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Elon Musk's luck has finally run out
- okokwhatever 3y agoSo businessinsider seems happy because the guy decides to loss/invest into whatever he wants his own money. Ok.
- sgjohnson 3y agoThere are a lot of people that have lent him money that would like to be paid back, which would be impossible if Elon fucks everything up. 63% of his Tesla shares are pledged as a collateral. Do the math. So no, not his own money. His creditors’ money. He doesn’t have any money. He only has Tesla stock. The party is over. The credit card is maxed out. The interest rates are rising. Someone will have to pick up the tab.
- Zigurd 3y agoThe LBO lenders who thought they were going on a clever little adventure with Twitter must be pretty nervous. They can't sel the loans, and taking possession of Twitter is unattractive. And they can't get rid of Elon until the crisis is so deep that they might as well walk away from the loans.
- sgjohnson 3y ago63% of his Tesla stock pledged as collateral. Holy shit, he’s more leveraged than I ever imagined. Assuming it’s 2:1 leverage and his shares are worth $250bn... What the fuck has he spent >$80bn on?
- neximo64 3y agoThere'll be a margin of safety embedded, so even if it was 2:1 leverage they wouldnt give $80bn on the amount, it would be a small fraction of it, if it was 50% (which is very high) that would be $40bn
- resolutebat 3y agoSpaceX, mostly.
- Zigurd 3y agoHis position and collateral in margin loans on Tesla shares, unless we know the precise numbers and dates of those loans, is going to be pretty hard to sort out. Plus those things could effectively have been refinanced. Let's say he took out a margin loan on TSLA at 400, and was facing a margin call. He could pledge more shares. So the whole thing is very opaque.
- happytiger 3y agoThis is pretty normal for high fliers to use their equity to take cash out and diversify into other companies and investments. It’s how the rich keep getting richer. Unless one knows what he is using the cashed out money for, there is no objective way to assess the risk. He could pledge all his stock and just put the money in the bank for interest or just use it to generate a return somewhere and nobody would be the wiser.
- sgjohnson 3y agoBut we do know why he cashed out a significant amount. Apparently to light it on fire.
- defrost 3y agoThat'd be the Grimes influence coming out, homage to The KLF. https://www.thenational.scot/culture/23768111.klf-unravelling-legacy-band-burned-1-million https://www.thenational.scot/culture/23768111.klf-unravellin... We're all bound for Mu Mu Land.
- happytiger 3y agoI mean lacking other evidence doesn’t rule this scenario out. ;)
- rowanG077 3y agoHonestly this article does not seem to be written in good faith. Bringing up the pedo incident adds nothing. Adding things like "Twitter — sorry, X —" is just childish. Why not just stick the what is relevant.
- resolutebat 3y agoThe author's point is that Elon does stupid shit when the pressure gets too high, and all indications are he's feeling the heat again.
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- 0xy 3y agoBusiness Insider reported that Musk's luck had run out and SpaceX was an utter disaster in 2016, when it was worth around $15bn. [1] Today, it's worth $175bn in the private market. [2] Forgive me if I discard the reporting of a company with this record, and with undisclosed bias via its shareholder Jeff Bezos. [1] https://www.businessinsider.com/the-bad-news-could-get-worse-for-elon-musks-spacex-2015-7 https://www.businessinsider.com/the-bad-news-could-get-worse... [2] https://fortune.com/2023/12/07/elon-musks-spacex-valued-at-175-billion-larger-than-any-ipo-valuation-in-history/ https://fortune.com/2023/12/07/elon-musks-spacex-valued-at-1...
- sgjohnson 3y ago> Today, it's worth $175bn in the private market. Only theoretically. In practice, just because someone is willing to buy a completely insignificant stake (0.2%) for $500mn doesn’t make the entire company worth $175bn. If anything, this is probably Elon and his friends pulling off an accounting trick. I can register a company with a share capital of $1 and issue 1000000000000 shares with a nominal value of $0.000000000001 each. Then I could sell you one of those shares for $1 and then I could tell everyone that I’m a trillionaire. Which would technically be the truth.
- TheAlchemist 3y agoYeah, reminds me about this 100M deli. Been done before ! https://www.cnbc.com/2022/09/26/three-men-charged-with-fraud-in-100-million-new-jersey-deli-scheme.html https://www.cnbc.com/2022/09/26/three-men-charged-with-fraud...
- keiferski 3y agoThis is how every company is valued. The point is not that the company is literally valued for some exact amount of money, but how it compares to other companies’ valuations. Capitalism 101.
- Zigurd 3y agoThe parent post remains correct. An illiquid investment in a tiny percentage of a company is not a reliable measure for valuation. Any sophisticated investor would see it as a way of manipulating the price.
- entropicgravity 3y agoIt's disingenuous to purport to analyze Musk's financial position without mentioning his investment in SpaceX regardless of how Tesla may or may not be doing this quarter.
- rsynnott 3y agoI'm somewhat surprised that it's possible, post-financial-crisis (when a bunch of such deals went interestingly wrong) to pledge that much of a company (13%!) as collateral for loans.
- sgjohnson 3y agoGets even more interesting when you account for the fact that assets purchased with that loaned money are also probably pledged as a collateral for more loans.
- tamimio 3y agoHe learned the hard way that criticizing certain people will have consequences, even if you are the richest person on earth. They will use all the means to cancel you or ruin your business, and the advertisers are a key part of it. They have no qualms about advertising on platforms that promote drugs or human trafficking, but they shun the ones that expose them to scrutiny. The question is, will he learn from this?
- Zigurd 3y agoAlternatively, Elon isn't a genius and we are watching regression to the mean on a grand scale.