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As best I can tell the deal includes paying off $12 billion of Twitter debt. So that's real money, though that seems like it's basically all of the cash that xA

As best I can tell the deal includes paying off $12 billion of Twitter debt. So that's real money, though that seems like it's basically all of the cash that xAI has raised, so if that's the case that's pretty wild. Edit: I misread, Musk said it's an all-stock deal, so you're right, it's all funny money. I think that means the combined entity is taking on that debt. It's still great for Twitter and bad for xAI investors because the combined entity now has both the $12 billion debt and all the VC xAI raised.

wraaath 2y ago
Definitely great for the Twitter investors to be able to convert. I think they took a haircut relative to the 42B that they came in on, as the 45B includes the 12B debt. (42 gets reduced to 33, so 21-22% haircut) xAI also raised 6B in December last year at a 45B valuation, and then in February, reporting was that xAI was trying to raise 10B more at the 75B valuation... so this is where the frothiness of AI helps to mask the fundamentals. Can gets kicked down the road.
- whats_a_quasar 2y ago
  Definitely, and a lot of that haircut actually happened in between when the deal was signed and when it closed, too. That was right when interest rates went up and Musk tried to wriggle out of the purchase agreement. So it's a great outcome for Twitter investors, assuming it sticks.
  - j4coh 2y ago
    And assuming the xAI stock they traded their X stock for is worth anything.
    - wraaath 2y ago
      Also - the wording on the deal: xAI being valued at 80B X being valued at 33B Is the xAI 80B number inclusive of the 33B (45B including debt)? That would back into xAI's valuation moving backwards since the December round. Usually when venture-backed companies tout a valuation after a capital raise, it's post-money... and they're not chest-thumping a 113B number (which they surely would have given 9 figures)
      - wraaath 2y ago
        And.. looks like there was an update on the valuation from Bloomberg: Aggregate over 100B, but less than 113B due to some mingled ownership. https://archive.is/esoEN https://archive.is/esoEN
- pqtyw 2y ago
  The are getting xAI stock instead of cash though and it's not really clear how liquid it will be.
no_wizard 2y ago
Every time I see deals like this that are going to be such raw deals for the majority of those who invested it feels like a keen reminder that all the talk of market efficiency the pro caps in Washington talk about are full of it This is a terrible and inefficient use of money. It’s inevitable that this paper house will fall over
- selectodude 2y ago
  Markets are plenty efficient. They’ve just lit billions of dollars on fire that used to belong to people stupid enough to believe in Elon Musk.
  - no_wizard 2y ago
    That isn’t efficient by any commonly understood definition of the word
    - deleted 2y ago
      [deleted]
  - riffraff 2y ago
    Tesla is still worth something like a forward PE of 90 and a trailing PE of 130, among plummeting sales and market share. It's still wildly overvalued, and at it's unclear how long the market will stay irrational.
    - Epa095 2y ago
      It's so hard to make predictions of Teslas value in today's political system! Musk is very very close to power, and it's impossible to say how that will play out. Will Tesla be the only car company without 25% tariffs? Will the government spend billions to buy Teslas? Or will Tesla die and Musk live of space-X?
      - psd1 2y ago
        He's not "close to power". He's cutting your nation into shreds, unopposed.
AtlasBarfed 2y ago
I smell margin call desperation. Musk got visibly worried with tanking Tesla stock and pulled out some crazy stops to keep Tesla afloat. Remember, these megabillionaires are due to stock valuations, and live rich lifestyles on the basis of lending against the value of stock. If that value drops and a margin call forces actual selling, then Musk loses shares in Tesla. I have to think this stunt is related to Musk needing some liquidity somehow, or being unable to cover private liquidity crunch with public assets. TSLA is ludicrously overvalued. P/E is 150, based on Q4 earnings which were 1/3 "real" revenue, 1/3 mark-to-market-BTC (aka one shot), 1/3 CAFE/subsidies which Trump will nuke in 6 months. But the "real" earnings that were already flat in Q4 are seeing a huge drop in EU/CN and who knows in the US. If "real" revenue drops 20%, the "real" earnings might drop 70% or more. Anyway, that 150 p/e is ACTUALLY 450 in my mind, but after Q1 reports it will ACTUALLY be almost 1000 or worse. The only thing keeping the stock afloat is AI hype, but 1000 p/e ratios are for people with market dominance and fundamental leads on competitors. Tesla is arguably middle of the road in both self driving and robots.
- deleted 2y ago
  [deleted]
- HWR_14 2y ago
  Tesla is still worth more than it was 6 months ago. I don't think a margin call based on borrowing a few years ago is likely.
  - immibis 2y ago
    When is the first earnings call after everyone realized Musk was a Nazi?
    - AtlasBarfed 2y ago
      Q1 sales call. I was trying to stay apolitical but a CEO doing Nazi salute and not being fired is uncharted waters, at least in the last 80-85 years. I keep going back to the horsemeat episodes on mad men, and the papa johns CEO getting booted. This is simply unprecedented in brand management. Brands take decades to build, and are especially important for car companies.

wraaath 2y ago

Definitely great for the Twitter investors to be able to convert. I think they took a haircut relative to the 42B that they came in on, as the 45B includes the 12B debt. (42 gets reduced to 33, so 21-22% haircut) xAI also raised 6B in December last year at a 45B valuation, and then in February, reporting was that xAI was trying to raise 10B more at the 75B valuation... so this is where the frothiness of AI helps to mask the fundamentals. Can gets kicked down the road.

whats_a_quasar 2y ago
Definitely, and a lot of that haircut actually happened in between when the deal was signed and when it closed, too. That was right when interest rates went up and Musk tried to wriggle out of the purchase agreement. So it's a great outcome for Twitter investors, assuming it sticks.
- j4coh 2y ago
  And assuming the xAI stock they traded their X stock for is worth anything.
  - wraaath 2y ago
    Also - the wording on the deal: xAI being valued at 80B X being valued at 33B Is the xAI 80B number inclusive of the 33B (45B including debt)? That would back into xAI's valuation moving backwards since the December round. Usually when venture-backed companies tout a valuation after a capital raise, it's post-money... and they're not chest-thumping a 113B number (which they surely would have given 9 figures)
    - wraaath 2y ago
      And.. looks like there was an update on the valuation from Bloomberg: Aggregate over 100B, but less than 113B due to some mingled ownership. https://archive.is/esoEN https://archive.is/esoEN
pqtyw 2y ago
The are getting xAI stock instead of cash though and it's not really clear how liquid it will be.

no_wizard 2y ago

Every time I see deals like this that are going to be such raw deals for the majority of those who invested it feels like a keen reminder that all the talk of market efficiency the pro caps in Washington talk about are full of it This is a terrible and inefficient use of money. It’s inevitable that this paper house will fall over

selectodude 2y ago
Markets are plenty efficient. They’ve just lit billions of dollars on fire that used to belong to people stupid enough to believe in Elon Musk.
- no_wizard 2y ago
  That isn’t efficient by any commonly understood definition of the word
  - deleted 2y ago
    [deleted]
- riffraff 2y ago
  Tesla is still worth something like a forward PE of 90 and a trailing PE of 130, among plummeting sales and market share. It's still wildly overvalued, and at it's unclear how long the market will stay irrational.
  - Epa095 2y ago
    It's so hard to make predictions of Teslas value in today's political system! Musk is very very close to power, and it's impossible to say how that will play out. Will Tesla be the only car company without 25% tariffs? Will the government spend billions to buy Teslas? Or will Tesla die and Musk live of space-X?
    - psd1 2y ago
      He's not "close to power". He's cutting your nation into shreds, unopposed.

AtlasBarfed 2y ago

I smell margin call desperation. Musk got visibly worried with tanking Tesla stock and pulled out some crazy stops to keep Tesla afloat. Remember, these megabillionaires are due to stock valuations, and live rich lifestyles on the basis of lending against the value of stock. If that value drops and a margin call forces actual selling, then Musk loses shares in Tesla. I have to think this stunt is related to Musk needing some liquidity somehow, or being unable to cover private liquidity crunch with public assets. TSLA is ludicrously overvalued. P/E is 150, based on Q4 earnings which were 1/3 "real" revenue, 1/3 mark-to-market-BTC (aka one shot), 1/3 CAFE/subsidies which Trump will nuke in 6 months. But the "real" earnings that were already flat in Q4 are seeing a huge drop in EU/CN and who knows in the US. If "real" revenue drops 20%, the "real" earnings might drop 70% or more. Anyway, that 150 p/e is ACTUALLY 450 in my mind, but after Q1 reports it will ACTUALLY be almost 1000 or worse. The only thing keeping the stock afloat is AI hype, but 1000 p/e ratios are for people with market dominance and fundamental leads on competitors. Tesla is arguably middle of the road in both self driving and robots.

deleted 2y ago
[deleted]
HWR_14 2y ago
Tesla is still worth more than it was 6 months ago. I don't think a margin call based on borrowing a few years ago is likely.
- immibis 2y ago
  When is the first earnings call after everyone realized Musk was a Nazi?
  - AtlasBarfed 2y ago
    Q1 sales call. I was trying to stay apolitical but a CEO doing Nazi salute and not being fired is uncharted waters, at least in the last 80-85 years. I keep going back to the horsemeat episodes on mad men, and the papa johns CEO getting booted. This is simply unprecedented in brand management. Brands take decades to build, and are especially important for car companies.