[whats_a_quasar]

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.

[no_wizard]

Every time I see deals like this that are going to be such raw deals for the majority of those who invested it feels like a keen reminder that all the talk of market efficiency the pro caps in Washington talk about are full of it

This is a terrible and inefficient use of money. It’s inevitable that this paper house will fall over

[selectodude]

Markets are plenty efficient. They’ve just lit billions of dollars on fire that used to belong to people stupid enough to believe in Elon Musk.

[riffraff]

Tesla is still worth something like a forward PE of 90 and a trailing PE of 130, among plummeting sales and market share.

It's still wildly overvalued, and at it's unclear how long the market will stay irrational.

[Epa095]

It's so hard to make predictions of Teslas value in today's political system! Musk is very very close to power, and it's impossible to say how that will play out. Will Tesla be the only car company without 25% tariffs? Will the government spend billions to buy Teslas? Or will Tesla die and Musk live of space-X?

[psd1]

He's not "close to power". He's cutting your nation into shreds, unopposed.

[AnthonyMouse]

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.

[daveguy]

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.

[AnthonyMouse]

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.

[Rzor]

I fail to see the efficiency part. Care to elaborate?

[rambambram]

Garbage collection - although not pretty - is still necessary.

[no_wizard]

That isn’t efficient by any commonly understood definition of the word

[wraaath]

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.

[pqtyw]

The are getting xAI stock instead of cash though and it's not really clear how liquid it will be.

[whats_a_quasar]

Definitely, and a lot of that haircut actually happened in between when the deal was signed and when it closed, too. That was right when interest rates went up and Musk tried to wriggle out of the purchase agreement. So it's a great outcome for Twitter investors, assuming it sticks.

[j4coh]

And assuming the xAI stock they traded their X stock for is worth anything.

[wraaath]

Also - the wording on the deal: xAI being valued at 80B X being valued at 33B Is the xAI 80B number inclusive of the 33B (45B including debt)? That would back into xAI's valuation moving backwards since the December round. Usually when venture-backed companies tout a valuation after a capital raise, it's post-money... and they're not chest-thumping a 113B number (which they surely would have given 9 figures)

[wraaath]

And.. looks like there was an update on the valuation from Bloomberg: Aggregate over 100B, but less than 113B due to some mingled ownership.

https://archive.is/esoEN

[AtlasBarfed]

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.

[HWR_14]

Tesla is still worth more than it was 6 months ago. I don't think a margin call based on borrowing a few years ago is likely.

[mrweasel]

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.

[Zigurd]

The earnings call for Q1 2025 hasn't happened yet. Those usually happen at the end of the first month of the subsequent quarter.

[immibis]

When is the first earnings call after everyone realized Musk was a Nazi?

[AtlasBarfed]

Q1 sales call.

I was trying to stay apolitical but a CEO doing Nazi salute and not being fired is uncharted waters, at least in the last 80-85 years.

I keep going back to the horsemeat episodes on mad men, and the papa johns CEO getting booted. This is simply unprecedented in brand management. Brands take decades to build, and are especially important for car companies.

[wraaath]

I was thinking margin calls too: https://news.ycombinator.com/item?id=43423201#43425801

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.

[j4coh]

If it’s an all stock acquisition did it generate any liquidity?

[Zigurd]

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.