trump. But the bounce didn't last. Tesla's stock was down more than 40% after Friday's close.

Trump's spokeswoman said it's "garbage" that Musk will split with Trump sooner than planned. His job with the government has to end after 130 days.

Of course, various people, including me, have predicted an end to the Musk-Trump bromance. If you know Trump's history -- I've been dealing with him for close to 30 years -- you'd know that since Trump acts as if he's never made a mistake or a misjudgment, that any problems arising from the bromance would be blamed on Musk. Not on Trump.

All things considered, it is clear that Musk has coped with his Twitter and political miscues pretty well.

And who knows? Perhaps the world's richest person can parlay his sales skills to create yet another company. Musk Marketing, anyone?

Disclosure: I own one share of both Tesla and DJT to have guaranteed access to their shareholder reports. I'll donate to charity any profit that I realize on either stock.

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April 07, 2025 16:05 ET (20:05 GMT)

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