4 ms·

You mention solar is a big nothing burger. I remember when the acquisition happened there was quite an outcry about Tesla basically bailing out Musk's other com

You mention solar is a big nothing burger. I remember when the acquisition happened there was quite an outcry about Tesla basically bailing out Musk's other company. Do they have a liability here or is it just going to disappear into the ether?

dragontamer 8y ago
Why would it be a liability? Shareholders voted and accepted the purchase of SolarCity. I agree its sketchy, but Musk doesn't technically control the company. He has a large share of the voting pool, but the shareholders in general were willing to bail out SolarCity. Its kinda "Democracy in action". I think it was a stupid move for the shareholders to do, but its fully within their rights to do so.
- jampekka 8y ago
  To nitpick, it's literally plutocracy, not democracy.
  - dragontamer 8y ago
    Fair enough. The Stock Market is a pay-to-play game for sure.
- marvin 8y ago
  Didn't also Musk abstain from voting before the SolarCity acquisition? That's what I remember, anyway.
  - deleted 8y ago
    [deleted]
  - dragontamer 8y ago
    Yes. Musk abstained from voting. Musk made his opinion known, but otherwise "fairly" let the shareholders vote on the issue. At least technically fair. It was 85% in favor of merging. I say "technically", because Musk also went around trying to convince people that they should allow SCTY to be acquired by TSLA. But hey, shareholders trust Musk and were willing to follow his opinion on the matter. So I guess its fair overall. A stupid move, but fair.
    - ksherlock 8y ago
      They also did the fake shingle demo and pushed numbers around to report a quarterly profit.
    - olau 8y ago
      > A stupid move, but fair. Are you're saying this from a short-term financial perspective? I personally think it's too early to tell if it was a stupid move. Elon Musk had a plan, and his plans do seem to work out for the most part given some time. It's my understanding that they recently cut a major sales channel, so it's perhaps not surprising that the number of installations have fallen.
      - dragontamer 8y ago
        > Are you're saying this from a short-term financial perspective? Absolutely. Tesla's risk isn't long-term at all. Its all about the short-term risk. Just think about Tesla's debt schedue. * CUSIP 83416TAA8 -- $188,058,000 of Solar City Debt on November 2018. * CUSIP 88160RAB7 -- $920,000,000 of Tesla Debt on March 2019. (Not part of SolarCity, but it has to be part of the calculus). * CUSIP 83416TAC4 -- $566,000,000 of Solar City Debt, on November 2019. Imagine how much easier 2019 would have been if Tesla didn't have to worry about $740 Million of Solar City debt coming due. As a result, Tesla's CapEx spending (ie: building factories, buying factory equipment money) has dropped dramatically. That doesn't even get into the stock-dillution issue either. Millions of shares were issued, reducing Tesla shareholder voting power, and your representation of the company. Solar City investors joined with Tesla investors as a freebie, part of the deal. --------- So now that we've talked about the costs of merging the companies. What exactly has SolarCity done for Tesla? Absolutely nothing. Tesla has been given hundreds-of-millions of dollars in debt, and millions of shares worth of dillution... with nearly nothing in return. SolarCity employees and contractors were fired or laid off for the most part. SolarCity's deal with HomeDepot has evaporated. And finally the Gigafactory 2 is barely operational. The Solar Roof is years late and sales / revenue of SolarCity are completely ignorable. Oh, and future Solar City debt will come due. There's also a 2020 bond due (I can't figure out how much it costs though). Its not like Tesla is close to paying off all that old debt yet. We're looking at a ton of downsides with almost no visible upsides. Even after a year of waiting, all the touted "potential upsides" (Solar Roof, etc. etc.) are basically dead.
- Traster 8y ago
  I mean a literal liability - they've currently got an asset on their balance sheet that at some point they're going to have to re-evaluate the business and at some point there'll be a write-down associated with it.
kgwgk 8y ago
They still have “Solar energy systems, leased and to be leased” for $6.3bn, plus $350mn in goodwill, in their balance sheet. We’ll see a nice write-off someday. Edit: for context, total assets are $29.7bn and liabilities are $23.0bn.

dragontamer 8y ago

Why would it be a liability? Shareholders voted and accepted the purchase of SolarCity. I agree its sketchy, but Musk doesn't technically control the company. He has a large share of the voting pool, but the shareholders in general were willing to bail out SolarCity. Its kinda "Democracy in action". I think it was a stupid move for the shareholders to do, but its fully within their rights to do so.

jampekka 8y ago
To nitpick, it's literally plutocracy, not democracy.
- dragontamer 8y ago
  Fair enough. The Stock Market is a pay-to-play game for sure.
marvin 8y ago
Didn't also Musk abstain from voting before the SolarCity acquisition? That's what I remember, anyway.
- deleted 8y ago
  [deleted]
- dragontamer 8y ago
  Yes. Musk abstained from voting. Musk made his opinion known, but otherwise "fairly" let the shareholders vote on the issue. At least technically fair. It was 85% in favor of merging. I say "technically", because Musk also went around trying to convince people that they should allow SCTY to be acquired by TSLA. But hey, shareholders trust Musk and were willing to follow his opinion on the matter. So I guess its fair overall. A stupid move, but fair.
  - ksherlock 8y ago
    They also did the fake shingle demo and pushed numbers around to report a quarterly profit.
  - olau 8y ago
    > A stupid move, but fair. Are you're saying this from a short-term financial perspective? I personally think it's too early to tell if it was a stupid move. Elon Musk had a plan, and his plans do seem to work out for the most part given some time. It's my understanding that they recently cut a major sales channel, so it's perhaps not surprising that the number of installations have fallen.
    - dragontamer 8y ago
      > Are you're saying this from a short-term financial perspective? Absolutely. Tesla's risk isn't long-term at all. Its all about the short-term risk. Just think about Tesla's debt schedue. * CUSIP 83416TAA8 -- $188,058,000 of Solar City Debt on November 2018. * CUSIP 88160RAB7 -- $920,000,000 of Tesla Debt on March 2019. (Not part of SolarCity, but it has to be part of the calculus). * CUSIP 83416TAC4 -- $566,000,000 of Solar City Debt, on November 2019. Imagine how much easier 2019 would have been if Tesla didn't have to worry about $740 Million of Solar City debt coming due. As a result, Tesla's CapEx spending (ie: building factories, buying factory equipment money) has dropped dramatically. That doesn't even get into the stock-dillution issue either. Millions of shares were issued, reducing Tesla shareholder voting power, and your representation of the company. Solar City investors joined with Tesla investors as a freebie, part of the deal. --------- So now that we've talked about the costs of merging the companies. What exactly has SolarCity done for Tesla? Absolutely nothing. Tesla has been given hundreds-of-millions of dollars in debt, and millions of shares worth of dillution... with nearly nothing in return. SolarCity employees and contractors were fired or laid off for the most part. SolarCity's deal with HomeDepot has evaporated. And finally the Gigafactory 2 is barely operational. The Solar Roof is years late and sales / revenue of SolarCity are completely ignorable. Oh, and future Solar City debt will come due. There's also a 2020 bond due (I can't figure out how much it costs though). Its not like Tesla is close to paying off all that old debt yet. We're looking at a ton of downsides with almost no visible upsides. Even after a year of waiting, all the touted "potential upsides" (Solar Roof, etc. etc.) are basically dead.
Traster 8y ago
I mean a literal liability - they've currently got an asset on their balance sheet that at some point they're going to have to re-evaluate the business and at some point there'll be a write-down associated with it.

kgwgk 8y ago

They still have “Solar energy systems, leased and to be leased” for $6.3bn, plus $350mn in goodwill, in their balance sheet. We’ll see a nice write-off someday. Edit: for context, total assets are $29.7bn and liabilities are $23.0bn.