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.
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.
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.
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.
Hold on, I feel like everyone's missing that theres a real argument here. I think the key point was:
>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.
This distinguishes the lawsuit failing from the idea that a fair price was paid. The competing contentions are (a) fair price vs (b) unfair but beneath threshold of legally punishable harm.
Note that this is a civil suit, so the concept of a “threshold of legally punishable harm” doesn’t apply. There’s no “punishment,” and the plaintiff doesn’t need to meet the high standards (proof beyond a reasonable doubt, etc.) for imposing a punishment.
Under Delaware law, there’s two standards for evaluating this kind of claim. When there is no conflict of interest, the court applies the “business judgment rule,” which is similar to what you seem to be thinking—it gives corporate officers wide latitude.
But when there is a conflict of interest, the court applies the “entire fairness” standard, which requires both fair dealing and a fair price. And a fair price means what it sounds like—it’s what an objective businessman would consider a fair price under the circumstances. It doesn’t need to be the best price, but it must be within the range of fair. And to establish a fair price, the court relies on evidence from financial valuation experts. It’s a rigorous standard that’s hard to meet.
> And to establish a fair price, the court relies on evidence from financial valuation experts.
I generally find expert testimony to be suspect. Anyone can be trotted forward as an expert, rattle off their credentials, and say whatever they feel like saying, depending on who is paying them to testify. And financial valuation is not a science; there is of course plenty of math involved that takes into account hard, objective numbers, but a good chunk of it is opinion, too, as no one an know the future.
Having said that, the Delaware Chancery Court of course has more experience in these matters than any other state's courts, so I am of the opinion that they're less likely to be duped by "experts", but sill... it can and does happen.
I agree with you to a degree about expert testimony. But I’d argue that a Delaware Chancery Judge reviewing expert opinions from major investment banks is more likely to come to an accurate assessment than many other people offering view on the transaction. The legal ruling isn’t definitive for anything more than the case that was before the court, but I think it should be heavily weighted by anyone trying to inform their views about what happened.
I’d also point out that, in the legal industry, Delaware’s entire fairness standard is seen as a rigorous standard that typically results in victory for the plaintiff. The Chancery Court ruling resulted in various law firm updates using the case as an example of how the entire fairness standard isn’t always a death sentence for defendants.
NCEES has brought back the controls systems professional engineering licensure. This is the same license that civil engineers use to stamp designs for example.
Of course, the license doesn’t mean anything if everyone falls under an industrial exemption. I’d be in favor of safety-critical software requiring a PE stamp.
I have two feelings on this. One of which is alarm because it is a sentiment like this which is the backbone of misinformation believers and spreaders and we're in the worst era of misinformation I think that we've been in in a long time. Certainly the worst since the dawn of the digital age. Experts are right about vaccines. Right about building your savings with a 401k. They're right about using sunscreen. They're right about not ingesting too much sugar. They're right about reading to your kids from an early age and right about the impacts of tariffs on the economy. They're right about climate change. They're right about the Higgs Boson, etc. etc. In almost every case, the people going against the experts on these things are cranks, frauds, or confused conspiracy theorists.
But my other feeling is one of agreement in a very qualified sense. I believe that within the U.S. legal system, people who are presented as experts in certain forms of science, are able to invoke an unearned professional authority and legitimacy that has nothing in common with genuine expertise. When we talk about pseudoscience in the modern age, a lot of the time it's about new age crystals or evolution denial, but I think expert witnesses presented as authoritative in courtrooms have been responsible for generations upon generations of pseudoscience of various types. Everything from penmanship analysis to bite mark analysis to body language experts to, rather remarkably, supposed 911 phone call tonality analysis experts Who can include that wrongly timed emotional tremors or presence or absence of emotions prove the callers involvement in a crime.
And while it might be a gray area, I suspect there's at least a fair amount of crankery or motivated reasoning with hired gun economic experts summoned to Delaware courts to testify in favor of major corporate acquisitions.
I feel like this fixation on "punishment" as a legal term of art is not strictly necessary and my point can be reinterpreted in a charitable way that restates the same thing using different but functionally equivalent magic words.
So swap out "punishable" and instead say "legally actionable" (or other preferred synonym) and you nevertheless have an assessment that falls under what you noted is the entire fairness standard and the upshot is the same.
Also my understanding is that courts defer to the experts of the acquiring company. And if those experts are predisposed to have a favorable interpretation that favors the acquiring company, the valuation is in the less than optimal range of a range of values produced even by them, and they, by contrast to an actual market, might be much more lenient than a market would be in determining the price. So there's a convergence of variables that underscore the difference between fair as we conventionally understand the term (which is what we were all interested in here) and whatever it means to have survived legal scrutiny in Delaware.
Which again I would say means that this debate has real teeth and it's more than semantically equivalent differences in emphasis.
(c) no fair price can possibly be determined but the burden of proof lies with the claimant
(d) a court has no idea what a fair price would look like but made a finding of fact based on expert testimony despite being poorly situated to evaluate it
That’s generous. One party is stubbornly missing that the Delaware court’s ruling is weak evidence of a proper valuation having been done, but wants to parrot an irrelevant textbook understanding that obfuscates that conclusion.
It's worth pointing out (IMHO) given the other comments that it's actually more than that - the fairness standard requires they prove the process was fair as well (IE a fair process that generated a fair price), which the court found they did as well.
(As you know, but others may not - this is not always the standard vs the business judgment rule, but is the standard here)
You joke, I think, but I do think a solid welfare state delivers benefits that a mainstream economist would recognise. I fancy the long-term prospects if a country with a safety net higher than one without, all other things being equal. I see more inherent value in the public sector than the private.
Unfortunately the private sector has dominated the zeitgeist for decades; a kind of meta-regulatory-capture, if you will.
I can't trust that there will be a state pension waiting for me. So I'm in the private sector. Got some bonds in my mix, at least.
This is true but it's not as far off as you think.
In this case, the court doesn't have to just find it was a fair price, but a fair process as well.
That is, the standard the defendants have to meet (not the plaintiffs, the burden is actually on tesla here despite having been sued) is that the transaction was entirely fair to the corporation and shareholders- the process was a fair one, the price was a fair one, etc.
I have trouble thinking of a case where you can prove all this[1] but the market would have come up with something different. Almost by definition, if the market would have decided to pay a lower price, either the price or the process was probably not fair.
[1] Which again, you have to do affirmatively. You aren't just rebutting plaintiff evidence, the burden is on you to show the fairness
Even if there was a market, any market naturally requires adversarial decision making in the negotiation of a deal to have economic calculation (what we generally view the benefit we derive from a market in the first place).
When the same people are making the ask as making the buy, you literally cannot decouple the decision-making in a way that objectively eliminates cooperation.
A market cannot exist when the entities involved abandon adversarial decision-making and cooperate. One's priority is always suborned by one or the other.
And what happened to Tesla solar roofs? Haven’t heard about those since like 2020. Who actually has one? And Tesla trucks? And full self-driving? And robotaxis? And the private venture around the moon?
It’s like everyone just forgets Musk’s announcements that never get delivered on.
Solar roof installs are continuing to grow. Slower than they hoped, but growing.
The semi factory will be finished late this year.
FSD gets better each month. Obviously there is massive debate if it will be “done” in 1, 2, 5, 10 or never years
Robotaxis were announced recently, the plan as announced is for them to be sold in 2026. That has not changed.
Looks like they’ll have some kind of driverless taxi service running this year with remote operators like Waymo.
Private moon mission was canned.
I think it’s pretty strange to say Musks promises never get delivered on when Tesla sells the most popular car on the planet two years running, spacex launches more to orbit than the rest of the world combined and a ton of other stuff.
Obviously he’s utterly nuts, and doesn’t deliver everything he talks about, and is very late on many things. But you have to be blind to say he never delivers anything.
No, a self driving car can be either supervised or unsupervised.
I'm required to supervise my car while it drives me to work, but it is by definition fully self driving, controlling all aspects of the vehicle while I sit with hands off the wheel watching
[2017] The sensor hardware and compute power required for at least level 4 to level 5 autonomy has been in every Tesla produced since October of last year.
[2017] I think that [you will be able to fall asleep in a Tesla] is about two years
[2018] Probably technically be able to [self deliver Teslas to customers doors] in about a year then its up to the regulators
[2019] We expect to be feature complete in self driving this year, and we expect to be confident enough from our standpoint to say that we think people do not need to touch the wheel and can look out the window sometime probably around the second quarter of next year.
[2020] Robotaxis release/deployment... Functionality still looking good for this year. Regulatory approval is the big unknown
[2020] I am extremely confident that level five or essentially complete autonomy will happen, and I think, will happen very quickly, I think at Tesla, I feel like we are very close to level five autonomy. I think—I remain confident that we will have the basic functionality for level five autonomy complete this year, There are no fundamental challenges remaining.
[2020] I'm extremely confident that Tesla will have level five next year, extremely confident, 100%
[2021] FSD will be capable of Level 5 autonomy by the end of 2021
My understanding is that the solar roofs are basically dead. They're more of a vanity project than a real product. The total production of the tiles is enough to cover like 10-20 houses a week and the full system price is around 5 times what a regular solar install costs, even when you factor in replacing the entire roof before doing the solar install.
The project was unilaterally cancelled by the client, Yusaku Maezawa, in May 2024. Starship development had fallen significantly behind the original SpaceX aspirational date for the flight in 2023, and Maezawa's net worth had also halved since venture was announced in 2018.
How many children with how many women? How many disowned? False accusations of pedophilia against people he doesn’t know? Free speech absolutist who gleefully bans speech? Corporate acquirer who accidentally fires key people, and then makes the exact same mistake as a coup leader?
He is batshit. He is also smart and has accomplished some impressive things. The two are not incompatible.
> How many children with how many women? How many disowned?
That's common human behavior.
> False accusations of pedophilia against people he doesn’t know?
Against a single person who had just called him "insane" on TV. Not nuts at all.
> Free speech absolutist who gleefully bans speech?
Not all speech is free speech - you cannot advocate for hits on people, for example. Besides, it's perfectly legal to censor speech on his platform. Not nuts at all. Musk has made no attempt to suppress speech on Bluesky, Facebook, Reddit, Tiktok, etc.
> Corporate acquirer who accidentally fires key people
That's not how it worked. Twitter was losing money at an astonishing rate, and he had to cut expenses immediately. It is the fastest way to determine who was actually needed and who wasn't. Then hire back the ones who were actually needed.
> makes the exact same mistake as a coup leader?
It's the only way to do it when time is critical. It's also the only way when the agencies are doing everything possible to not cooperate with DOGE.
When a criticism sounds like a substitute for the real reason a person hates Musk, it is totally unfair.
For example, where was the disgust at the person who publicly called Musk insane first? A fair criticism would have included that. A fair person would also be aware that there is not a single person on the planet who has not called someone else a nasty name.
Ah, so Musk must have X systematically taking down calls for public execution of his political enemies, then? This is a legit exception to free speech absolutism and he is just asking Reddit to do the same thing he does on his platform.
I’d argue he offsets his risks (but not profits) to the taxpayer. His high-risk bets have largely been buoyed by government contracts, subsidies, and borderline crony-capitalism. In many respects, that’s not always bad for the taxpayer when he delivers, but it’s not the same as being a free-market risk taker.
I recommend reading a biography of him. He did not offset risks to the taxpayer. SpaceX, for example, got contracts from NASA. He delivered on those contracts. If he hadn't, he would have gone bust, not the taxpayer.
At one point with Tesla he was within hours of business and personal bankruptcy, before making a deal with an investor. The investor wasn't the government.
You may want to familiarize yourself with counter examples from Musk biographers, like Seth Abramson.
Musk said himself SpaceX would’ve gone bankrupt without NASA contracts. He needed those contracts because Spacex was too high of a risk at the time for private business. NASA is self-insured. This is the the way the government supports high-risk nascent industries, because they are the only institution capable of shouldering that risk.
It’s well-established that the solvency of his companies are tightly coupled, just like TFA. Further, Tesla is made competitive by subsidies for EVs and manufacturing. Not necessarily bad, but the success isn’t occurring in a free-market vacuum. When companies accepting subsidies go under, the govt doesn’t typically get that money back, at least not in full. (See the faux Solyndra “scandal”)
I know that doesn’t fit the preferred narrative of the mythical free-market iconoclast succeeding in spite of the govt, but that’s reality.
On the profit side, I should have said he gets a disproportionate amount of profit and the taxpayer gets a disproportionate amount of risk.
“And he wasn't paid until he delivered, like any contract with a business”
I don’t know the specifics of these contracts, but I very much doubt it based on my experience. That’s not how any Government development contract I’ve ever worked on has worked… There are startup payments, payments for milestones (including many at the start for various design stages before anything was built), payments at varying levels of build, etc… - often more than half (sometimes more than three quarters) of the contract value was paid before the final product was delivered.
We did some pretty cool things too (this was in defence satellite communications) but various Government customers took like 80% of the risk on the development most of our big products (obviously we had already proven our design abilities with smaller components but much smaller scale), which we would then sell to them and other Governments.
I’d implore you to research more about how the CCP is administered. There are payments before any astronaut gets a ride. Meaning if the company goes out of business beforehand, the taxpayers lost that money without receiving the actual service intended. That’s also why NASA selected two CCP contractors, it distributes the risk. Maybe you think socializing risk to the taxpayer makes him a smart businessman, I just wish people would comes to terms with the fact that his wealth is inextricably linked to taxpayers. Like I said before, it’s not even necessarily a bad thing but call it what it is. I personally think the hybrid public-private arrangement works well when it’s not being abused.
Regardless of all that, the point was that Musk is not a paragon of free-market capitalism. Nothing you’ve pointed out negates that point, yet people still cling to that narrative for…reasons. I suspect it has more to do with cognitive biases than reality.
My house was built to my specification. The general contractor required that I make progress payments. He wanted to be sure he wouldn't be left holding the bag for all of it after I moved in (and he also needed cash to buy supplies and hire subcontractors). I took a risk he didn't just disappear with the up front payment.
When I had the roof replaced, I had to pay half up front.
And so on. This is normal business practice.
There is nothing not free market about progress payments.
(Besides, if NASA was fronting all the money, SpaceX wouldn't have gone bankrupt if the rocket blew up. But what I've read was Musk bet the company on it not blowing up.)
I decided to check one detail. The EV subsidy came in the form of a tax credit to the buyer, it is not paid to the car manufacturer. Musk had nothing to do with it.
> I suspect it has more to do with cognitive biases than reality.
Imagining oneself as dealing in reality rather than cognitive bias is yet another cognitive bias. Everything written about Musk is subject to cognitive bias one way or another.
You order an uber. You aren’t expected to make progressive payments so the driver can buy the car, get gas, etc. That’s the more appropriate analogy. As I said, CCP is a service contract, not a product. A house is a product so it even if the contractor goes out of business, you still have the foundations, studs, etc. ie your payments cover the partial product you are actually contracted to receive. A house is a misapplied analogy that belies some ignorance on the commercial crew program.
Businesses can leverage POs to fund operations. That’s why the NASA contract matters.
Yes, the EV subsidy goes to the buyer. The point was it makes the product more competitive at its price point. That point still stands. Besides, Tesla also benefited from multiple other taxpayer benefits. For example, they get hundreds of millions in tax incentives for their factories. Again, their profitability is propped up by taxpayers.
I’ve never claimed to be completely unbiased. However, we do have the benefit of testing out narratives with facts. The mental gymnastics needed to deny that these ventures/profits are somehow not related to taxpayers is, in a word, “nuts”
> You order an uber. You aren’t expected to make progressive payments so the driver can buy the car, get gas, etc. That’s the more appropriate analogy.
It's utterly inappropriate. First, your card is submitted and approved prior to you getting the ride. The uber is going to get that payment, you have no choice. Second, I wouldn't be surprised if the amount is put on hold with the credit card company before the ride begins - I know gas stations do this. Third, it's a trivial amount of money compared with buying a house. Fourth, the uber driver cannot operate if he hasn't already bought the car and the gas.
> That point still stands.
Musk had no control over it. The tax credit was given to the consumer. It also was for all EVs, it was not targeted at Musk.
> they get hundreds of millions in tax incentives for their factories. Again, their profitability is propped up by taxpayers.
A tax abatement is not a subsidy. A subsidy is a payment. Tax abatement is not "propped up" by other taxpayers, they did not get their taxes raised by it, and the company was not previously paying taxes for that location.
I'm curious why you (apparently) think that anyone could have done what Musk did? Why didn't you (or anyone else) get those subsidies and tax credits and contracts and create Tesla and SpaceX? I've read that Musk is an imbecile who somehow failed into being the richest entrepreneuer on Earth?
Tesla + SpaceX is worth about $1.2 trillion dollars. If the government started it with a billion dollars, consider all the taxes Tesla + SpaceX + Musk + employees + investors has paid since. Wow what a return on investment! And as a bonus, NASA gets to shoot off rockets that cost only 10% of NASA-built rockets.
C'mon, this is bordering on a disingenuous argument. You can't acknowledge the different between a service and a product. That's literally the novelty of the CCP. In general practice, you don't pay for a service until after its rendered. But not the case in the NASA contract. If your Uber doesn't show up, you'll get reimbursed whatever small hold they put on. You're only out the service. If SpaceX went belly-up, NASA isn't getting milestone payments back and they don't get their ride. They're out payment and service.
>Musk had no control over it.
Are you claiming that subsidies don't get factored into a business plan? Again, the point is government action makes the business more competitive/profitable. Subsidies to the consumer absolutely impact that. Tesla's own filing acknowledge this point. E.g., they mention regulatory credits add $2.7B to their revenue. They also mention how consumer subsidies impact consumer demand for their cars, and how tax abatements are fundamental to projected operating expenses and financial obligations. Their own statements run afoul of the narrative you're defending.
>they did not get their taxes raised by it, and the company was not previously paying taxes for that location.
Correct. We agree the taxpayers are losing an income stream. If your house was built in a location, do you think you could claim "well there was nothing here before, so not paying income taxes is of no consequence"? It's a weird take if you think the public isn't offering something of value with beneficial tax breaks. If they are offering something of value, they are helping the business. I also agree the taxpayers can benefit from it, I don’t think they have to be in conflict, just acknowledged.
>I'm curious why you (apparently) think that anyone could have done what Musk did?
I've never claimed that, you seem to border on fanboy admiration of him. I think Musk is a once in a generation entrepreneur. I also think his business MO is heavily reliant on government contracts and special treatment. Those two aren't necessarily mutually exclusive. But the latter is contradictory to free-market ideals. That's the point that you're constantly side-stepping. Worship him if you want, but also acknowledge his success is tightly coupled to governmental help.
SpaceX has done amazing things. Buit I'm going to venture we have different opinions why. IMO, t's because they get to operate under different rules. I think the main advantage that NASA is buying is a plausible way to skirt a lot of the rules (political and technical) they must abide by. CCP does not, and that's largely why they can do things differently. That's not a guarantee of success (see: Boeing) but it sets the table.
You may not realize it, but we've had this same tired discussion a while ago. At that time, I said we will see Musk's business acumen with what he does with Twitter. Apropos of TFA, that doesn't currently put him in good light. 6 months ago it was valued at $9B, and then shortly later valued at $45B so that he could essentially sell it to himself at that valuation. At the very least, that indicates a lot of uncertainty. That is a suspect valuation, but to be generous there are some differential outcomes: 1) xAI becomes profitable largely due to the synergies from the sale of Twitter/X, 2) xAI is profitable in spite of the purchase, 3) xAI does not become profitable. It will be interesting to see, and I will be interested to see if we'll ever get insight into the private company to find out. It will also be interesting to see if future success is still coupled to government/political help; I suspect that's a drug hard to break from.
> his business MO is heavily reliant on government contracts and special treatment
He sells rockets to the government at 10% of what it would cost the government to buy them elsewhere. It's clearly Musk helping the government. Besides, Musk did not get subsidies for SpaceX nor special treatment.
> Are you claiming that subsidies don't get factored into a business plan?
No, I claimed that Musk had no control over the EV subsidy, which was given to buyers of electric cars from any company.
> acknowledge his success is tightly coupled to governmental help
Making a better, cheaper rocket is helping the government save tens of billions of dollars.
> contradictory to free-market ideals
The government keeps taking our economy farther and farther from the free market. Government taxes, subsidizes, and regulates. It isn't really possible to run a free market business in the US.
I know it's cool these days to dump on Musk and denigrate his achievements with "you didn't build that" (as if anyone else could have done it), but history will show him to be the greatest entrepreneuer the world has ever seen.
The government has subsidized other companies. None of them succeeded like Musk did. Not remotely. The idea that the government created Musk is just nonsense.
> buoyed by government contracts, subsidies, and borderline crony-capitalism
What you're describing is Lockheed, Boeing, Rockwell Collins, etc. SpaceX is the opposite--it provided NASA a service that was necessary for NASA to operate, at a fraction of the cost of competitors: https://ntrs.nasa.gov/citations/20200001093.
The fact that NASA makes interim payments on the contracts doesn't turn a purchase of services into a subsidy. "Free market" does not mean "off the shelf." It's extremely common in B2B settings for buyers to shoulder some up-front costs to develop products or services that aren't available in the market. For example, Apple made a large up-front payment to a supplier to speed up development of sapphire glass: https://www.cultofmac.com/apple-history/iphone-sapphire-glas....
Buyers take-on some risk when they do that, but that doesn't make it a subsidy. In Apple's case, they take on the risk in return for the bet that a supplier can provide them with huge volumes at a low price. In NASA's case, it took on some development risk because SpaceX promised a large reduction in launch costs.
I agree it applies to other contractors. My point is that the success is tightly coupled to the willingness of taxpayers to fund the operations.
You’re muddling points. I’m not saying the NASA contract was a subsidy. Tesla is a better example of subsidies.
No private capital was willing to contract to SpaceX until the risk was lowered. They’ve succeeded in doing so and deserve credit. However, they would have never gotten to that point without taxpayer dollars. Governments were the only institutions capable and willing of taking on that high initial risk. That point still stands. It’s odd that your stance denies that when Musk himself has admitted it.
You seem to be bent on have an altogether different discussion because you’re continuously missing the point. It’s exhausting, boring, and goes against HN guidelines about fostering a curious conversation.
> been buoyed by government contracts, subsidies, and borderline crony-capitalism
The government pays spacex to complete contracts. They pay tens of thousands of companies the same way - defence, bridges, trains, roads, etc. in fact, every government does this.
It’s also worth pointing out spacex have completed those contracts much cheaper than competitors who have not delivered (ie star liner). As far as the gov giving out contracts for space stuff, spacex are literally the best option, and directly save taxpayers money.
Tesla gets subsided because the government wants to encourage EVs. Oil extraction and refining, corn, education, healthcare, defence and literally thousands of other sectors are also heavily subsidized. Again, every government in the world does this for sectors they want to encourage.
You are so hell bent on your “Musk bad” line you didn’t realize it has nothing to do with him or his companies. You are angry at how governments around the world pay for and subsidizes sectors every single day.
No, the Commercial Crew Program is fundamentally different than the way NASA has previously done business. They are buying a ride, not a rocket. Because it’s a service contract, it’s much more hands-off.
We agree the government supports sectors they want to encourage. See my previous comments about supporting high-risk nascent industries. That’s a different point than the one I was making, which is that support is a large part why those industries can exist during their initial high risk phase. My point is he is not a paragon of free-market capitalism because they rely on government support during high-risk stages. Both points can coexist. It also doesn’t imply I think he is “bad”.
You are trying to shoehorn a different discussion. I’ve never said Musk is bad. In fact, I’ve said he’s a once in a generation entrepreneur and that his companies have delivered wonderful things to the taxpayer. My claim is that his success is not the free-market ideal because it relies on government largesse. In your head, you appear to view it through a completely different lens because you seem to want to construct this “good vs bad” false narrative. The fact that you are bypassing the points reiterated multiple times isn’t conducive to a curious, nuanced, and thoughtful discussion
You still missed the point because you want to force this into a “SpaceX vs Everybody” narrative. I’ve already addressed the Boeing point. It still doesn’t negate the point about the industry needing government help/contracts to survive its early stages.
I don’t know why it’s difficult to actually read and critique the point being made, rather than constant digressions into others, but it makes for boring conversation. If you have a point that SpaceX didn’t need government contracts early, then make it. I’d be curious to hear it, but I don’t think the data supports it.
What part of defence contractors or train line builders or oil refineries or corn or sugar growers didn’t need government contracts and subsidies early?
You’re making out like SpaceX are doing something unique or morally wrong, when what they are doing is perfectly common, and the government couldn’t function without companies doing what spacex are doing.
Your message makes no sense. This is everyday stuff across the entire economy.
The only story Is that spacex saved the government (taxpayers) billions compared to paying Boeing who can’t even deliver.
Also show me when I say SpaceX was doing something unique or morally wrong. Was it when I said other contractors do the same? Was it when I pointed out Boeing’s shortcomings? How any when I said SpaceX has done wonderful things for the taxpayer? Or how the public-private partnership works well?
Why do you insist on ignoring all the things we seem to agree on to fabricate an argument? Is it because you are incapable of admitting sometimes the government does good things? You are tilting at windmills, my friend.
It’s all there in the OP. But since reading comprehension seemed to take a hit due to the need for arguing, I’ll reiterate:
His high-risk bets have largely been buoyed by government contracts
SpaceX wouldn’t have survived without govt intervention. I think the same can be said of Tesla to a lesser extent. That’s not bad, it’s the way things work with high-risk nascent industries.
No. It's blindingly obvious. You can be utterly incredible at delegation. You can be incredibly productive. You can also be utterly nuts. The utterly nuts part is self-evident to people who aren't temporarily impoverished billionaires and don't want to kiss his ass and be him. In my experience, that tends to include people who need it "explained". No disrespect.
What are you talking about? How about you spend like 2min doing research? Tesla solar roofs exist and are being deployed. Its just not the extreme growth market that Musk hopped for. And the trucks exist too.
The private moon mission is off because the costumer pulled out. But Starship is still in development and is contract with NASA for a moon mission.
Aren't Cyber trucks by Tesla? And FSD is basically here which means robotaxis are basically here. Now there are just regulatory hurdles and the long tail.
"""“I feel very confident predicting autonomous robo taxis for Tesla by next year. Not in all jurisdictions, because we won’t have regulatory approval everywhere. But we will have regulatory approval at least at some point next year,” Musk said toward the end of the presentation. “From our standpoint, if you fast forward a year, maybe a year in three months, but next year for sure, we will have over a million robo taxis on the road.”""" - Musk, April 2019
GP is referring to Tesla's promise to build electric semi trucks, not the pickup truck that Cybertruck is.
> And FSD is basically here which means robotaxis are basically here. Now there are just regulatory hurdles and the long tail.
AIUI, Tesla FSD is at best Level 3 automation (probably more like Level 2), which means it requires constant driver supervision to keep the car from committing suicide. That's pretty far from being "basically here", especially since Tesla seems extremely loth to accept any responsibility for FSD-related crashes.
In what sense of the word "basically" are the FSD and robotaxis "basically" here? Tesla FSD is a level 2 autonomic system that requires constant supervision, robotaxis would require level 4/5 autonomy. That's not even close to becoming reality.
"Basically here" and "actually here" tend to be decades apart ... especially in Musks case. Tho, I think another company can be actually capable to make them actually working.
Quite a claim. FSD in practice is nowhere close to actually being able to do robotaxi operations. So its not really a regulatory burden, other then regulatory actually checking if it works.
Exactly why do you believe a court that does exactly this kind of judgement all the time is not capable of it?
They issued a 127 page supporting decision on why they found it was a fair process that generated a fair price.
Want to say which part you take issue with that shows it was not capable of the judgement?
FWIW - I actually hate tesla, i just also hate the sort of drive by shitting on other fields that HN seems to do sometimes. If there are concrete reasons to believe they aren't capable, let's have that discussion. Otherwise, there's no need to denigrate others capabilities without evidence based on our feelings :)
you hate the company or the product? How does someone hate a company the open sourced all of their patents which resulted in creating a ton of competition in a previously dominated market?
Some people don't ignore the fraud, the terrible working conditions, the anti-competitive business practices, the unfulfilled promises, the stock price manipulation, and the cult of personality of a highly controversial leader just because of a marketing stunt from more than a decade ago which even Elon admits was not altruistic.
I'm a fan of Tesla's patent strategy. However, calling it "open source" isn't strictly correct. Patents are only free to use as long as you also give Tesla rights to all your patents.
copy-left is referred to as open source and some even claim it's _more_ open source, but thanks for the information, I wasn't aware of the that detail.
edit: oh it's not copyleft, but specifically quid pro quo so tesla gives you their patents if you give them yours
A copy left style arrangement would require you to not enforce your patents against anyone who signs and upholds the agreement, not just with Tesla. If that was the case, I probably wouldn't have quibbled with the term "open source" being applied.
Quite the opposite. You were the one who brought up how many words they wrote, when we can just look at the glaringly obviously results which were there solar city failed.
I can just point to that huge failure that we can see right now.
?
You still haven't pointed out a single thing the judge got wrong, and literally just relied on a bare assertion of your feelings about how it went later, which is, of course, almost totally irrelevant to whether it was fair at the time of purchase
Companies eventually failing does not mean they were bad deals at the time (or even a bad deal later). Not everything succeeds.
The question is not "did anyone successfully predict the future" or even "was it a good thing to buy" but instead "was it a fair price and a fair deal at the time they bought it". So i have no idea why you keep bringing up what happened later as it it's relevant at all, and won't tell anyone why you think it's relevant to the past.
Given you refuse to read and cite a single thing that the judge actually got wrong and keep citing the end of solar city as if this somehow changes the past about whether it was fair deal for a fair price at the time, it's hard to believe you are really doing this in good faith, so i'm out.
(FWIW - i was the first solarcity customer in maryland, and given my experience i certainly have no love for them, but you aren't presenting any coherent argument here)
They are, but in the relevant Delaware law the latter point matters when there is a potential conflict of interest, so the Delaware court ruled on that.
The "fair price" standard and ruling is about both the process and the price. And the standard is likely not what most people would assume it to be, particularly as stated by the OP, resting on matters such as "was and is the transaction synergistic to Tesla?" It's also notable that the court found several process flaws created by Musk but ultimately determined the Tesla board was independent enough that it was likely fair.
Was it actually fair as evaluated by any outsider on first principles? Probably not. Was it criminally unfair? No.
It wasn’t a criminal case, and plaintiffs didn’t need to meet a high burden of proof. And Delaware’s entire fairness standard is a two-prong test that includes both fair dealing and fair price: https://en.wikipedia.org/wiki/Weinberger_v._UOP,_Inc.
The court ruled:
> Even assuming (without deciding) that Elon was Tesla’s controlling stockholder, the Tesla Board was conflicted, and the vote of the majority Tesla’s minority stockholders approving the Acquisition did not trigger business judgment review, such that entire fairness is the standard of review, the persuasive evidence reveals that the Acquisition was entirely fair…
> Equally if not more important, the preponderance of the evidence reveals that Tesla paid a fair price—SolarCity was, at a minimum, worth what Tesla paid for it, and the Acquisition otherwise was highly beneficial to Tesla. Indeed, the Acquisition marked a vital step forward for a company that had for years made clear to the market and its stockholders that it intended to expand from an electric car manufacturer to an alternative energy company. The Court’s verdict, therefore, is for the defense.
"The court made 11 factual findings showing that Musk had participated in the deal process to a degree greater than he should have."
"The trial court noted that these “process flaws flow[ed] principally from [Musk’s] apparent inability to acknowledge his clear conflict of interest and separate himself from Tesla’s consideration of the Acquisition."
"Upon recognizing these process flaws, the court then turned to what it identified as the strengths. It found six."
"Regarding fair dealing, the trial court noted that the road leading to the Acquisition was not entirely smooth. The court found, however,that the “Tesla Board meaningfully vetted the Acquisition” and Musk “did not impede the Tesla Board’s pursuit of a fair price.”Although Appellants assert that the court failed to make a finding of fair dealing, the court’s opinion can only reasonably be read and understood as concluding that the flaws did not overcome the findings of the process strengths and that the process, overall, was the product of fair dealing."
What’s that got to do with the court’s ruling that Tesla paid a fair price, which is what I said in my OP? This is the relevant part of the opinion:
> In instances where there are process infirmities, the Court is obliged to study fair price even more carefully. I have done that here. After careful consideration, I am persuaded Elon presented credible evidence that Tesla paid a fair price for SolarCity. Plaintiffs answered by proffering incredible testimony that SolarCity was insolvent, and then provided some “also ran” theories on value that their experts did not ultimately endorse, or at least not persuasively so. Given this, I have no credible basis in the evidence to conclude that a “fairer price” was available, and therefore, no basis to conclude that the price paid was not entirely fair. Indeed, the price was, in my view, not “near the low end of a range of fairness,” but “entirely” fair in the truest sense of the word.
The ruling is based on price _and_ process by your own reference. You keep moving the goalposts. Which end do you want to play from? I thought not burying the lede was the scheme here?
Grandparent is not correct, you can’t just assign “whatever” value in self-dealing transactions.
The SEC and IRS weren’t born yesterday. It reminds me of people who come up with basic self-dealing transactions with some tax benefit and act like the idea wasn’t around 100 years ago and that regulations aren’t already in place.
Regardless of the faith you have in the courts assessment time has shown the more critical opinion to be true. Solar City was a dead company, none of the promises they made has amounted to anything, they aren’t producing any products or revenue, and the deal has been shown to be self dealing in order to bail out his brother.
Where are the solar roof tiles? What’s happened to the tax payer funded factory in NY?
They’ve been here for ages but you can basically see what happens when you self-identify with a party rather than principles and put your intellect to work rationalizing positions selected by other people. I miss their contributions of a decade ago.
> what happens when you self-identify with a party rather than principles and put your intellect to work rationalizing positions selected by other people
This is a problem for a lot of people, regardless of political spectrum.
When your identity is tied to a political group, criticism of that group transfers to criticism of self, and there aren't many people that enjoy that.
Yes - it’s a cognitive pitfall humans are prone to. You can see it with any group membership - here on HN, how many comments have we seen where someone is defensive about legitimate criticism about their favorite programming language or style – but it can be especially bad with politics because it can be weaponized by people acting in bad faith with significantly more negative consequences.
That has certainly been the case for the past few decades and I, personally, think we may have reached some sort of breaking point. The other day on a somewhat popular radio show catering to a specific group typically associated with one US party the calls to divest from political affiliation to a Party as a deciding factor were a lot more common and urgent in tone. I know what I think and I do think US 2 party system is part of its current set off issues, but it was odd to hear some of those thoughts expressed in the wild.
Don't get me wrong, the tribe mentality is absolutely still there, but for the first time in a while I am hearing something akin to 'fuck it'.
When I read your comment, what I see is "I checked through their comment history. They disagree with my political viewpoint, so I'm going to use the popular talking points from my in-group to attack them."
I glanced through your comment history as well, and I'm convinced that you are a lot smarter than that, and can add more to the conversation.
> popular talking points from my in-group to attack them
Pointing out that we're currently being de facto ruled by a circle of wealthy billionaires and millionaires is not a "talking point". This comes across as projection.
> I'm convinced that you are a lot smarter than that
Thank you. I'm not sure what you're looking for me to add to the conversation however, I just plainly said what I saw, which was them to bat for several oligarchs who are currently making a mockery of our country.
If you are heavily invested in early Tesla stock you should've cashed out, unless people are so greedy and irradiated that a 50x/10y RoI isn't good enough.
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.
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.
> 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.
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.
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.
I don't think there are that many of them, and I think most of them are very much under the "Musk" spell. This would be the party to sue to block this deal, and it seems unlikely that they will.
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?
> if they stopped being used by offensive at times racist and awful, then Twitter could get more users, sell advertising and make money probably.
That's a big if, and I think most people would be pretty skeptical of the possibility of that happening. The fact that outside investors seem to value it at under $10B suggests that's a common enough opinion.
To me, "make money" only implies financial sustainability. Do you take it to mean unicorn levels of cash?
I had an employer taken over by PE and shredded, for the crime of only managing 10% profit margin. Apparently, to some, if 20% of revenue doesn't go into someone's pocket, your business is a corpse. I think the world needs to chuck that attitude in the bin.
Opportunity cost is what the business can earn by investing in something else, usually something less risky than what the business is doing. If the business cannot earn more than the opportunity cost, it's a losing investment.
Businesses often use an opportunity cost of around 14%, so if the business is earning only 10%, then they are losing 4%.
For example, if you start a risky venture that earns 2%, when you could invest the money safely in bonds at 5%, it doesn't make sense to do the risky venture.
It's not an "attitude", it's maximizing the use of the money.
This thinking by American business is why tariffs will never bring back whole sectors of manufacturing to US shores. It's not business American companies want to get involved with.
'if you start a ̶r̶i̶s̶k̶y̶ venture that earns 2%, when you could invest the money safely in bonds at 5%'
The US invented flat screen technology. The return on manufacturing didn't fit American business profit levels so they sold the technology off to overseas companies. Tariff's aren't going to fix that. They might artificially boost the return short term, but unless we are going permanent protected markets this sort of low return manufacturing isn't coming back, because of American management style, not 'Canada bad', not 'trade deals bad'. If anything a better cause statement would be to say 'American MBAs bad'.
The discussion way back when they interviewed executives about LCD patents/research being sold of was that they were just too low of a profit margin to bother pursuing. I believe it was a 60 Minutes piece but it may have been a nightly news piece at the time.
If business costs are lower offshore, that raises the profit margin for the busines to go there. It doesn't mean that offshore businesses accept lower margins.
Understood. But what you have described is an attitude. Another possible attitude is being happy to lose money, hand over fist. Somewhere in between, there used to be a multi-billion company that made a piffling 10% margin on revenue.
You need some diversity in a system to remain able to change. Very homogenous populations are more likely to be wiped out in a crisis. Maximal efficiency is not maximal meta-efficiency.
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.
Yes, like a lot of tech companies they weren’t focused on profits until their CEO prioritized it over growth but from that point on they were profitable from 2018 on, with the aforementioned bad quarter when everyone cut spending at the start of the pandemic. The one-time deferred lawsuit payout in 2021 masked what otherwise would have been several hundreds of millions in profit.
The problem people had understanding them was that they weren’t Facebook or Google. The expectations of a money-printing machine were unrealistic but they had a solid middle-tier business with a large number of solid customers.
Actually I think that's a great observation! I hadn't thought of that one. But Facebook, open AI, Google, Microsoft have even more money than musk and I'm sure they wont allow that.
X is now state-sponsored media, not social media. it provides political echochamber for some portion of the population and nothing more than that any longer
the one way you can look at $45bn is ability to buy election(s). as long as there are enough sheep orbiting that platform the value is there - in buying election(s)
Anti-democrat journalists were given extensive access by Musk to internal files at Twitter and the best they could come up with is finding that the Biden campaign was sending emails with links to posts they believed were against Twitter terms of service, and Twitter employees then checked the posts, discussed internally, and usually agreed they should take those down. Some of the examples of tweets taken down by this process by the anti-Biden journalist were investigated by others and found to be pictures of Biden's son naked from his laptop. And the Trump presidency was also sending similar reports doing with the same results.
So the worse that Musk's personally selected journalists could find was a special process that political figures from both parties had where their abuse reports were getting prioritized.
It was a fair bit more than that. From the left-leaning guardian
> The most worrying issue the Twitter Files have exposed is the level of contact between the social media company and state security organisations. The FBI regularly holds meetings with Twitter executives, pressuring them to take action against “misinformation”, even when this amounted to little more than a satirical tweet, and demanding the personal data of users.
Take note of the "pressuring", in line with what was reported by Zuck.
I’d recommend reading the source claim. Those “FBI meetings” were an email asking if Twitter would reconsider allowing their commercial data provider to access the bulk firehose feed:
wait till january of 2029 and see what zuck will say about trump. or see what he said in 2021… zuck etc will suck dick to whomever is at the helm. come 2029 he’ll re-introduce gender menu with 365 options so we can switch gender each day of the year and will proclaim that 99% of new hires will be “DEI” hires to beat Trump administration previous record of “98% DEI hires” (and rising)…
Oh, I have no doubts about that. But that's not what missinformation is, IMO. You and I have no way of knowing if what zuck said in that instance is true or not, like a million other things CEOs say. You can't "trust" them when it suits your narative, but say it's missinformation when it doesn't.
Isn't that actually the point? Megacorps like Zuck's are beholden to the government to not break them up or pass laws they don't like, so they bend the knee whenever it's users or free speech taking the hit. Evidence of this not happening would be a non-corrupt government that breaks up the companies or repeals the laws that prop up their market dominance instead of every administration taking them up on the quid pro quo.
To prevent this you need social media to not have central gatekeepers in a position to censor things to begin with.
which is only possible with platforms like bluesky/mastodon/… which are decentralized but of course they have their own issues… I deleted all my social media accounts once I realized that nothing good can come from it and it is one of the roots of current insanity that is our society (especially USA but it is spreading…)
Well, I would have suggested that you put your money where your mouth is and buy out Fidelity et al, but it looks like you're off the hook for that statement.
However, secondary markets for these megacorps are relatively liquid, so the valuations are not actually completely baseless.
"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)
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.
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.
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.
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
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?
Megacorp market valuations are extremely bizarre because they're in a sense self-fulfilling. If your company has a market cap in the hundreds of billions of dollars then it has lower capital costs than competitors. If you want to build another factory, you're paying less in interest. Which means you can undercut the competition on price, or expand into grid storage or data centers etc.
Obviously you then have to actually do those things before the value crashes, so whether it works or not depends on whether investors continue to expect you to.
The current value fluctuations have more to do with politics than the company. The media is writing a lot of negative stories right now, but they also have the attention span of a goldfish and ultimately some new Current Thing will replace the existing one.
Ahhh, I dunno, musk is pretty good at fucking his own companies with Nazi salutes and wreckless incompetent destruction. Doesn't really take any big bad media to see what a fucknut musk is.
The media is the thing that characterizes it as "Nazi salutes" and "wreckless incompetent destruction".
The guy is an eccentric with autism, not an angel or the devil. He's not always right. But everything is so polarized right now that people are barely willing to concede that it's possible for someone to be right some of the time.
Teslas have the positive characteristics that they don't run on petroleum and have good safety ratings. They have the negative characteristics that they have privacy issues and you can't get parts or documentation to fix them yourself. A strong heuristic to tell if someone is using motivated reasoning is if the thing they're complaining about is an unrelated political hot button well-known to produce outrage (e.g. allegations of somehow simultaneously secret and open fascist ideology) as opposed to a way they're actually screwing someone illegitimately but in a way that doesn't cause most people to experience an immediate visceral response (e.g. mass surveillance, right to repair).
You can also tell it's that when the target is actually doing a bad thing, but the people objecting only care about the target and not anyone else doing the same thing. This is extremely common with corruption allegations. All corruption is bad, you need systems in place to constrain government officials from bilking the taxpayer, but this is a process problem where you need stronger checks and balances to prevent the government from transferring money to cronies, not a "we need to somehow elect only infallible humans" problem where what people actually mean is that they just want their guy to get in so the money goes to their cronies instead.
Cool story buddy. But musk is still a Nazi salute throwing fuckwad fool. I'm not buying the smirking excuses. He also happens to control a company producing government subsidized garbage pail cars. And he lies about their self-driving capability... over and over and over again. Mainly because he was too big of a fool to recognize that multimodal sensors are a good thing so he's about half a decade behind.
I prefer cars that don't get recalled for glued on pieces falling off and CEOs that didn't pay a quarter billion dollars to buy a presidency.
Plenty of other electric cars being produced by the other manufacturers.
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.
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.
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)
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.
People tend to only look at the drop from January until now, but if you look back a little further it seems clear that the market was expecting some payout from Musks relationship to Trump. When that's didn't really amounted to anything, the stock price just dropped down to it's September 2024 level and continued from there, as if October - January didn't happen.
What surprises me is that the drop in sales numbers seems to have zero effect on the stock price, at least not yet.
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.
He had a sizable chunk of collateralized borrowings against his Tesla shares even before the Twitter acquisition. There was the risk of a margin call during year following the acquisition, but AI became the latest hotness so he was able to spin up a company to cook up some more market bubble.
Sort of: it put Twitter's LBO debt on X.ai's books. I strongly suspect Elon had been lending X money to cover interest payments. Both X.ai and X are privately held, so specifics will be hard to come by.
This doesn’t strike me as an objective assessment of the state of affairs.
You could make the same “bleeding money” comment about many historical social media acquisitions – at least Twitter has advertising and subscription revenue. And it’s similarly suspect to argue that xAI is failing due to lack of revenue, without mentioning the astronomical valuations of its peers in the AI space, many of which are not only lacking revenue but also have no distribution channel comparable to the scale of Twitter/X.
xAI has one of the leading models in terms of investment and user base, and it’s rapidly improving on its evaluation metrics.
Twitter/X is one of the Top 10, if not Top 5, social media properties worldwide. It has hundreds of millions of monthly active users and maintains the lead in public consciousness as the “go to” place for 1-N broadcasting of information. While Bluesky shows promise, it won’t be dethroning Twitter any time soon. When has Bluesky been the source of breaking news?
And you cannot separate these two businesses. Twitter/X and X.ai are fundamentally coupled to one another. Twitter is not only a data source for X.ai but also a distribution and retention channel. There is an “ask Grok” button under every Tweet. And it’s not the only LLM that can be summoned via Tweet – with similar automations from companies like Perplexity proving there is value in the channel – but it is the only LLM with a native integration into the interface and first dibs on freshly-generated user content and breaking news.
You're missing the fact that Twitter has essentially 0 advertising revenue compared to the other major social networks, as all major ad networks have stopped doing business with Twitter (this in turn being because of the very high likelihood that their ads would be shown next to content that their clients didn't want to be associated with, such as images of Hitler).
We already have multiple news stories about xAI receiving 10,000s of GPUs that were originally meant for Tesla. That's about as close to "public company giving private company owned by CEO money" as you could possibly get without cartoon sacks of cash.
> Even by Tesla & Musk lawlessness standard that would be too wild.
Not to be overly snarky here, but, uh: what standard? They have proven over and over that they could not give less of a shit about either societal norms or the laws of the nation.
Stock market graveyards are full of people that shorted TSLA. I remember reading about people who lost it all because of a TSLA short at least since 2020. The lesson here is that markets can remain irrational longer than we can remain solvent.
In those cases, it usually revolved around Tesla releasing either the Model 3 or Y, and they were betting against Musk's execution in general. What wasn't really up for debate (in my mind) was the technological lead or the demand in the marketplace for the car.
Essentially, Tesla was primed in both situations for a huge market they had to themselves: electrified transport.
Now?
- demand is tanking, and the brand is permanently damaged, well, as long as Musk is at the helm.
- competitors are everywhere
- technological moat (with respect to EV drivetrain/construction) is gone. I could argue their cylindrical cells are legacy/semi-obsolete in fact, since IMO pouch cells are superior for LFP/sodium ion, and who knows what solid state will optimally package.
There is also the "first buddy" benefit. The whole thing is being actively rebuilt at a time when Musk has been heading a department which, amongst other things, openly backdoored the treasury. It's pretty uncharted waters.
> The entire stack is based on TSLA valuation, which is going to tank.
But it's not is it. Try looking at the trends long term, not just YTD. It's remarkably stable, trending upwards. Yes it gain a bunch of value from October to January/February, which is has lost. Investors seems to have traded on the "First Buddy" effect, that didn't actually do anything for Tesla, so that value has now been removed and we're back on the original trend line.
How the hell drop in sales and lose of brand value hasn't caused to stock to absolutely tank is beyond me. Is someone artificially keeping the price stable? Do investors see something I don't, or they do just not care?
Yep, I also believe that we will have a Minsky Moment on the entire Muskonomy.
Given his political involvement, I would assume that the maximum end date for this house of cards is the date when Trump is no longer in power - which is less than 4 years away. The real date is probably much sooner, but who knows when ?
But that then means that Musk has a strong incentive to keep Trump (or some replacement that will similarly let him do whatever he wants) in power past these 4 years.
Buying time to get the rocket finished that he will ride escaping his creditors to Mars. That would be a badly written plot even by the standard of cheesy comic books, but somehow it all makes sense from that angle. (no, I don't believe that he would ever get within explosion range of a rocket engine ignition)
No, Tesla has their own seperate training supercomputer called Dojo that it optimized for computer vision. Its one of the top 20 supercomputers in the world by compute.
That’s all marketing. They have had lots of issues getting it put together and working, and is more akin to really really really self driving in 2018 we were told.
Mmh, that source is showing a 10% drop in users for September 2023 the last point, which was notably before alternatives like bluesky and others were starting off. Also note that since Musk took the company private we don't really know how accurate these numbers are.
So I'd argue that the statement theat Twitter/X is bleeding users can't be conclusively decided, but it seems your statement that Twitter has been growing globally is incorrect at least for the last reported quarter.
Fair enough, edited to just revenue. But those are just datacenters bought with VC money - my intent was to say that xAI's resources are basically just the investment they've received.
We don't know that it's a world class data center, we only know how many GPUs they bought. For all we know, half of them could be staying on shelvez, and the whole data center could run for 5 hours a day: there's no public info on how well they're doing.
xAI is a private company. I very much doubt that the current VC investors will ever litigate this.
They are all waiting for some other favour for taking this on either explicitly or implicitly.
Also, I would like to see a Venn diagram of the investors in xAI and SpaceX.
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.
That wasn’t the claim. They just speculated that acquiring one solar company helped in their other solar ventures, which seems like a good default assumption.
If you have evidence that’s not the case, that would be interesting to share.
I wrote a comment 2 hours before the initial comment in this subthread that explains Tesla held in court that Solar City ended up contributing nothing because it needed to be liquidated immediately lest Tesla go bankrupt. https://www.vanityfair.com/news/2019/08/how-elon-musk-gamble...
For what it's worth, I don't even know what the inverse position would be, SolarCity was a solar panel maker, and famously, the idea after they realized they couldn't come close to China's prices, was solar roof tiles. They would be a major breakthrough project that would make Solar City a breakout financial hit.
Do people think Tesla makes solar panels? Solar roofs?
I don't blame them, I guess, this carnival has been going on for years.
I'm somewhat surprised how dedicated you are to avoiding information and asking for someone, anyone, to give info. It's been 18 hours and 3 replies on your end, albeit without people taking the time to spell it out to you like this. Personally, I would have looked into it a bit myself.
I don't think that's the true at all. There's a vast and visible footprint we can see with batteries (pretty sure every major solar company in the U.S. that has a battery storage option does at least some Tesla) that has no equivalent with solar rooftops. The former are ubiquitous while the latter are so far as I can tell almost entirely non existent.
And if that's too light on data I'll put it this way, I'm reasonably confident I can find 10 solar companies that install Tesla batteries for every one that does Solar City roofs.
Exactly, and theres plenty of third party companies buying and installing these for customers and their economic activity testifies to the significant scale of the Tesla battery business.
Because Tesla abandoned the SolarCity model? Like, SolarCity was a bunch of sales people going door-to-door to sell questionable leases on solar systems and hawking off the junk bonds resulting.
I’m curious what the cumulative operating cost / financial repayment plan is relative to the capital installation cost. Funny enough if it is advantageous to you vs solar city that is one more argument in favor of them running a poor business model.
The general model has some intrinsic advantages. If you want to build out solar generation you normally have to buy land (expensive), but this way the customer is giving you space on their roof "for free". Then the price per kWh the customer pays to the power company includes a transmission cost, but the power is being consumed on site so you don't have to pay that.
The result is that solar generally has a generation cost of ~$0.04/kWh (which includes the cost of the land) but meanwhile you have customers happy to be paying $0.11/kWh. The trade off is the one-time cost of installing it on individual roofs is more labor intensive than doing a large-scale installation in a field somewhere, but that just means it's competitive rather than having a massive advantage.
> Exactly. So then why draw conclusions about how SolarCity was a bad deal for shareholders (see parent comments)?
You can absolutely draw adverse inferences from Tesla's refusal to report certain straightforward, useful numbers. For example, their refusal to publish any real safety statistics, to the point where Elon Musk himself has to invoke rubbish numbers like the 'community tracker'.
If, after all the lawsuits and accusations of failure, and the reporting about the near-zero deliveries and idled factories, the Tesla Energy division is giving you no numbers on the solar roof, and is lumping them together with a totally different product like batteries, there is one thing and only one thing that that means: the numbers are awful.
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.
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.
Well I trust Elon's statements (even the financial statements) as far as I can throw them but can you point out where it says that? I'm searching the 10-K and I don't see solar broken out.
But even if it's true I assume they are including their utility-scale solar and battery packs, which has nothing to do with Solar City: the panels are generic, the customer lists are not residential, they don't use the fancy shingles. Solar City did not help them in any way with these getting or fulfilling these contracts.
So what, Tesla energy is a separate division? Tesla solar products are basically dying in the solar roof failed. It's a great idea, who wouldn't want to buy it if it lasted and was practical.
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-.... But if there is self dealing, courts will scrutinize the actual fairness of the transaction. But self dealing isn’t per se impermissible.
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.
> I can’t sell my family member my house for $1 for example
In most countries you absolutely can. The difference between market value and the sale price might be considered and taxed as a gift, but such a deal is generally not prohibited.
Yes, self-dealing is illegal when taken to mean a precise legal term; a fiduciary using that position to carry out a transaction in their own self-interest and against the interests of their beneficiaries.
Yes, and just like anti-trust law doesn’t make monopolies illegal, it’s not the self-dealing that’s illegal, it’s the abuse of the process (as you say).
Obviously you can sell house for $1 to a family member, this will not help to avoid taxes though, as tax office for taxing purposes evaluates value of the house independently.
I know for certain that in Virginia you can sell a house for any price you want, because I transferred one to a family member for zero. Of course the county's assessor had other ideas about the value for tax purposes, but the official deed was recorded at $0.
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.
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.
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?
> 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.
Yes, I stated it as an outcome. I was not defining oligarchy. I was responding to a comment which was stating that Elon Musk becoming involved in the USG apparently makes it an oligarchy, and that this has something to do with this personal pre-existing wealth.
The govt isn’t a business. Do you really want the list of people who would be better than Elon fucking Musk? It would take forever. This has the same energy as believing what Doge says because they have a simple table saying so
Could you give a broad outline of how you'd make this list? The government is currently not run efficiently, so clearly we can't rely on people who already have lots of government experience, because that just means they've been doing a poor job for a long time?
Yeah it is more profitable but revenues are way down.
In 2021, the last full year before Musk's acquisition, Twitter generated $5.08 billion in revenue.
Under Musk's ownership, X's revenue has declined significantly. In 2024, X reported $2.7 billion in revenue, which is nearly half of its pre-acquisition level. For 2025, global ad revenue is projected to grow to $2.26 billion, marking its first annual increase since the acquisition.
So yes on paper, X is more profitable than Twitter was before the acquisition. Its 2024 adjusted EBITDA nearly doubled Twitter’s best year, despite a much smaller revenue base. But whether that profitability is sustainable or comes at too high a cost—strategically, reputationally, and culturally—remains an open question.
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.
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