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The article mentions $2.5MM liens which is drastically less than 1% of expenses of $1445MM ("[SpaceX] generated $55 million in profit on $1.5 billion in revenue

The article mentions $2.5MM liens which is drastically less than 1% of expenses of $1445MM ("[SpaceX] generated $55 million in profit on $1.5 billion in revenue during the first quarter of 2023") It don't appear to be because SpaceX is having trouble paying. I would guess SpaceX are delaying payment as much as possible because it is cheap lending and because it's run as an extremely mercenary company. Their costs of deliquent payment are likely below their lending costs. So optimally don't pay until the cost of deliquency exceeds lending costs (maybe ≈ junk bond rate per year).

ben_w 2y ago
While interesting, I don't see how it might make any difference to any federal workers' decisions? Musk doesn't pay "because he can get away with it" isn't better or worse than "because there's a money shortage"; and in any case, the federal government being delinquent is a very different kind of catastrophe, as is it making promises it refuses to keep.
- Spooky23 2y ago
  Many things are based on the assumption of the impeccable credit of the US government. Elmo being a shitty business partner isn’t the same as the US.
  - ben_w 2y ago
    We're on the same page, I think. There's a possibility of contagion from Musk to the US government, but I very much agree they're different — and it's much worse if that contagion goes from potential to actual.
dghlsakjg 2y ago
Who give a shit what their revenue is. It tells me nothing about how they pay their vendors. 2.5mm in liens is just how much they have proveably shorted construction workers in Texas. It doesn't count other vendors doing work that isn't elegible for a lien, or how many workers got shorted, but it just wasn't enough to worry about. If you were one of the 70+ businesses that held a lien against them, you would think differently. > It don't appear to be because SpaceX is having trouble paying. Having the cash to be paid out, and having the systems in place to pay your bills are two different things. > I would guess SpaceX are delaying payment as much as possible because it is cheap lending and because it's run as an extremely mercenary company. Violating the terms of your contract isn't cheap lending. It is fraud. The fact that they are getting away with it isn't a defense. > Their costs of deliquent payment are likely below their lending costs. So optimally don't pay until the cost of deliquency exceeds lending costs (maybe ≈ junk bond rate per year). Consistently and intentionally violating the terms of payment is, as noted above, fraud. They are getting away with, and they might continue to get away with it, but mercenary businesses getting away with crime is a bad thing.
- robocat 2y ago
  I mostly agree with you. I wasn't excusing or agreeing with the behaviour. I was only trying to ponder the amoral financial incentives. Aside: I think most moral people struggle to even recognise amoral decision making. I also suspect that learning to be more sociopathic can be profitable. I don't much admire most doyens of business. Trying to fight amoral business people seems like a personally losing game because you eventually internalise their tricks.
- infecto 2y ago
  Sigh, these rage bait style of responses are as bad as the original article. Reuters was not even able to figure out what % was due to contractors as opposed to Tesla itself. Everything you said says nothing of how they pay their vendors. $2.5mm is not exactly breaking news for construction projects. Most large projects have some percentage of total project value in liens. I know we all want to get upset but its too hard to say either way, the dollar amount is far too small, it maybe involve a large portion of contractors and based on the cost of the development does not seem to be a rampant issue.
  - abduhl 2y ago
    >> Most large projects have some percentage of total project value in liens. I hate to be this guy but please provide a source for this. I’ve been involved in the construction industry for quite a while, almost exclusively on large and mega projects, and “most” of my jobs have not had any percentage of their total project value in liens. One company that refused to pay for work my (then) company performed is SpaceX. Our work did not permit filing a lien.
    - infecto 2y ago
      My experience with projects and AP in general. ~$2mm across 70 liens without any split between contractors vs spacex is not that interesting. Did not look like they even accounted for a chain of liens based on the same original unit of work. The report came out in 2024 and the count and $ sum was from 2019, so over 5 years including COVID years. During COVID liens jumped quite a bit and on projects that span multiple years I don't find $2mm over 5 years that shocking. Now SpaceX could totally be stretching their NWC as far as it goes and always paying late on purpose. Really impossible to tell in this style of shock reporting. I would be surprised in your experience that you have never had cases of a GC not paying on his end and those folks throwing a <$100k lien on the project. Or a dispute between the GC and payer.
bushbaba 2y ago
Sadly, it's super common in business to delay paying up.
csomar 2y ago
That’s still an expense even if they didn’t pay. Same as when you bill a customer, it’s considered revenue even if they didn’t pay. They probably have cash flow issues since it reached the lien stage.
hedora 2y ago
Edit: Never mind. They’re counting Musk’s personal donations against spacex. See reply. —— SpaceX donated $265M to Trump last year: https://www.opensecrets.org/2024-presidential-race/donald-trump/contributors?id=N00023864 https://www.opensecrets.org/2024-presidential-race/donald-tr... It sounds like that’s comparable to their total profit for the year, and it would cover the liens 100 fold. I wonder how much of that cash was taxpayer money that got laundered and used for Trump’s personal finances.
- phonon 2y ago
  $280,475,260 of total contributions was from individuals. AKA Elon Musk. https://www.opensecrets.org/orgs/summary?id=D000029147 https://www.opensecrets.org/orgs/summary?id=D000029147
  - hedora 2y ago
    Thanks for correcting me. The page I linked is confusing. (Why attribute it to SpaceX, but not X or Tesla?)
    - zerocrates 2y ago
      When you disclose this stuff, you have to list the donor's occupation/employer, and Elon said he was CEO of SpaceX every time he funded his PAC.
fumeux_fume 2y ago
Peak HN. You are literally making things up about something you know nothing about.

ben_w 2y ago

While interesting, I don't see how it might make any difference to any federal workers' decisions? Musk doesn't pay "because he can get away with it" isn't better or worse than "because there's a money shortage"; and in any case, the federal government being delinquent is a very different kind of catastrophe, as is it making promises it refuses to keep.

Spooky23 2y ago
Many things are based on the assumption of the impeccable credit of the US government. Elmo being a shitty business partner isn’t the same as the US.
- ben_w 2y ago
  We're on the same page, I think. There's a possibility of contagion from Musk to the US government, but I very much agree they're different — and it's much worse if that contagion goes from potential to actual.

dghlsakjg 2y ago

Who give a shit what their revenue is. It tells me nothing about how they pay their vendors. 2.5mm in liens is just how much they have proveably shorted construction workers in Texas. It doesn't count other vendors doing work that isn't elegible for a lien, or how many workers got shorted, but it just wasn't enough to worry about. If you were one of the 70+ businesses that held a lien against them, you would think differently. > It don't appear to be because SpaceX is having trouble paying. Having the cash to be paid out, and having the systems in place to pay your bills are two different things. > I would guess SpaceX are delaying payment as much as possible because it is cheap lending and because it's run as an extremely mercenary company. Violating the terms of your contract isn't cheap lending. It is fraud. The fact that they are getting away with it isn't a defense. > Their costs of deliquent payment are likely below their lending costs. So optimally don't pay until the cost of deliquency exceeds lending costs (maybe ≈ junk bond rate per year). Consistently and intentionally violating the terms of payment is, as noted above, fraud. They are getting away with, and they might continue to get away with it, but mercenary businesses getting away with crime is a bad thing.

robocat 2y ago
I mostly agree with you. I wasn't excusing or agreeing with the behaviour. I was only trying to ponder the amoral financial incentives. Aside: I think most moral people struggle to even recognise amoral decision making. I also suspect that learning to be more sociopathic can be profitable. I don't much admire most doyens of business. Trying to fight amoral business people seems like a personally losing game because you eventually internalise their tricks.
infecto 2y ago
Sigh, these rage bait style of responses are as bad as the original article. Reuters was not even able to figure out what % was due to contractors as opposed to Tesla itself. Everything you said says nothing of how they pay their vendors. $2.5mm is not exactly breaking news for construction projects. Most large projects have some percentage of total project value in liens. I know we all want to get upset but its too hard to say either way, the dollar amount is far too small, it maybe involve a large portion of contractors and based on the cost of the development does not seem to be a rampant issue.
- abduhl 2y ago
  >> Most large projects have some percentage of total project value in liens. I hate to be this guy but please provide a source for this. I’ve been involved in the construction industry for quite a while, almost exclusively on large and mega projects, and “most” of my jobs have not had any percentage of their total project value in liens. One company that refused to pay for work my (then) company performed is SpaceX. Our work did not permit filing a lien.
  - infecto 2y ago
    My experience with projects and AP in general. ~$2mm across 70 liens without any split between contractors vs spacex is not that interesting. Did not look like they even accounted for a chain of liens based on the same original unit of work. The report came out in 2024 and the count and $ sum was from 2019, so over 5 years including COVID years. During COVID liens jumped quite a bit and on projects that span multiple years I don't find $2mm over 5 years that shocking. Now SpaceX could totally be stretching their NWC as far as it goes and always paying late on purpose. Really impossible to tell in this style of shock reporting. I would be surprised in your experience that you have never had cases of a GC not paying on his end and those folks throwing a <$100k lien on the project. Or a dispute between the GC and payer.

bushbaba 2y ago

Sadly, it's super common in business to delay paying up.

csomar 2y ago

That’s still an expense even if they didn’t pay. Same as when you bill a customer, it’s considered revenue even if they didn’t pay. They probably have cash flow issues since it reached the lien stage.

hedora 2y ago

Edit: Never mind. They’re counting Musk’s personal donations against spacex. See reply. —— SpaceX donated $265M to Trump last year: https://www.opensecrets.org/2024-presidential-race/donald-trump/contributors?id=N00023864 https://www.opensecrets.org/2024-presidential-race/donald-tr... It sounds like that’s comparable to their total profit for the year, and it would cover the liens 100 fold. I wonder how much of that cash was taxpayer money that got laundered and used for Trump’s personal finances.

phonon 2y ago
$280,475,260 of total contributions was from individuals. AKA Elon Musk. https://www.opensecrets.org/orgs/summary?id=D000029147 https://www.opensecrets.org/orgs/summary?id=D000029147
- hedora 2y ago
  Thanks for correcting me. The page I linked is confusing. (Why attribute it to SpaceX, but not X or Tesla?)
  - zerocrates 2y ago
    When you disclose this stuff, you have to list the donor's occupation/employer, and Elon said he was CEO of SpaceX every time he funded his PAC.

fumeux_fume 2y ago

Peak HN. You are literally making things up about something you know nothing about.