X’s rock-bottom leaves Elon Musk little to lose

X marks the Grok. Elon Musk does well when his back is against the wall. The billionaire famously slept on the floor of his Tesla office when it looked like the company he runs was losing its charge. With a $700 billion market value today, it’s hard to imagine what could take the electric-car maker down. His investment in X now fills the longshot role, which leaves him little to lose.

After a series of controversial decisions already made at the social network formerly known as Twitter, Musk said on Friday that he was planning to introduce a new artificial intelligence chatbot on the platform. Grok, as it is called, has “real-time access to info via the X platform,” Musk noted in a post, which gives it a “massive advantage” over other AI models. The decision follows stock grants to employees valuing X at $19 billion, according to the New York Times, a 55% discount to the purchase price a year ago.

Although the product is still being tested, Musk says it already can out-compute OpenAI’s GPT-3.5 and Meta Platforms' Llama 2. Even if he is overhyping the bot’s abilities, as is his wont, user data from X, which can help drive better accuracy and performance, might be a huge edge.

Musk is iterating his own intelligence, too, when it comes to social media. Earlier this year, he threatened to sue Microsoft, alleging that the software developer was illegally using X data to train its AI models. In March, he even started charging developers steep prices for access to the previously free troves of posts. That, along with attempts to charge subscriptions, tweak access for news outlets and upend verification processes, show just how much Musk is working to find ways to monetize X.

He might as well get wacky. At $19 billion, the equity is worth a mere $6 billion, and it could rapidly dwindle further. New Chief Executive Linda Yaccarino said it could be profitable by next year, but X hasn’t, in its history, generated consistent profit. Rival Meta Platforms managed to bounce back, but the top line is only expected to grow 15% in 2023. X's revenue, by comparison, has plummeted since last year, according to Reuters. X may be near, or already has hit, rock bottom, right where Musk often does his best work.

Context News

Billionaire Elon Musk, owner of X, formerly known as Twitter, on Nov. 4 unveiled a new artificial intelligence-powered chatbot called “Grok,” available to all of the social media network’s paid subscribers. He wrote in a post that the chatbot would be able to access information from the X platform in real-time, which he described as a “massive advantage” over other models. X’s artificial intelligence arm shared internally conducted research on Nov. 4 that claimed the AI model underlying Grok outperforms some models created by rivals OpenAI and Meta Platforms in terms of its math and reasoning abilities. The company formerly known as Twitter handed out stock grants to its employees in paperwork that valued it at about $19 billion, the New York Times reported on Oct. 30, less than the $44 billion Musk paid to acquire the company last year.

(Source: Reuters Breakingviews)