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He has done this move before with Tesla buying Solar City. When you do a deal with yourself you can assign any value you want to assets, it isn’t a competitive

He has done this move before with Tesla buying Solar City. When you do a deal with yourself you can assign any value you want to assets, it isn’t a competitive process. In the previous case Solar City was dying but its acquisition by Tesla was pitched as a great synergy. https://www.businessinsider.com/solarcity-tesla-energy-beleaguered-history-elon-musk-2021-7 https://www.businessinsider.com/solarcity-tesla-energy-belea... There were a few lawsuits from Tesla shareholders about the acquisition regarding self dealing but they didn’t succeed: https://en.wikipedia.org/wiki/SolarCity https://en.wikipedia.org/wiki/SolarCity

mayneack 2y ago
Surely a theoretically disgruntled xAI shareholder is going to have a harder time here since they're both private companies and given Elon's proximity to any potential regulators.
- gruez 2y ago
  Company directors are generally given wide latitude in what they can do without breaching fiduciary duty, so such lawsuits were always going to be an uphill battle.
  - bradleyjg 2y ago
    An acquisition is a special case (for the company being acquired) and the scrutiny is somewhat higher. At least in Delaware. I have no idea what corporate law is like in Texas.
    - dmix 2y ago
      Private companies buying private companies is not heavily scrutinized in general by states, even in Delaware, especially non-public deals with no antitrust issues. The primary risk is stakeholders going through a state court if the company didn't follow standard rules.
    - pclmulqdq 2y ago
      No X shareholder in their right mind will object to getting a $45 billion valuation (including debt) when their latest valuations have the company at <$10 billion.
      - deleted 2y ago
        [deleted]
      - Alive-in-2025 2y ago
        Twitter still has a lot of users and if they stopped being used by offensive at times racist and awful, then Twitter could get more users, sell advertising and make money probably. Now that's all gone because Twitter could investors need w own a small piece of the giant over inflated Xai, which has value because of AI hype but it's future actual value is questionable. There are so many other AI companies, so what is it that xai can do that justifies an $80 billion valuation?
        monkeywork 2y ago
        >Twitter could get more users, sell advertising and make money probably How'd that work out in the past with the previous owners?
        acdha 2y ago
        Well: with the exception of Q1 2020 they were profitable from 2017 until Musk bought the company. Their last year was lower due to a lawsuit settlement but they were making significant profits until his acquisition added huge debt service obligations and tanked revenue.
        monkeywork 2y ago
        https://www.businessofapps.com/data/twitter-statistics/ https://www.businessofapps.com/data/twitter-statistics/ https://www.investing.com/academy/statistics/twitter-facts-statistics/ https://www.investing.com/academy/statistics/twitter-facts-s... https://dazeinfo.com/2020/07/30/twitter-global-net-income-by-year-graphfarm/ https://dazeinfo.com/2020/07/30/twitter-global-net-income-by... Long history of not being profitable - 2018 and 2019 feel like more of an anomaly than a trend.
    - Majromax 2y ago
      > I have no idea what corporate law is like in Texas. Nobody does, really. Texas is relatively new to its 'corporate registration friendly' game, and at least on paper the statutory law is the same. Texas courts don't have to follow Delaware's case history, but it's also not a given that they will rule in a vastly more owner-friendly manner.
      - no_wizard 2y ago
        To add on to this, Texas as part of this pitch is the promise of less oversight and they not following Delaware’s lead is a plus
        ISL 2y ago
        The judges may or may not have the same take on that matter as the legislature.
        rvnx 2y ago
        Is it realistic that Texas will decide to punish one of its most active companies ? Risking that they leave Texas for another state.
    - raverbashing 2y ago
      Yes but the owners of X are all elon sycophants so I doubt they will have an issue with this (and honestly xAI stock is better than x stock)
  - moffkalast 2y ago
    Given how much they're typically paid for their trouble, you'd think they'd carry an ounce of responsibility for their actions.
- deleted 2y ago
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- tonyhart7 2y ago
  "Surely a theoretically disgruntled xAI shareholder" they know what they buying when elon promotes his lmao, elon twitter deal is backed by saudi. elon himself come to saudi asking for an investment from royal prince saudi safe to say that if they want spent 40 billion for twitter, they would spent more with AI flavored company (they are saudi after all)
- sebazzz 2y ago
  Do regulators still have teeth in the US?
  - johannes1234321 2y ago
    You mean the regulators threatened by DOGE?
deleted 2y ago
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rayiner 2y ago
Tesla bought Solar City for $2.6 billion, and now it looks like the Tesla Energy division had about that much in net income last year alone.
- FreeRadical 2y ago
  Tesla Energy existed before Tesla acquired Solar City
- refulgentis 2y ago
  Solar City was a debacle, it died immediately. Tesla's story in court was they were about to go bankrupt, and it was a financial necessity to redeploy all Solar City assets, including all employees, to Model 3 production. It breaks my heart because my rust belt hometown got a substantial investment from the state they had been chasing for a couple decades. $700M of the Buffalo Billion went to a Solar City facility, Elon even said they were going to build the solar roofs there! New York State didn't dare pick a fight with him as the factory set empty for years. Full story via Bethany McLean, 2019: https://www.vanityfair.com/news/2019/08/how-elon-musk-gambled-tesla-to-save-solarcity https://www.vanityfair.com/news/2019/08/how-elon-musk-gamble...
  - grakasja 2y ago
    Huh, DOGE ought to look into where that 700M went..
- foobarqux 2y ago
  Putting aside the fact that you can't justify fraud by post-hoc outcomes (Shkreli and SBF also claimed that they didn't commit fraud because they would or did win it back), I doubt any of the Tesla Energy division income (even assuming the accounting is okay) is a result of businesses that can be traced back to Solar City. I suspect most of the business is battery storage and the Powerwall was introduced by Tesla before the acquisition.
  - enslavedrobot 2y ago
    The vertically integrated Tesla strategy is to use batteries to arbitrage the value of stored energy. This is well described in the Tesla "Master Plan" documents. Solar is a huge part of this. According to the company filings the solar assets Tesla acquired are still generating revenue at the rates projected during the acquisition.
rayiner 2y ago
You’re burying the lede here, which is that the Delaware Chancery Court rules that Tesla had paid a fair price for Solar City: https://www.businessinsider.com/elon-musk-wins-solarcity-tesla-shareholder-lawsuit-2022-4 https://www.businessinsider.com/elon-musk-wins-solarcity-tes...
- deleted 2y ago
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- marinmania 2y ago
  OP mentions the lawsuits did not succeed Its not like the courts are investment banks with an evaluation arm. They are just judging if anything reaches the point where shareholders were legally harmed, which still gives a lot of gray area to the acquiring company.
  - rayiner 2y ago
    Lawsuits can fail for lots of reasons without a decision on the merits. It seems relevant that the reason the lawsuit failed is because the court looked at the fairness of the transaction and determined that Tesla paid a fair price.
    - nmca 2y ago
      This whole thread is true consistent statements that differ only in emphasis.
      - lcnPylGDnU4H9OF 2y ago
        > differ only in emphasis The commenter you are responding to is explicitly intending to place more emphasis on the reason why the lawsuit failed. That is why they used the phrase “burying the lede” in their initial comment.
        srveale 2y ago
whats_a_quasar 2y ago
The solar city acquisition was for "only" $2.6 billion. This deal is way bigger. I'm not sure what the Tesla valuation was at the time of that deal, but I have to imagine it's proportionally way bigger too. A $45 billion acquisition when the acquirer, xAI, has an $80 billion valuation will threaten the integrity of xAI. Particularly because that's just a paper valuation and xAI doesn't have much of any revenue. If I were an investor in xAI I would be furious about this. They're almost certainly overpaying for Twitter and there's definitely going to be litigation. Edit: It sounds like the combined entity is taking on Twitter's $12 billion of debt from when it originally went private. As of last December xAI had raised "more than $12 billion" in total [1], so the deal attaches Twitter's debt to that ~12 billion pot of VC money. Unless I'm really misunderstanding something this deal looks like a bailout of Twitter and a huge new liability for xAI. It's definitely possible my hot take is wrong and the xAI investors support the transaction. I hope so because if not there's going to be some brutal lawsuits over this. [1] https://www.nytimes.com/2024/12/24/technology/elon-musk-xai-funding.html https://www.nytimes.com/2024/12/24/technology/elon-musk-xai-...
- TheAlchemist 2y ago
  Just keep in mind this is all funny money ! The valuation of those 2 companies combined should be < $10 billions if we are very very generous. X is heavily in debt, diminishing user base, and bleeding money. 0 profits xAI is yet to make any actual revenues outside of ... X. Also bleeding money Although I would admit, that these companies are not valued based by their economics, but rather on political power they provide to the owner.
  - dzhiurgis 2y ago
    I’m guessing Tesla is paying xAI to train their FSD model?
    - TheAlchemist 2y ago
      That would be a shocking conflict of interest - a public company paying a private company, which is owned by the CEO of the public one ? All while the same CEO claims that the public company is the leader in the field ? Even by Tesla & Musk lawlessness standard that would be too wild.
rozap 2y ago
My guess is that there's an added grift, er...benefit here; since the federal government is now (apparently) in the business of subsidizing AI companies, we'll effectively see the failing social media platform get subsidized by the federal government. I'm certain we'll see a pile of public funds handed over the xAI in the future.
- timewizard 2y ago
  DOGE for thee but not for me!
  - rozap 2y ago
    I mean, that was always a grift to anyone with two brain cells to rub together .
    - timewizard 2y ago
      The government spends 1 out every 5 dollars of GDP. It probably does need a better mechanism for managing costs and outlays. Having one of the "richest men in the world" be in charge of it is ridiculous. That's Trump for you. Populism up front, oligarchy in the back.
      - fastball 2y ago
        Not sure that tracks. Oligarchy is generally how people who don't deserve wealth can get it. As pointed out by you, that doesn't exactly apply to the world's (already) richest man. And who exactly would you look for to help the federal government build "a better mechanism for managing costs and outlays", if not someone who has built multiple successful businesses (managing costs and outlays at impressive scale) in very different industries?
        timewizard 2y ago
        > Oligarchy is generally how people who don't deserve wealth can get it. No that's just one of it's outcomes. The proper definition would be "a small group of people having control of a country, organization, or institution." > that doesn't exactly apply to the world's (already) richest man. Given the appropriate definition and his involvement in owning not only a social media company but also having a role in federal government policy and now apparently investigations I am completely baffled by your assertion. > And who exactly would you look for to help the federal government build I figured someone would summon this fallacy. He has acquired wealth. This does not demonstrate any skill in spending tax payer money efficiently in a regulated environment. This is particularly true if you're willing to assume that oligarchy played some part in his acquisition in the first place. > if not someone who has built multiple successful businesses He likes to call himself a founder. Of business that already existed and he purchases a controlling share in. It's amazing that people accept this distortion of reality. > managing costs and outlays at impressive scale Presumably he has people on the payroll who do this. I imagine that the entire financial success of these companies is not down to a single person. How does he find time to do anything in a day? I imagine the federal government could, you know, just do the same thing. Hire qualified professionals to do the job? > Not sure that tracks. Outside of the reality distortion field that some people willingly occupy it most certainly does.
acuntcalleddan 2y ago
[flagged]
haliskerbas 2y ago
I thought self dealing was usually illegal. I can’t sell my family member my house for $1 for example. But you can do the same thing with companies?
- rayiner 2y ago
  You can sell your house to a family member for $1. (There might be tax implications if you sell a $100,000 property for $1 to avoid gift tax limits or whatever, but that’s a separate issue.) I sold my car to my sister in law for $1. Self dealing is also permissible with companies. Corporate officers and directors must still meet their fiduciary duties to shareholders. And the potential for conflict of interest changes how courts will evaluate the transaction if a shareholder complains about a breach of fiduciary duties. Ordinarily, in Delaware, operate transactions are protected by the “business judgment rule” that gives wide latitude to corporate officers and directors. https://plusblog.org/2023/11/28/the-business-judgement-rule-and-the-entire-fairness-standard-as-it-applies-to-controlling-stockholders https://plusblog.org/2023/11/28/the-business-judgement-rule-.... But if there is self dealing, courts will scrutinize the actual fairness of the transaction. But self dealing isn’t per se impermissible.
  - BobAliceInATree 2y ago
    This is why many states base the sales tax of used cars sales on the market value, not the actual sales price.
    - ty6853 2y ago
      Sales tax was already paid when it was new, the state got its due. That kind of idiotic policy is how expensive and collector cars get owned under an LLC and the LLC changes hands rather than the title. Thus the rich bypass all that BS it's only for the gullible plebs.
      - glial 2y ago
        Sounds like tax evasion.
WalterBright 2y ago
The only way to determine fair market value is by having a free market sale. For example, I had a run-in with the property tax assessor. He assessed my house at an unreasonably high price. I filed a protest, and then had a conversation with him. I offered to sell him the house at a considerably lower price, and he could then flip it for what he assessed it at. He refused. I eventually did sell it, for considerably less than the assessed value. As anyone following stocks knows, the fair market value of a company can vary dramatically minute by minute.
- deleted 2y ago
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cyberge99 2y ago
Isn’t this what Trump was found guilty of? Inflating asset value at loan time and deflating their values at tax time?
aylmao 2y ago
Beyond the valuation, I think there's 3 things that are interesting to think about: 1. Musk owned an estimated 80% of X and an estimated 50% of xAI [1]. We don't know the specifics of the deal, but we do know it's an all-stock deal, so in theory this should help Musk own more of xAI, which sounds like better-performing and more promising company atm. 2. Tesla has been a big name in AI for a while now, but has been awfully MIA when it comes to generative AI. It's always focused most on vision, sure, but it's not hard to see how other types of AI could fit it's strategy. Imagine a conversational virtual assistant in your car, or in their robots, or the possible manufacturing applications. In my opinion the device manufacturer + AI lab combo, especially for a device that sells on its promise of cutting-edge technology, makes more sense social network/LLM combo. Beyond the product applications Tesla would greatly benefit from the prestige and marketing of cutting-edge AI. Nonetheless Musk owns only about 12% of Tesla [2]. It makes more sense for Musk's fortune to ride the wave of this new industry with a private venture he owns. This 12% ownership is down from 22% in 2018 btw [3], before the Twitter acquisition in 2022, which was largely funded by liquidating his Tesla stock [4]. Musk seems to be very much divesting from Tesla— both in effort and in money. 3. Where does this leave Musk, Tesla, and xAI? - I think it leaves xAI in the position of being the most important company for Musk right now. Best-case, it becomes a "big tech" company. I'm sure we'll keep hearing much more about it, although I don't rule that Musk could try to sell it or merge it if it gives him control of a tech company with a solid business model or strategic importance. - Musk I think is definitely in a better position than before, fortune and power-wise. He's been diversifying away from a company that's had an insane PE ratio for a while [5], but most importantly, he's been doing so in a pretty smart way. If he had just sold Tesla to buy government bonds, the share price would've crashed. Instead everyone buys into the "he's eccentric and went through a divorce" story. Social network ownership has given him plenty of political power— I don't doubt unbanning Donald Trump is how he got close to him the first place. And now he's converted imaginary wealth from unattainable hype at Tesla into ownership of private company riding the hot tech wave of the moment, concrete political power and self-regulation via his seat in government, and evergreen influence/relevance via his own social network— a tech baron's dream. - Tesla is not doing great, and Tesla investors are the ones getting the short end of all this. I think Musk realized self-driving is too hard, be it due to tech or regulation. I think he realized he can't compete vs Chinese automakers. I think he's pumping and dumping. If he can get a good deal he might try to merge it with xAI in a way that offers him full control of the company (maybe even private ownership), but otherwise I think Musk is ready to let go of it. He's used its insane valuation to get himself better assets. [1] https://www.barrons.com/articles/xai-buys-x-musk-twitter-2e5ab716 https://www.barrons.com/articles/xai-buys-x-musk-twitter-2e5... [2] https://www.investopedia.com/articles/insights/052616/top-4-tesla-shareholders-tsla.asp https://www.investopedia.com/articles/insights/052616/top-4-... [3] https://www.thestreet.com/investing/stocks/how-elon-musk-controls-tesla-with-only-a-minority-stake-14564491 https://www.thestreet.com/investing/stocks/how-elon-musk-con... [4] https://abc7.com/post/elon-musk-accused-improperly-selling-75-billion-tesla/14917474/#:~:text=Tesla%20stock%20sales%20funded%20Twitter%20purchase&text=But%20from%20April%20through%20December,purchase%20of%20Twitter%20that%20year. https://abc7.com/post/elon-musk-accused-improperly-selling-7... [5] https://www.macrotrends.net/stocks/charts/TSLA/tesla/pe-ratio https://www.macrotrends.net/stocks/charts/TSLA/tesla/pe-rati...

mayneack 2y ago

Surely a theoretically disgruntled xAI shareholder is going to have a harder time here since they're both private companies and given Elon's proximity to any potential regulators.

gruez 2y ago
Company directors are generally given wide latitude in what they can do without breaching fiduciary duty, so such lawsuits were always going to be an uphill battle.
- bradleyjg 2y ago
  An acquisition is a special case (for the company being acquired) and the scrutiny is somewhat higher. At least in Delaware. I have no idea what corporate law is like in Texas.
  - dmix 2y ago
    Private companies buying private companies is not heavily scrutinized in general by states, even in Delaware, especially non-public deals with no antitrust issues. The primary risk is stakeholders going through a state court if the company didn't follow standard rules.
  - pclmulqdq 2y ago
    No X shareholder in their right mind will object to getting a $45 billion valuation (including debt) when their latest valuations have the company at <$10 billion.
    - deleted 2y ago
      [deleted]
    - Alive-in-2025 2y ago
      Twitter still has a lot of users and if they stopped being used by offensive at times racist and awful, then Twitter could get more users, sell advertising and make money probably. Now that's all gone because Twitter could investors need w own a small piece of the giant over inflated Xai, which has value because of AI hype but it's future actual value is questionable. There are so many other AI companies, so what is it that xai can do that justifies an $80 billion valuation?
      - monkeywork 2y ago
        >Twitter could get more users, sell advertising and make money probably How'd that work out in the past with the previous owners?
        acdha 2y ago
        Well: with the exception of Q1 2020 they were profitable from 2017 until Musk bought the company. Their last year was lower due to a lawsuit settlement but they were making significant profits until his acquisition added huge debt service obligations and tanked revenue.
        monkeywork 2y ago
        https://www.businessofapps.com/data/twitter-statistics/ https://www.businessofapps.com/data/twitter-statistics/ https://www.investing.com/academy/statistics/twitter-facts-statistics/ https://www.investing.com/academy/statistics/twitter-facts-s... https://dazeinfo.com/2020/07/30/twitter-global-net-income-by-year-graphfarm/ https://dazeinfo.com/2020/07/30/twitter-global-net-income-by... Long history of not being profitable - 2018 and 2019 feel like more of an anomaly than a trend.
  - Majromax 2y ago
    > I have no idea what corporate law is like in Texas. Nobody does, really. Texas is relatively new to its 'corporate registration friendly' game, and at least on paper the statutory law is the same. Texas courts don't have to follow Delaware's case history, but it's also not a given that they will rule in a vastly more owner-friendly manner.
    - no_wizard 2y ago
      To add on to this, Texas as part of this pitch is the promise of less oversight and they not following Delaware’s lead is a plus
      - ISL 2y ago
        The judges may or may not have the same take on that matter as the legislature.
        rvnx 2y ago
        Is it realistic that Texas will decide to punish one of its most active companies ? Risking that they leave Texas for another state.
  - raverbashing 2y ago
    Yes but the owners of X are all elon sycophants so I doubt they will have an issue with this (and honestly xAI stock is better than x stock)
- moffkalast 2y ago
  Given how much they're typically paid for their trouble, you'd think they'd carry an ounce of responsibility for their actions.
deleted 2y ago
[deleted]
tonyhart7 2y ago
"Surely a theoretically disgruntled xAI shareholder" they know what they buying when elon promotes his lmao, elon twitter deal is backed by saudi. elon himself come to saudi asking for an investment from royal prince saudi safe to say that if they want spent 40 billion for twitter, they would spent more with AI flavored company (they are saudi after all)
sebazzz 2y ago
Do regulators still have teeth in the US?
- johannes1234321 2y ago
  You mean the regulators threatened by DOGE?

deleted 2y ago

[deleted]

rayiner 2y ago

Tesla bought Solar City for $2.6 billion, and now it looks like the Tesla Energy division had about that much in net income last year alone.

FreeRadical 2y ago
Tesla Energy existed before Tesla acquired Solar City
refulgentis 2y ago
Solar City was a debacle, it died immediately. Tesla's story in court was they were about to go bankrupt, and it was a financial necessity to redeploy all Solar City assets, including all employees, to Model 3 production. It breaks my heart because my rust belt hometown got a substantial investment from the state they had been chasing for a couple decades. $700M of the Buffalo Billion went to a Solar City facility, Elon even said they were going to build the solar roofs there! New York State didn't dare pick a fight with him as the factory set empty for years. Full story via Bethany McLean, 2019: https://www.vanityfair.com/news/2019/08/how-elon-musk-gambled-tesla-to-save-solarcity https://www.vanityfair.com/news/2019/08/how-elon-musk-gamble...
- grakasja 2y ago
  Huh, DOGE ought to look into where that 700M went..
foobarqux 2y ago
Putting aside the fact that you can't justify fraud by post-hoc outcomes (Shkreli and SBF also claimed that they didn't commit fraud because they would or did win it back), I doubt any of the Tesla Energy division income (even assuming the accounting is okay) is a result of businesses that can be traced back to Solar City. I suspect most of the business is battery storage and the Powerwall was introduced by Tesla before the acquisition.
- enslavedrobot 2y ago
  The vertically integrated Tesla strategy is to use batteries to arbitrage the value of stored energy. This is well described in the Tesla "Master Plan" documents. Solar is a huge part of this. According to the company filings the solar assets Tesla acquired are still generating revenue at the rates projected during the acquisition.

rayiner 2y ago

You’re burying the lede here, which is that the Delaware Chancery Court rules that Tesla had paid a fair price for Solar City: https://www.businessinsider.com/elon-musk-wins-solarcity-tesla-shareholder-lawsuit-2022-4 https://www.businessinsider.com/elon-musk-wins-solarcity-tes...

deleted 2y ago
[deleted]
marinmania 2y ago
OP mentions the lawsuits did not succeed Its not like the courts are investment banks with an evaluation arm. They are just judging if anything reaches the point where shareholders were legally harmed, which still gives a lot of gray area to the acquiring company.
- rayiner 2y ago
  Lawsuits can fail for lots of reasons without a decision on the merits. It seems relevant that the reason the lawsuit failed is because the court looked at the fairness of the transaction and determined that Tesla paid a fair price.
  - nmca 2y ago
    This whole thread is true consistent statements that differ only in emphasis.
    - lcnPylGDnU4H9OF 2y ago
      > differ only in emphasis The commenter you are responding to is explicitly intending to place more emphasis on the reason why the lawsuit failed. That is why they used the phrase “burying the lede” in their initial comment.
      - srveale 2y ago

whats_a_quasar 2y ago

The solar city acquisition was for "only" $2.6 billion. This deal is way bigger. I'm not sure what the Tesla valuation was at the time of that deal, but I have to imagine it's proportionally way bigger too. A $45 billion acquisition when the acquirer, xAI, has an $80 billion valuation will threaten the integrity of xAI. Particularly because that's just a paper valuation and xAI doesn't have much of any revenue. If I were an investor in xAI I would be furious about this. They're almost certainly overpaying for Twitter and there's definitely going to be litigation. Edit: It sounds like the combined entity is taking on Twitter's $12 billion of debt from when it originally went private. As of last December xAI had raised "more than $12 billion" in total [1], so the deal attaches Twitter's debt to that ~12 billion pot of VC money. Unless I'm really misunderstanding something this deal looks like a bailout of Twitter and a huge new liability for xAI. It's definitely possible my hot take is wrong and the xAI investors support the transaction. I hope so because if not there's going to be some brutal lawsuits over this. [1] https://www.nytimes.com/2024/12/24/technology/elon-musk-xai-funding.html https://www.nytimes.com/2024/12/24/technology/elon-musk-xai-...

TheAlchemist 2y ago
Just keep in mind this is all funny money ! The valuation of those 2 companies combined should be < $10 billions if we are very very generous. X is heavily in debt, diminishing user base, and bleeding money. 0 profits xAI is yet to make any actual revenues outside of ... X. Also bleeding money Although I would admit, that these companies are not valued based by their economics, but rather on political power they provide to the owner.
- dzhiurgis 2y ago
  I’m guessing Tesla is paying xAI to train their FSD model?
  - TheAlchemist 2y ago
    That would be a shocking conflict of interest - a public company paying a private company, which is owned by the CEO of the public one ? All while the same CEO claims that the public company is the leader in the field ? Even by Tesla & Musk lawlessness standard that would be too wild.

rozap 2y ago

My guess is that there's an added grift, er...benefit here; since the federal government is now (apparently) in the business of subsidizing AI companies, we'll effectively see the failing social media platform get subsidized by the federal government. I'm certain we'll see a pile of public funds handed over the xAI in the future.

timewizard 2y ago
DOGE for thee but not for me!
- rozap 2y ago
  I mean, that was always a grift to anyone with two brain cells to rub together .
  - timewizard 2y ago
    The government spends 1 out every 5 dollars of GDP. It probably does need a better mechanism for managing costs and outlays. Having one of the "richest men in the world" be in charge of it is ridiculous. That's Trump for you. Populism up front, oligarchy in the back.
    - fastball 2y ago
      Not sure that tracks. Oligarchy is generally how people who don't deserve wealth can get it. As pointed out by you, that doesn't exactly apply to the world's (already) richest man. And who exactly would you look for to help the federal government build "a better mechanism for managing costs and outlays", if not someone who has built multiple successful businesses (managing costs and outlays at impressive scale) in very different industries?
      - timewizard 2y ago
        > Oligarchy is generally how people who don't deserve wealth can get it. No that's just one of it's outcomes. The proper definition would be "a small group of people having control of a country, organization, or institution." > that doesn't exactly apply to the world's (already) richest man. Given the appropriate definition and his involvement in owning not only a social media company but also having a role in federal government policy and now apparently investigations I am completely baffled by your assertion. > And who exactly would you look for to help the federal government build I figured someone would summon this fallacy. He has acquired wealth. This does not demonstrate any skill in spending tax payer money efficiently in a regulated environment. This is particularly true if you're willing to assume that oligarchy played some part in his acquisition in the first place. > if not someone who has built multiple successful businesses He likes to call himself a founder. Of business that already existed and he purchases a controlling share in. It's amazing that people accept this distortion of reality. > managing costs and outlays at impressive scale Presumably he has people on the payroll who do this. I imagine that the entire financial success of these companies is not down to a single person. How does he find time to do anything in a day? I imagine the federal government could, you know, just do the same thing. Hire qualified professionals to do the job? > Not sure that tracks. Outside of the reality distortion field that some people willingly occupy it most certainly does.

acuntcalleddan 2y ago

[flagged]

haliskerbas 2y ago

I thought self dealing was usually illegal. I can’t sell my family member my house for $1 for example. But you can do the same thing with companies?

rayiner 2y ago
You can sell your house to a family member for $1. (There might be tax implications if you sell a $100,000 property for $1 to avoid gift tax limits or whatever, but that’s a separate issue.) I sold my car to my sister in law for $1. Self dealing is also permissible with companies. Corporate officers and directors must still meet their fiduciary duties to shareholders. And the potential for conflict of interest changes how courts will evaluate the transaction if a shareholder complains about a breach of fiduciary duties. Ordinarily, in Delaware, operate transactions are protected by the “business judgment rule” that gives wide latitude to corporate officers and directors. https://plusblog.org/2023/11/28/the-business-judgement-rule-and-the-entire-fairness-standard-as-it-applies-to-controlling-stockholders https://plusblog.org/2023/11/28/the-business-judgement-rule-.... But if there is self dealing, courts will scrutinize the actual fairness of the transaction. But self dealing isn’t per se impermissible.
- BobAliceInATree 2y ago
  This is why many states base the sales tax of used cars sales on the market value, not the actual sales price.
  - ty6853 2y ago
    Sales tax was already paid when it was new, the state got its due. That kind of idiotic policy is how expensive and collector cars get owned under an LLC and the LLC changes hands rather than the title. Thus the rich bypass all that BS it's only for the gullible plebs.
    - glial 2y ago
      Sounds like tax evasion.

WalterBright 2y ago

The only way to determine fair market value is by having a free market sale. For example, I had a run-in with the property tax assessor. He assessed my house at an unreasonably high price. I filed a protest, and then had a conversation with him. I offered to sell him the house at a considerably lower price, and he could then flip it for what he assessed it at. He refused. I eventually did sell it, for considerably less than the assessed value. As anyone following stocks knows, the fair market value of a company can vary dramatically minute by minute.

deleted 2y ago
[deleted]

cyberge99 2y ago

Isn’t this what Trump was found guilty of? Inflating asset value at loan time and deflating their values at tax time?

aylmao 2y ago

Beyond the valuation, I think there's 3 things that are interesting to think about: 1. Musk owned an estimated 80% of X and an estimated 50% of xAI [1]. We don't know the specifics of the deal, but we do know it's an all-stock deal, so in theory this should help Musk own more of xAI, which sounds like better-performing and more promising company atm. 2. Tesla has been a big name in AI for a while now, but has been awfully MIA when it comes to generative AI. It's always focused most on vision, sure, but it's not hard to see how other types of AI could fit it's strategy. Imagine a conversational virtual assistant in your car, or in their robots, or the possible manufacturing applications. In my opinion the device manufacturer + AI lab combo, especially for a device that sells on its promise of cutting-edge technology, makes more sense social network/LLM combo. Beyond the product applications Tesla would greatly benefit from the prestige and marketing of cutting-edge AI. Nonetheless Musk owns only about 12% of Tesla [2]. It makes more sense for Musk's fortune to ride the wave of this new industry with a private venture he owns. This 12% ownership is down from 22% in 2018 btw [3], before the Twitter acquisition in 2022, which was largely funded by liquidating his Tesla stock [4]. Musk seems to be very much divesting from Tesla— both in effort and in money. 3. Where does this leave Musk, Tesla, and xAI? - I think it leaves xAI in the position of being the most important company for Musk right now. Best-case, it becomes a "big tech" company. I'm sure we'll keep hearing much more about it, although I don't rule that Musk could try to sell it or merge it if it gives him control of a tech company with a solid business model or strategic importance. - Musk I think is definitely in a better position than before, fortune and power-wise. He's been diversifying away from a company that's had an insane PE ratio for a while [5], but most importantly, he's been doing so in a pretty smart way. If he had just sold Tesla to buy government bonds, the share price would've crashed. Instead everyone buys into the "he's eccentric and went through a divorce" story. Social network ownership has given him plenty of political power— I don't doubt unbanning Donald Trump is how he got close to him the first place. And now he's converted imaginary wealth from unattainable hype at Tesla into ownership of private company riding the hot tech wave of the moment, concrete political power and self-regulation via his seat in government, and evergreen influence/relevance via his own social network— a tech baron's dream. - Tesla is not doing great, and Tesla investors are the ones getting the short end of all this. I think Musk realized self-driving is too hard, be it due to tech or regulation. I think he realized he can't compete vs Chinese automakers. I think he's pumping and dumping. If he can get a good deal he might try to merge it with xAI in a way that offers him full control of the company (maybe even private ownership), but otherwise I think Musk is ready to let go of it. He's used its insane valuation to get himself better assets. [1] https://www.barrons.com/articles/xai-buys-x-musk-twitter-2e5ab716 https://www.barrons.com/articles/xai-buys-x-musk-twitter-2e5... [2] https://www.investopedia.com/articles/insights/052616/top-4-tesla-shareholders-tsla.asp https://www.investopedia.com/articles/insights/052616/top-4-... [3] https://www.thestreet.com/investing/stocks/how-elon-musk-controls-tesla-with-only-a-minority-stake-14564491 https://www.thestreet.com/investing/stocks/how-elon-musk-con... [4] https://abc7.com/post/elon-musk-accused-improperly-selling-75-billion-tesla/14917474/#:~:text=Tesla%20stock%20sales%20funded%20Twitter%20purchase&text=But%20from%20April%20through%20December,purchase%20of%20Twitter%20that%20year. https://abc7.com/post/elon-musk-accused-improperly-selling-7... [5] https://www.macrotrends.net/stocks/charts/TSLA/tesla/pe-ratio https://www.macrotrends.net/stocks/charts/TSLA/tesla/pe-rati...