6 ms·

I am wondering what is in it for those people lining up - they are paying 20% over the market value to be locked in with musk.

trothamel 4y ago
Tesla is up 995% over the past 5 years.
- adventured 4y ago
  - fny 4y ago
    The question is not whether he's been successful. He has been, the question is whether this is the peak valuation akin to Cisco during dotcom and whether he is over leveraged at this point.
    - adventured 4y ago
      Some of that depends on whether Twitter can partially self-fund the acquisition itself over time. Most likely it can, that much more so if Musk negotiates a lower price. Debt is very inexpensive right now, especially for large corporations with a strong balance sheet. If Musk owns all of Twitter, he gets their $6 billion in cash and their balance sheet has no consequential debt issues. Twitter is operationally profitable, despite being very poorly run in terms of cost structure. Their margins on sales should be far greater than at present; they have a bloated employee count and have for a very long time. There's no reason Twitter can't spit off $1b in operating income on $5b in sales. Further, Musk has ~$9b in cash (per Bloomberg), lots of very rich friends (eg Ellison, Google founders, VC billionaires, etc etc) that believe in him, and lots of assets in Tesla and SpaceX he can borrow $10b-$20b against if needed. That said - I don't think levering himself to the moon is wise and I don't think paying $40b+ for Twitter is smart. Particularly at this point in time (with the global economy shaky, the US economy contracting in real terms, China's economy shaky, and financial markets sinking).
    - optimiz3 4y ago
      People have kept asking this question for the past 12 years. Meanwhile my TSLA shares bought in 2013 have been doing just fine.
      - skrtskrt 4y ago
        Your shares did well in of the biggest untinerrupted market bull runs in history????
        mkr-hn 4y ago
        Survivorship bias is a hell of a drug. The real test to see whether it's wisdom or luck is to predict the next Tesla. I don't think many people who point to their Tesla stock performance as vindication could come up with a repeatable theory of investing. If they could, their TSLA gains would be nothing next to their next investments. That's how I know people who make that argument don't actually know anything. It's like someone still talking about that great touchdown in high school at 50. Where's the next one? You don't see Elon Musk bragging about his $22 million from Zip2.
        alfor 4y ago
        Those companies don’t come often, but you don’t need many winners to be all set. I saw Google before the rise, Amazon, Apple, Bitcoin and Tesla. I only acted on Tesla after seeing all the other ones before but didn’t put my conviction into action. It’s not very hard: you read HN daily/weekly and listen to the trends. Pick one that keep coming and interest you and dig deeper, you are not in a hurry as HN is way early in the cycle, the danger is being too early and giving up before it catch up. (Bitcoin) Pick one big potential winner, calculate the expected value as good as you can Good/Bad scenario, place your bet, let the time do it’s thing. An example of a bet I didn’t do: Bitcoin was 1$, I knew that if it worked very well it could go to 1M$. Let say you think that the probability of success is 20%: (1M$/1$)*20% = 200 000 to 1. You then place let say 5k$ on bitcoin and forget about it for 10 years. At the moment, I don't see a trend that catch my attention beside AI and for the moment I think Tesla will be the winner in that trend. Look up the book: one up on wall street
  - mkr-hn 4y ago
    I don't like a world where the only way to assess someone is by how much money they make for investors. That's a bleak reality, so I prefer to act as though a person's behavior matters in the hopes I might create it by force of will. You can recognize the negative with the positive. Anything else is revisionism.
    - briandear 4y ago
      The money they make for investors is a direct measurement of the value they create.
      - mkr-hn 4y ago
        This is the mindset I spoke against. Did you reply to the wrong comment?
      - amusedcyclist 4y ago
        Not in the short run. In the short run markets can be irrational (which I believe they are with Tesla), in the long run sure
    - alvah 4y ago
      Other countries and economies have chosen not to reward value-creators for the value they create. So far this has not worked out well for these countries and economies.
      - deleted 4y ago
        [deleted]
        deleted 4y ago
        [deleted]
  - semi-extrinsic 4y ago
    > Tesla has plainly kicked the ass of the European and Asian auto giants Tesla had 1.4% of all cars sold in 2021, by number of units. Going by revenue it's somewhere around 1%. It is kinda hard to see that as kicking the asses of the competition. Kicking ass would be more like what happened with smartphones, where iOS + Android went from 0 to >90% market share in the space of five years, leaving Nokia, Palm, Blackberry etc. as brands nobody would assoviate themselves with. Nothing like that is happening in automotive.
    - cyberlurker 4y ago
      Expensive cars in the emerging EV market. 1.4% is great.
      - philjohn 4y ago
        Tesla has 14% of the EV market, VW Group has 12% - and closing fast. They also have a much larger dealership network.
        postmeta 4y ago
        dealership network eats their margin, plus vw has to discount all of their own legacy sales they cannibalize
        philjohn 4y ago
        It eats their margin, marginally (typically 5% kickback if a dealership meets sales figures, per car) as they're almost entirely franchises. But that dealer network means when you need your car serviced, or repaired, you're never more than a short(ish) drive away from one.
    - zamfi 4y ago
      Smartphone upgrade cycles are annual/biennial. Car upgrade cycles average 7-10 years. Not that I expect Tesla to dominate like apple and android have, but I do think we’ll need to wait a few more years before we know the answer.
- shapefrog 4y ago
  Are you suggesting that twitter will have a marketcap approx worth tesla / facebook / berkshire hathaway / johnson and johnson in 5 years time?
  - cto_of_antifa 4y ago
- itsoktocry 4y ago
  And it's back to prices it was at in 2020. Do you think more people bought Tesla 5 years ago, or in the past 1.5 years? Because the latter folks are underwater.
toyg 4y ago
For the same sort of consideration for which one would buy a newspaper in the third millennium: there is something to gain from directing a powerful megaphone, even if it doesn't make money directly.
ahepp 4y ago
I don't have any background in finance, but it seems like there are a couple of possibilities. First, given the recent precipitous fall in the NASDAQ, there's speculation that Musk will lower the offer (which seems quite reasonable). Second, I'm not sure there's any reason to assume these new equity investors are paying the share price Musk is paying. If Musk pays $54.20 a share, and needs to raise 25% of the acquisition cost by issuing new equity, he could sell 49.99% of the new company at say, $30 a share to his partners and still raise the required capital.
mywittyname 4y ago
Leveraged buyout at an inflated price in the short term. Banks backing the loans will get guaranteed interest payments on the loans plus a lucrative contract debt servicing and consulting fees in the medium term. Long term they'll IPO again and/or find a fool to acquire them.
rsuelzer 4y ago
Well I bought TWTR at it's peak... I'm voting my shares against a buyout (won't matter), mostly because it locks in a loss that I feel would have been recoverable in the next 5 years...
- KptMarchewa 4y ago
  Have you considered opportunity cost of not using this money for other investments?
  - ummonk 4y ago
    Right it seems unlikely to believe that Twitter is undervalued but that nothing else is equally undervalued to invest in after getting a small profit off of the Twitter investment.
  - futuretaint 4y ago
    I cunningly bought TWTR at the top too and thus was hoisted by mine own petard. basically as a retail investor I have no leverage so all in all I'm happy to just get my money returned.
alvah 4y ago
If you believe in Matt Levine's Elon Markets Hypothesis, paying 20% over market to be in close proximity to Elon's Twitter feed might be a bargain.
- shapefrog 4y ago
  Seems an expensive bribe.
parkingrift 4y ago
Being “locked in with Musk” has been one of the best investment strategies of the last decade.

trothamel 4y ago

Tesla is up 995% over the past 5 years.

adventured 4y ago
- fny 4y ago
  The question is not whether he's been successful. He has been, the question is whether this is the peak valuation akin to Cisco during dotcom and whether he is over leveraged at this point.
  - adventured 4y ago
    Some of that depends on whether Twitter can partially self-fund the acquisition itself over time. Most likely it can, that much more so if Musk negotiates a lower price. Debt is very inexpensive right now, especially for large corporations with a strong balance sheet. If Musk owns all of Twitter, he gets their $6 billion in cash and their balance sheet has no consequential debt issues. Twitter is operationally profitable, despite being very poorly run in terms of cost structure. Their margins on sales should be far greater than at present; they have a bloated employee count and have for a very long time. There's no reason Twitter can't spit off $1b in operating income on $5b in sales. Further, Musk has ~$9b in cash (per Bloomberg), lots of very rich friends (eg Ellison, Google founders, VC billionaires, etc etc) that believe in him, and lots of assets in Tesla and SpaceX he can borrow $10b-$20b against if needed. That said - I don't think levering himself to the moon is wise and I don't think paying $40b+ for Twitter is smart. Particularly at this point in time (with the global economy shaky, the US economy contracting in real terms, China's economy shaky, and financial markets sinking).
  - optimiz3 4y ago
    People have kept asking this question for the past 12 years. Meanwhile my TSLA shares bought in 2013 have been doing just fine.
    - skrtskrt 4y ago
      Your shares did well in of the biggest untinerrupted market bull runs in history????
      - mkr-hn 4y ago
        Survivorship bias is a hell of a drug. The real test to see whether it's wisdom or luck is to predict the next Tesla. I don't think many people who point to their Tesla stock performance as vindication could come up with a repeatable theory of investing. If they could, their TSLA gains would be nothing next to their next investments. That's how I know people who make that argument don't actually know anything. It's like someone still talking about that great touchdown in high school at 50. Where's the next one? You don't see Elon Musk bragging about his $22 million from Zip2.
        alfor 4y ago
        Those companies don’t come often, but you don’t need many winners to be all set. I saw Google before the rise, Amazon, Apple, Bitcoin and Tesla. I only acted on Tesla after seeing all the other ones before but didn’t put my conviction into action. It’s not very hard: you read HN daily/weekly and listen to the trends. Pick one that keep coming and interest you and dig deeper, you are not in a hurry as HN is way early in the cycle, the danger is being too early and giving up before it catch up. (Bitcoin) Pick one big potential winner, calculate the expected value as good as you can Good/Bad scenario, place your bet, let the time do it’s thing. An example of a bet I didn’t do: Bitcoin was 1$, I knew that if it worked very well it could go to 1M$. Let say you think that the probability of success is 20%: (1M$/1$)*20% = 200 000 to 1. You then place let say 5k$ on bitcoin and forget about it for 10 years. At the moment, I don't see a trend that catch my attention beside AI and for the moment I think Tesla will be the winner in that trend. Look up the book: one up on wall street
- mkr-hn 4y ago
  I don't like a world where the only way to assess someone is by how much money they make for investors. That's a bleak reality, so I prefer to act as though a person's behavior matters in the hopes I might create it by force of will. You can recognize the negative with the positive. Anything else is revisionism.
  - briandear 4y ago
    The money they make for investors is a direct measurement of the value they create.
    - mkr-hn 4y ago
      This is the mindset I spoke against. Did you reply to the wrong comment?
    - amusedcyclist 4y ago
      Not in the short run. In the short run markets can be irrational (which I believe they are with Tesla), in the long run sure
  - alvah 4y ago
    Other countries and economies have chosen not to reward value-creators for the value they create. So far this has not worked out well for these countries and economies.
    - deleted 4y ago
      [deleted]
      - deleted 4y ago
        [deleted]
- semi-extrinsic 4y ago
  > Tesla has plainly kicked the ass of the European and Asian auto giants Tesla had 1.4% of all cars sold in 2021, by number of units. Going by revenue it's somewhere around 1%. It is kinda hard to see that as kicking the asses of the competition. Kicking ass would be more like what happened with smartphones, where iOS + Android went from 0 to >90% market share in the space of five years, leaving Nokia, Palm, Blackberry etc. as brands nobody would assoviate themselves with. Nothing like that is happening in automotive.
  - cyberlurker 4y ago
    Expensive cars in the emerging EV market. 1.4% is great.
    - philjohn 4y ago
      Tesla has 14% of the EV market, VW Group has 12% - and closing fast. They also have a much larger dealership network.
      - postmeta 4y ago
        dealership network eats their margin, plus vw has to discount all of their own legacy sales they cannibalize
        philjohn 4y ago
        It eats their margin, marginally (typically 5% kickback if a dealership meets sales figures, per car) as they're almost entirely franchises. But that dealer network means when you need your car serviced, or repaired, you're never more than a short(ish) drive away from one.
  - zamfi 4y ago
    Smartphone upgrade cycles are annual/biennial. Car upgrade cycles average 7-10 years. Not that I expect Tesla to dominate like apple and android have, but I do think we’ll need to wait a few more years before we know the answer.
shapefrog 4y ago
Are you suggesting that twitter will have a marketcap approx worth tesla / facebook / berkshire hathaway / johnson and johnson in 5 years time?
- cto_of_antifa 4y ago
itsoktocry 4y ago
And it's back to prices it was at in 2020. Do you think more people bought Tesla 5 years ago, or in the past 1.5 years? Because the latter folks are underwater.

toyg 4y ago

For the same sort of consideration for which one would buy a newspaper in the third millennium: there is something to gain from directing a powerful megaphone, even if it doesn't make money directly.

ahepp 4y ago

I don't have any background in finance, but it seems like there are a couple of possibilities. First, given the recent precipitous fall in the NASDAQ, there's speculation that Musk will lower the offer (which seems quite reasonable). Second, I'm not sure there's any reason to assume these new equity investors are paying the share price Musk is paying. If Musk pays $54.20 a share, and needs to raise 25% of the acquisition cost by issuing new equity, he could sell 49.99% of the new company at say, $30 a share to his partners and still raise the required capital.

mywittyname 4y ago

Leveraged buyout at an inflated price in the short term. Banks backing the loans will get guaranteed interest payments on the loans plus a lucrative contract debt servicing and consulting fees in the medium term. Long term they'll IPO again and/or find a fool to acquire them.

rsuelzer 4y ago

Well I bought TWTR at it's peak... I'm voting my shares against a buyout (won't matter), mostly because it locks in a loss that I feel would have been recoverable in the next 5 years...

KptMarchewa 4y ago
Have you considered opportunity cost of not using this money for other investments?
- ummonk 4y ago
  Right it seems unlikely to believe that Twitter is undervalued but that nothing else is equally undervalued to invest in after getting a small profit off of the Twitter investment.
- futuretaint 4y ago
  I cunningly bought TWTR at the top too and thus was hoisted by mine own petard. basically as a retail investor I have no leverage so all in all I'm happy to just get my money returned.

alvah 4y ago

If you believe in Matt Levine's Elon Markets Hypothesis, paying 20% over market to be in close proximity to Elon's Twitter feed might be a bargain.

shapefrog 4y ago
Seems an expensive bribe.

parkingrift 4y ago

Being “locked in with Musk” has been one of the best investment strategies of the last decade.