3 ms·

> profitable now, sans the debt So, not profitable.

by rwmj 2y ago

DoesntMatter22 2y ago
With the debt it's break even.
- rwmj 2y ago
  So, not profitable.
  - Saline9515 2y ago
    The company is profitable. The debt is unrelated to assets acquired or previous deficits.
    - rwmj 2y ago
      a.k.a the worst kind of financial engineering. The company is not profitable if it doesn't make a profit when all things are considered. And we're not even talking about the missed opportunity costs of the ~ $27bn cash used to purchase Twitter. Most of that value is completely gone.
      - DoesntMatter22 2y ago
        If you were an investor in X and put up some of that $27 billion dollars you now own shares in xAI, so it's not not gone.
        rwmj 2y ago
        You can dress it up in "financial alchemy" like any hedge fund, but it doesn't disguise the fact that the last person to carry that can is going to lose a lot of very real money.
        DoesntMatter22 2y ago
        That doesn't even make any sense.
    - 4ndrewl 2y ago
      So much financial sophistry going on here, can almost see the sequel to the CDS infused trauma of 20 years ago coming down the line
j_maffe 2y ago
What، acompany needs to cover the costs of how it was acquired, now? If it's valued at the price it was purchased and making a positive revenue stream then it is profitable.
- acdha 2y ago
  They need to cover their debts. If someone uses private equity raider tactics to load the company up with debt, it’s likely to be bad for the company but it still counts on their books just as taking payday loans is ill-advised but legal.
- dave4420 2y ago
  Yes, this seems to be common practice. 1. Borrow lots of cash 2. Buy a victim company with the cash 3. Carry out weird financial/legal alchemy to make the victim company solely responsible for paying off the loan 4. If the victim company can’t handle the debt and goes bankrupt, then you don’t own the company any more. That’s sad. Especially for the people who lose their jobs. But the people you borrowed the cash from can’t chase you for it, so no harm done, eh? 5. If the victim company pays off all the debt, then congratulations: you bought a successful profitable company for free! I don’t understand step 3 or why it’s legal.
largbae 2y ago
This is part of the reason that the term EBITDA exists.

> profitable now, sans the debt So, not profitable.

by rwmj 2y ago

> profitable now, sans the debt So, not profitable.

DoesntMatter22 2y ago

With the debt it's break even.

rwmj 2y ago
So, not profitable.
- Saline9515 2y ago
  The company is profitable. The debt is unrelated to assets acquired or previous deficits.
  - rwmj 2y ago
    a.k.a the worst kind of financial engineering. The company is not profitable if it doesn't make a profit when all things are considered. And we're not even talking about the missed opportunity costs of the ~ $27bn cash used to purchase Twitter. Most of that value is completely gone.
    - DoesntMatter22 2y ago
      If you were an investor in X and put up some of that $27 billion dollars you now own shares in xAI, so it's not not gone.
      - rwmj 2y ago
        You can dress it up in "financial alchemy" like any hedge fund, but it doesn't disguise the fact that the last person to carry that can is going to lose a lot of very real money.
        DoesntMatter22 2y ago
        That doesn't even make any sense.
  - 4ndrewl 2y ago
    So much financial sophistry going on here, can almost see the sequel to the CDS infused trauma of 20 years ago coming down the line

j_maffe 2y ago

What، acompany needs to cover the costs of how it was acquired, now? If it's valued at the price it was purchased and making a positive revenue stream then it is profitable.

acdha 2y ago
They need to cover their debts. If someone uses private equity raider tactics to load the company up with debt, it’s likely to be bad for the company but it still counts on their books just as taking payday loans is ill-advised but legal.
dave4420 2y ago
Yes, this seems to be common practice. 1. Borrow lots of cash 2. Buy a victim company with the cash 3. Carry out weird financial/legal alchemy to make the victim company solely responsible for paying off the loan 4. If the victim company can’t handle the debt and goes bankrupt, then you don’t own the company any more. That’s sad. Especially for the people who lose their jobs. But the people you borrowed the cash from can’t chase you for it, so no harm done, eh? 5. If the victim company pays off all the debt, then congratulations: you bought a successful profitable company for free! I don’t understand step 3 or why it’s legal.

largbae 2y ago

This is part of the reason that the term EBITDA exists.