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This also lets all of his co-investors in X, who were likely pissed that their shares tanked, exchange their shares at an inflated value (but one that still see
by minwcnt5 1y ago
This also lets all of his co-investors in X, who were likely pissed that their shares tanked, exchange their shares at an inflated value (but one that still sees them losing 25% of their original investment) for shares in a trendy yet likely overvalued AI company that they consider to have more upside.
The other part of this is that if TSLA stock drops to $100-ish he'll be at risk of being margin called on the loans he took against his holdings to buy X. I wouldn't be surprised if this deal involves some X shares being sold for cash (that was raised from VCs) to pay down those loans, and/or the lenders agreeing to take xAI stock in lieu of cash.
This whole thing seems like a big pyramid scheme. I don't think this is the last time we've seen this type of move: he'll keep starting companies that are at the forefront of whatever the current hype cycle is, then leverage the extremely inflated valuations to benefit himself.
- intuitionist 1y agoThe outside investors in X made a profit on paper; Twitter was bought for $44B but the deal was financed with like $31B in equity and $13B in debt. It’s not a big profit (in fact it’s worse than you would have done in T-bills), and of course they’re swapping one illiquid and hard-to-value asset for another, but Elon isn’t giving them a 25% haircut at all.
- deleted 1y ago[deleted]
- zahlman 1y agoIsn't Twitter's stock price higher than it was at acquisition?
- ceejayoz 1y agoTwitter doesn't have a stock price. It got taken private in the acquisition.
- deleted 1y ago[deleted]
- azemetre 1y agoAlso I think Fidelity open puts out statements on the value of Twitter since they are a shareholder. The only recent info I can find on this was an article from last October: https://www.forbes.com/sites/tylerroush/2024/09/30/elon-musks-x-is-now-worth-around-a-fifth-of-the-44-billion-he-paid-for-it-fidelity-says/ https://www.forbes.com/sites/tylerroush/2024/09/30/elon-musk... Where it states that Twitter is now worth 1/5 of its $44billion price. I highly doubt it re-made up the equivalent value in the span of 6 months. If anything they likely lost more money as advertising sales have plummeted.
- kelnos 1y agoAs the sibling pointed out, private companies don't have stock prices. But I've read estimates that Twitter is worth less $10B now, so less than a quarter what Musk paid for it.
- DoesntMatter22 1y agoThe banks just recently did a debt sale of a lot of that debt close to list price, so 44 billion dollar valuation is probably reasonable. Apparently the company is profitable now, sans the debt, so as long as it doesn't go out of business and can grow on other fronts then it's probably not a problem.
- rwmj 1y ago> profitable now, sans the debt So, not profitable.
- j_maffe 1y agoWhat، 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 1y agoThey 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 1y agoYes, 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.
- echelon 1y agoEven if he made the Twitter investors whole, I wonder how the investors in xAI feel.
- chrisco255 1y agoThey're mostly the same investors.
- johannes1234321 1y agoThey just wait for the next round of this. Maybe SpaceX will require more AI? Or Tesla?
- onlyrealcuzzo 1y agoThey feel great, because he just magically turned a ~50% loss in Twitter into a ~50% return in xAI and a ~0% loss in Twitter. Of course, you can't buy $20B worth of mangoes for $40B worth of Mango Holding Company stock and then suddenly make your mango-holding business worth twice as much money. But you can pretend! Private valuations, especially VC-funded companies, have been nonsense for decades. Elon is just exploiting that egregiously.
- bravetraveler 1y agoFeeling mighty 2008/subprime in here
- silisili 1y agoHe didn't leverage Tesla stock to buy X. These Reddit level takes with zero research are making threads like this really annoying to read. All emotions, zero facts.
- IrishTechie 1y agoYou haven’t added any facts either, it’s just one more statement from a random Interneter like those Reddit posts. I’m intrigued to hear some fact on this point though?
- silisili 1y ago[flagged]
- HWR_14 1y agoHow did he get the tens of billions in cash he personally put in if not leveraging Tesla. Yes he had minority investors and put some debt on the acquisition itself, but he put up a lot of money.
- silisili 1y agoHe sold Tesla shares. This is all public, I don't understand the weird speculation...
- HWR_14 1y agoHe also sold a ton of shares. But not enough to cover all the money he needed to put into Twitter.
- gscott 1y agoHe had to sell some Tesla shares because he reached the max borrowing limit against his Tesla shares that was allowed. Once he was forced to sell shares he had to pay a lot in taxes. This shows the mega wealthy can pay taxes and not become poor. We should learn from this lesson and tax the .01% of society.
- cellwebb 1y agoI don't think he's going to be able to spin up hype on anything after this. He's burned a lot of bridges.
- sitkack 1y agoWhen you Godwin your own thread, you are by definition done.
- onlyrealcuzzo 1y agoHe's simply moving Twitter losses to xAI investors - because he's the largest Twitter loser - and would prefer those losses go to other patsies instead.
- jeff_carr 1y ago> This whole thing seems like a big pyramid scheme. That's because his scam of charging $8k over the price of a Tesla for "self driving" was complete vaporware. It never worked and it never was going to work. I am disappointed I fell for it. There should be a class action lawsuit against TESLA for everyone that purchased the $8k self driving "feature". We were all told it was "being rolled out". It was a total lie.
- geertj 1y agoYou must not have tried FSD 13.x with AI4 hardware. I commute to work every day from the suburbs to the city with a ~25 min one-way commute with zero disengagements. Edit: Elon mentioned in the last earnings call that if you are on AI3 hardware and bought FSD that they will have to upgrade you free of charge to AI4. Edit 2: To clarify, FSD 13.x is only available with AI4 hardware.
- lukevp 1y agoThey started selling FSD back in like 2017 and it was supposed to be self-driving ALL THE TIME by 2019. It’s 8 years later now and the best you’ve got is “upgrade the hardware to version 4 and you can make a 25 mile commute without disengagement” when Tesla was promising cross-continent summoning so you could fly somewhere and your car would drive there to meet you, charging along the way. That’s L5 autonomy. The delta between promised and delivered is so far apart it’s ridiculous. Mercedes’ autonomous system is the only L3 even, Tesla’s is L2. They by my definition did not deliver whatsoever on their promises. Another thing is a lot of people don’t even keep cars longer than 8 years (and people who are buying new, $100k electric cars are more likely going to upgrade sooner than someone who’s buying a $30k civic.) they paid for FSD thinking it would be ready soon.
- baggachipz 1y agoI was intent on keeping my low-vin release day Model 3 until they made good on their FSD promise, come hell or high water. Then The Salute and The Infomercial happened, and I gave up and ditched the car like a psycho girlfriend. They got my money and I was fooled by a con. I'll never let that happen again.