4 ms·
How much leverage is too much leverage? I guess we'll find out.
by sink_knob 8y ago
How much leverage is too much leverage? I guess we'll find out.
- walrus01 8y agoWell, it's not like they lack a working product (Falcon9 block5), market demand (commercial launch operators who were paying a fuckton of money to Russians or the ESA), or unique technology (landing on legs, re-used first stages). Even if it winds up in a debtor-in-possession or forced acquisition scenario I feel optimistic about the direction it's going as a whole. Webvan burned through approximately 1.2 billion and accomplished pretty much nothing. Quoting a case study of it from the mid 2000s: "Raised approximately $1.2 billion dollars from private investors and IPO. • Investors: • Goldman Sachs • Yahoo • CBS Inc • Knight – Ridder Co • Softbank Co • Benchmark Capital • Sequoia Capital. "
- hn_throwaway_99 8y agoMusk is raising equity, not debt.
- raverbashing 8y agoSo if my friend pays me $10 for 0.1% equity on my lemonade stand is my lemonade stand worth 10k?
- SkyPuncher 8y agoYes, but good luck convincing the next investor of that.
- matte_black 8y agoIt’s not that hard if the lemonade stand has been pumping out at least $150/month in profit for the past year or two.
- hn_throwaway_99 8y agoRegardless, equity is not "leverage", and does not have the same risks.
- jeletonskelly 8y agoYou could point to that transaction for a 409A valuation.
- virgilp 8y agoIt is, according to him. The world may not believe him, but that's the statement he made. And he stands to lose up to $10 if he lied or misjudged it.
- JumpCrisscross 8y ago> that's the statement he made More fundamentally, valuations are a metric on stock price and shares outstanding. The latter, too, is a metric on a company’s charter, outstanding (and anticipated) warrant and option and conversion obligations, et cetera. The concrete quantum is the trade. Everything else is educated conjecture.
- elif 8y agohe doesn't have to believe it's worth 10k. he just has to believe that someone else can be convinced it's worth 11k.
- virgilp 8y agoRight, he doesn't have to believe what he stated - "lie" was one of the possibilities I listed. But you can't claim the gesture is meaningless.
- synaesthesisx 8y agoExactly. Take almost any tech startup (Uber for instance, is not worth anywhere near $100B but they've managed to convince investors otherwise)
- oconnor663 8y agoIt means your lemonade stand is worth 10k to your friend apparently. How many friends you got?
- Arnt 8y agoThat's precisely right. Because that valuation is the price someone was willing to pay, which makes it a better estimate than a "reasonable" number which isn't backed by anyone's actual willingness to invest at that price.
- empath75 8y agoAccording to that person, yes. You'd find out if it actually was, if you sold the rest of it.
- douglaswlance 8y agoAccording to your friend, yes. According to someone else, probably not. Companies (as well most all things) are only worth as much as people are willing to pay for it. When a company like SpaceX raises funds at a particular valuation, you can be sure that they have done a rigorous analysis to figure out what is an acceptable valuation for their target buyers.
- btian 8y agoYou just discovered market capitalization. Congrats!