Banking crisis due to ELON Musk!!
Musk and other investors brought roughly $30 billion in cash to the table, while the banks supplied the other $13 billion to finalize the purchase. But we now know the people who work at those banks have felt considerable financial pain from agreeing to something so stupid. How much pain? As the Journal tells it, top investment bankers at Barclays were told at a dinner in late 2023 that everyone would be getting at least a 40% pay cut. After everyone got their bonuses for the year, about 50 of the company’s 200 directors left, according to the Journal.
Every bank in the deal, including Morgan Stanley, Bank of America, Barclays, Mitsubishi UFJ Financial Group, BNP Paribas, Mizuho, and Société Générale, have been struggling with this hanging on their books. And talks about restructuring the deal haven’t been fruitful, according to the Journal. As countless journalists at places like Bloomberg have previously pointed out, those same banks want to have access to anything Musk may be cooking up in the future, including a possible IPO of SpaceX, arguably the smartest thing the billionaire ever founded. SpaceX is a powerhouse in commercial space and benefits tremendously from government contracts. Starlink, the satellite internet arm of SpaceX, may even be spun off and could see its own IPO in the future. And the hype around all of that puts these banks in a tricky position as Musk continues to hurt their financial positions with his dumb Twitter purchase.
X is currently valued at roughly $19 billion, less than half what Musk paid for it. And yet Musk has maintained a reputation among some of the dumbest people that he’s still a genius. The tech oligarch remains surrounded by a bubble of sycophants on X constantly telling him what an amazing person he is. The entire spectacle is likely a demonstration of the primary reason he bought the site. Musk bought himself a safe space where everyone is constantly telling him he’s a genius. And that’s worth a lot of money to one of the wealthiest men in the world.
To be sure, the banks have continued to receive interest payments on the loans, which are typically above market averages due to the higher level of risk associated with tech buyouts.
However, it seems unlikely that X’s enterprise value will approach the $44 billion that Musk paid after the media company disclosed a $19 billion valuation as of last year.
Citing people familiar with the deal, the Journal reported that the banks have accumulated paper losses on the debt totaling hundreds of millions of dollars each. This in turn has caused banks to reduce the capital available to finance other deals.
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xAI, Elon Musk’s AI company, has raised $6 billion in a Series C financing round.
The company announced this week that Andreessen Horowitz , Blackrock, Fidelity, Lightspeed, MGX, Morgan Stanley, OIA, QIA, Sequoia Capital, Valor Equity Partners, Vy Capital, Nvidia, AMD, and others participated.
Kingdom Holdings, the Saudi conglomerate holding company, invested roughly $400 million in the round, according to a public filing. The filing also revealed that xAI is now valued at $45 billion, close to double its previous valuation.
The new cash brings xAI’s total raised to $12 billion, adding to the $6 billion tranche xAI raised in May.
According to the Financial Times, only investors who’d backed xAI in its previous fundraising round were permitted to participate in this one. Reportedly, investors who helped finance Musk’s Twitter acquisition were given access to up to 25% of xAI’s shares.
“xAI’s most powerful model yet … is currently training and we are now focused on launching innovative new consumer and enterprise products,” xAI said in a statement. “The funds from this financing round will be used to further accelerate our advanced infrastructure, ship groundbreaking products … and accelerate … research and development.”
https://techcrunch.com/2024/12/25/elon-musks-xai-lands-billions-in-new-cash-to-fuel-ai-ambitions/
NOT LONG AFTER Elon Musk announced plans to acquire Twitter last March, he mused about open sourcing “the algorithm” that determines how tweets are surfaced in user feeds so that it could be inspected for bias.
His fans—as well as those who believe the social media platform harbors a left-wing bias—were delighted.
But today, as part of an aggressive plan to trim costs that involves firing thousands of Twitter employees, Musk’s management team cut a team of artificial intelligence researchers who were working toward making Twitter’s algorithms more transparent and fair.
https://www.wired.com/story/twitter-ethical-ai-team/
“Grok is designed to answer questions with a bit of wit and has a rebellious streak, so please don’t use it if you hate humor!” xAI said in its blogpost.
The bot is still in an early stage of testing, Musk said, but will soon be made available to subscribers of X’s Premium+ service, who, in the United States, pay $16 a month for features such as the once-coveted blue checkmark.
Grok is intended to rival ChatGPT, an AI chatbot released to the public by its maker OpenAI last November to much fanfare. Musk is a co-founder of OpenAI, but stepped down as chairman five years ago partly over disagreements about the company’s direction.
Britain’s Prime Minister Rishi Sunak, left, shakes hands with Tesla and SpaceX’s CEO Elon Musk after an in-conversation event in London, Thursday, Nov. 2, 2023. Sunak discussed AI with Elon Musk in a conversation that is played on the social network X, which Musk owns.(AP Photo/Kirsty Wigglesworth, Pool)
Elon Musk sees an AI future where ‘no job is needed’
In its blogpost, xAI said the large language model (LLM) — the type of system used to train AI applications — underpinning Grok-1 had outstripped the capabilities of GPT-3.5, the LLM that trains the publicly available version of ChatGPT, on several measures, including solving some high school math problems.
“It is only surpassed by models that were trained with a significantly larger amount of training data and compute resources like GPT-4,” the company said.
Musk has previously expressed concerns about the speed of development of AI, and the technology’s potential to fundamentally change human society for the worse.
xAI said it expects Grok to rapidly improve as X’s users feed it with more information, which may fuel unease among those critical of Musk’s handling of the platform since he bought the company last October.
The world’s richest person has called himself a “free speech absolutist” and said that, under his leadership, the company would be “very reluctant” to delete content and permanently ban some users.
https://www.cnn.com/2023/11/06/tech/grok-elon-musk-ai-chatbot-x-twitter/index.html
h/t Digital mix guy Spock
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