Elon Musk

I love that the people who posted that video were smart and turned comments off.

didn't realize that was district 9 neill blomkamp upthread

not clear if this is already priced in or not, but seems bad

― 𝔠𝔞𝔢𝔨 (caek), Monday, January 2, 2023 1:49 PM (one hour ago)bookmarkflaglink

tbf when it comes to tesla nothing is priced in its lost 3/4 of its value and is still worth more than toyota

― lag∞n, Monday, January 2, 2023 1:51 PM (one hour ago)

the way tech stocks are generally valued is based on the potential for future growth, when the economy is in a ZIRP environment tech stocks get out of control because the discount rate for future cash flows is essentially 0% so if your growth trajectory puts you at 10x your revenue in 5 years, that 10x revenue gets priced in today with no discount essentially. you take that and add in the fact that $TSLA was the first meme stock and that was the jet fuel for the stock price going to the moon during the pandemic.

the reason tesla has a larger market cap than toyota despite selling way fewer cars / being a way smaller company is because toyota is a very mature company and they're not growing their revenue at the crazy rate that tesla was (7% year over year vs. 40% for tesla). that, and also being a meme stock.

elon is not... wrong when he says that the fed raising rates is responsible for $TSLA's decline, but it's only one factor and doesn't account for the fact that $TSLA has way underperformed the nasdaq in general and other tech stocks. its growth is slowing, the market for EV is maturing and getting a lot more crowded/competitive, it's not unreasonable to think that $TSLA has crested and the good times are over. it's still got a massive growth % but that % is probably going to get smaller over time, not bigger. i suspect that this Q4 is already being priced in if an analyst on twitter has already published their numbers, but won't know until the official Q4 numbers are released.

telsa was priced for future growth only if you thought they were going to be mining gold on mars

yeah fair it's not just future growth, i didn't feel like getting into it but probably the biggest reason the stock gained so much was due to the fact that it was the most heavily speculated on stock in the S&P 500 during the pandemic via the options market and the rise of retail options trading in general, which led to all sorts of funky behavior. here's a good FT article that goes into some of that: https://archive.ph/twZTK

i think a lot of that air has been let out of the balloon though.

even pre-pandemic and pre-meteoric rise it had a market cap bigger than a lot of automakers at the time e.g. Ford, that's totally due mostly to future growth/ZIRP stock pricing and was the reason it had a bullseye on its back even then for the $TSLAQ people.

obvs theres tons of complicated finalization around it and people hopping on for the ride but i think what happened with teslas stock price qualifies as a genuine mania, theres a bunch investors out there who just believed in elon so fucken much, lol

obvs parallels with crypto except that the story being told about tesla made even less sense

https://www.forbes.com/sites/qai/2023/01/03/elon-musks-spacex-valued-at-137-billion-in-latest-funding-round/?sh=10259e2b3b36

andy hory still has a huge crush on musk, shd see if they want to buy twitter

im sure ive complained about this before but the way the business press reports valuations is very silly, those investors almost always have first out provisions in their deals meaning if i bought ten percent of a company for a dollar it would be reported that i valued the company at ten dollars, except that later if the company sold for a dollar i would get... one dollar, that sounds to me more like i valued the company at one dollar, and its also just nonsensical to pretend a company has a value based on relatively tiny private investments no one even knows the details of

btw a bunch of musks reported net worth is based on said valuations

yah it kind of makes sense when someone's net worth is reported based on stock holdings when it's an institutional, long-running stock. there are rare exceptions when something tanks the market, but if you're the founder or major stockholder of some too big to fail corp that's 80% owned by institutional investors, then counting the stock as part of your net worth makes sense

tesla's like 40% individual investors and 15% tesla employees/the board, with the rest split between venture capital and institutional investors -- and the institutional ones have tesla slotted into the volatile gambling bundles, not the long-term stability ones

just total bs

and the space x part of his fortune is even more illusory

first google result says elon owns about half of spacex so thats ~$70b right there, can he actually get that money no of course not

Down 12% today

enjoying the plummeting T$LA stock price as ever^^^ but also vaguely worrying it ends in a plummeting spacex moon-podule full of the first however many* ppl to die in actual real outer space

*ie all of them :(

space x doing manned flights is prob just more musk pr lying, tho i havent actually looked into it, seems like in reality theyre a rocket company

im sure ive complained about this before but the way the business press reports valuations is very silly, those investors almost always have first out provisions in their deals meaning if i bought ten percent of a company for a dollar it would be reported that i valued the company at ten dollars, except that later if the company sold for a dollar i would get... one dollar, that sounds to me more like i valued the company at one dollar, and its also just nonsensical to pretend a company has a value based on relatively tiny private investments no one even knows the details of

― lag∞n, Tuesday, January 3, 2023 10:32 AM (one hour ago)

yeah valuations are silly, but in the private rounds they are also very mathematically factual, as you point out, it's just price paid per share of the company multiplied by total shares outstanding. by first-out provision, i think you mean the liquidation preference. in your example, you'd only get a $1 back if you were the only investor and at the top of the capital stack, if you had co-investors in the same round and the company sold for a $1 you'd be sharing that dollar with those other investors. the term you want is paid-in capital, which I guess is a good proxy if you're a VC with preferred shares. the most accurate accounting way of describing a company's value is shareholder's equity, which is just assets minus liabilities of the company.

the private round valuations are silly, yeah, but by the time a VC funded company goes public they're usually confident that the public IPO price will be well above the last private round. that generally holds true except when it doesn't, i.e. last year when tech stocks cratered and a ton of tech companies started trading below their IPO price and close to or even below their last private funding rounds. but if you were a series A or even series D investor or w/e in google, amazon, etc. those private round valuations weren't silly and you made a ton of money, more than enough to cover your investments in the 100 other start-ups that didn't make it, where you were partially protected by the liquidation pref anyway. VC investing, good business to be in if you can swing it, the incentives are all wrong but who's gonna fix it?

i will fix it just gimmie a min

yah it kind of makes sense when someone's net worth is reported based on stock holdings when it's an institutional, long-running stock. there are rare exceptions when something tanks the market, but if you're the founder or major stockholder of some too big to fail corp that's 80% owned by institutional investors, then counting the stock as part of your net worth makes sense

tesla's like 40% individual investors and 15% tesla employees/the board, with the rest split between venture capital and institutional investors -- and the institutional ones have tesla slotted into the volatile gambling bundles, not the long-term stability ones

just total bs

― mh, Tuesday, January 3, 2023 11:00 AM (forty-seven minutes ago)

net worth never makes sense no matter how blue-chip the underlying stock is for the simple reason that if anybody tried to unload that much stock at once, the price would tank, simply supply/demand microecon 101. but it's a convenient proxy and leads to eye-popping numbers so it's what get used.

tesla's 40% institutional isn't that low tbh, a lot of blue-chips are in the 50% or so range, and blue-chips don't have a ceo that holds 15-25% at any given time due to an outsized (and potentially illegal) comp plan. some institutional investors may hold tesla in "volatile gambling bundles" but keep in mind ever since tesla was added to the S&P 500 a few years ago a ton of index funds were forced to buy tesla, which added a ton of jet fuel to the options bonfire i linked to previously itt. index funds are not volatility traders.

re my example it was obvs simplified but its the same diff regardless of how many investors are involved, obvs u need to adjust the percentages based on how much of the stock has that preference

and obvs the people who get screwed in the deal are generally the ones who did the actual work ie the employees who are being compensated with stock

Right, you want to be like employee number three or join post IPO. anything in the middle is for chumps.

like steve aoki is in the middle of the #dearmoon project

re my example it was obvs simplified but its the same diff regardless of how many investors are involved, obvs u need to adjust the percentages based on how much of the stock has that preference

― lag∞n, Tuesday, January 3, 2023 11:54 AM (twenty-six minutes ago)

so if you and 4 other investors invested $1 total for 10% of the company (each of you paying $0.20 each) and the company later sold for $1, you'd get your money back. this goes into the rabbit hole of what actually happens to start-ups that don't go public. one common scenario is for the start-up to get bought. usually when this happens it's at a premium to the last private valuation, because of the control premium i.e. the privilege to control the company, i.e. why elon's offer of $44B was like 50% higher than the market cap of twitter at the time. so in that situation you get paid out, make some money, and the employees get paid out too.

another common scenario is for the start-up to go bankrupt, in which case your liquidation pref doesn't protect you and you get wiped out in bankruptcy court. that's part of the VC game too.

right now the scenario a lot of tech companies are facing is their public company peers are trading way down so their private valuations are being adjusted way down, see all the stories about instacart right now. it definitely kind of sucks for the employees but only if they actually exercised their options, and you don't exercise your options unless you have to because you left the company and they're expiring. if they still work there and just hold options, they didn't actually spend any money on stock, so their downside is limited. if you joined a start-up and agreed to be paid only in stock options, well i dunno what to tell you other than you maybe come from a rich family?

i'm also not sure how sorry i'd feel for them regardless, if you join a start-up you probably did so because you heard the story of david choe and his $200 million for painting facebook's offices00 million for painting facebook's offices, or of snapchat or airbnb rank-and-file employees becoming millionaires when those companies went public and you're chasing that dream, you always had the option of joining a safe public company where your stock comp is actually paid out in RSUs that have value vs. stock options that are essentially a gamble. and you still got paid 6 figures in cash a year for all those years most likely anyway!

all of the above is kind of funny because when you put it like that (generational wealth opportunities are only open to the rich who have disposable capital to invest, basically) you can see why crypto took off in such a big way. america, the country of temporarily embarrassed millionaires!

Private tech valuations

1. Fuck right off with that SpaceX BS. Ain’t no WAY

2. Stripe employees should mutiny for missing the greatest tech IPO window of all time pic.twitter.com/GvDiVQlr7l

— Bucco Capital (@buccocapital) December 30, 2022

or, another way to put it - if you're a rank and file employee in silicon valley, you only get to gamble on one company at a time (via working for them), so you better choose right.

if you are a VC, you get to gamble on a thousand companies, and your biggest problem is trying to get your fingers into as many pies as possible, because of the skewed upside/downside risk-reward profiles (being a series A investor in uber will pay many, many times over for being a series A investor in 1000 other failed start-ups that went bankrupt). because of this, the competition to get in the hottest start-ups will be intense, and it will be a race to the bottom and VCs will fall over themselves and throw caution to the wind, see all the stories about how the FTX investors did basically no diligence. because, while the music is playing, you have to dance!

jason calacanis is a grifter, but his book about angel investing was extremely interesting to me as someone who knows nothing about how early stage vc works. seems to be become the standard text for senior engineers who made fuck you money at uber or wherever and are so bored they're doing angel vc now.

that whole generation are a bunch of right place, right time guys, elon included.

Calacanis co-founded the blog network Weblogs, Inc.[3] with Brian Alvey on September 24, 2003, and the startup was supported by an angel investment from Mark Cuban.

i mean, lmao

there were a bunch of his blog peers (Anil Dash, several ex-Six Apart/blogger/flickr/etc) types dunking on Calacanis publicly on twitter late last year calling him an insufferable dweeb

you've got to be pretty terrible for people to pop up and do that

There are so many desperate, sweaty untalented dudes in nominal positions of power in tech. Though I will say, in 20+ years, Jason Calacanis stands out as amongst the top in terms of sheer embarrassing foolishness, even separate from his funding of white supremacist shitheels. https://t.co/mTHyEjJ97q

— anildash (@anildash) September 30, 2022

Ha! Exactly. I still recall when he couldn’t tell me apart from Mena bc you know, female blog company founders are confusing!

— Meg Hourihan (@megnut) September 30, 2022

all of the above is kind of funny because when you put it like that (generational wealth opportunities are only open to the rich who have disposable capital to invest, basically) you can see why crypto took off in such a big way. america, the country of temporarily embarrassed millionaires!

Not to mention the tax treatment on nearly all such investments will be long term capital gains and any losses will offset such gains the investors have elsewhere, while employees getting a W-2 alongside any such stock/interests/options get taxed at higher wage rates. Nice work if you can get it.

yeah i think the biggest elephant in the room is the way the us government has juiced the stock market, which is a public policy choice that has gone back literally centuries, the NYSE can trace its roots back to 1792. treatment of long term capital gains definitely a big one, makes no sense that one of the biggest opportunities for "wealth creation" is taxed the least.

another prominent in my mind are 401ks and how they've displaced relatively safer fixed-income pension funds, the government basically seeing all that money locked up in pension funds (which aren't as equity-weighted as 401k plans) and deciding it's better to allocate that to the stock market; now there's a permanent fixed bid on the S&P 500 to the tune of $20k a year multiplied by all W-2 employees in america, with an employer match to boot.

Lmao heading rapidly for $100, down almost 15% today

the guy who originally proposed the idea of a 401k based on a possibility given financially legislation is one of those dudes who goes around explaining why his idea was misused now

financially? financial

the government basically seeing all that money locked up in pension funds (which aren't as equity-weighted as 401k plans) and deciding it's better to allocate that to the stock market

should be pointed out that "the government" cited in that sentence consisted of members of Congress, who most definitely were having cash shoveled in their direction by businesses that would benefit from a move away from pensions and toward 401Ks.

OK, I'm going to get off of the Calacanis beat after this, but... jesus christ what a thin-skinned dork
https://himariapetrova.medium.com/why-does-jason-calacanis-hate-scott-galloway-3ada7784c9a3

xp dan to get back to the original point about valuing startups via extrapolating from privileged investments is just basically that the investors are getting better deal than say the employees, thats why they want it, how much more is it worth idk, but its not nothing

yeah I agree with that, at the end of the day it's the classic battle between Labor vs. Capital

musk of all people gets that. so much of his management style seems like class-based revenge rather than liberatian market-based capitalism tbh. which is why the lack of tech unions is so maddening.

i was too new to have any social capital to push for this myself, but the almost total lack of any serious conversation about unionization at twitter over the summer was baffling to me.

theres the classic dynamic where affluent or even merely middle class people identify with the ruling class, unions are for people who work in factories, its so wrong headed, feel like someone just needs to organize a campaign around getting privates offices (or i guess now home offices) instead of open floor plans and tech workers might start to see the benefit of collective action

i know it's a running joke but twitter really was the "wokest" set of employees i've ever worked with. if not there, it's difficult to see it happening anywhere in tech. the 90th-99th income percentile really don't get it.

yeah it would prob take a larger union wave to sweep them along, which could be happening tbf, but its got a ways to go

even at somewhere like twitter you've got a non-trivial number of libertarian, vocally anti-union cranks among non-management, which is surprisingly chilling for discussion, especially when it happens on slack rather than in break rooms.

just to threaten to tell the irs about their crypto dealings and theyll shut up

but in all seriousness if one really wanted to do it theyd prob need a plan that involves marginalizing those people, im sure someone will attempt to organize a tech company at some point, i know there was some agitation at google a while ago but they were going with the wobbly wildcat model thats about a chunk of workers taking ad hoc action rather than actually forming a union, which prob reflects the fact that the demand just wasnt there

iirc etsy may have done it?

oh its the sellers that are doing it thats interesting i hadnt heard about that https://www.theverge.com/2022/8/31/23330758/etsy-strike-boycott-indie-sellers-guild-union-fee-increase