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by JumpCrisscross 12 days ago
> Circular financing

Circular financing would require SpaceX to buy a similar quantity of stuff from Google. (Or invest in Google.) We have no evidence of that. Instead this looks like Google taking advantage of SpaceX’s desire to print revenue today versus a month from now.

(If the agreement is terminated with no exchange of goods, it might be market manipulation. But still not circular financing.)
3 comments
singron 12 days ago
It's circular since Google owns part of SpaceX. According to [1] they own 7% of SpaceX, so a $1.75T IPO would value their stake at $120B. The target IPO price is >90x revenue, so if Google increases SpaceX's revenue by $11B, SpaceX's valuation could increase by $990B to maintain the same multiple, which would increase the value of Google's stake by $69B.

1: https://finance.yahoo.com/markets/stocks/articles/alphabet-s...

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JumpCrisscross 12 days ago
> It's circular since Google owns part of SpaceX

Not what circular financing means. Buying from a company you own stock in can be a conflict of interest, but it's only circular if you invest in the company and then they use those proceeds to buy your stuff. A past investor buying services from a company they are affiliated with is pretty par for the course in business.

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SlinkyOnStairs 12 days ago
Their exposure is more than just their ownership of SpaceX.

If the SpaceX IPO bombs (or even merely underperforms), the expectations for the Anthropic/OpenAI IPOs collapse, and with that, everything else AI.

AI companies can't afford to let any AI company go down.

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singron 12 days ago
I'm not sure this is true for Google. Ignoring their equity in Anthropic, AI is generally a threat to Google, since it's the closest thing to upsetting their search monopoly. The best case for Google is if OpenAI and Anthropic are way out over their skis, and Google is the only major player left with their sturdier financial position. The worst case is if ChatGPT/Claude completely displace search and nobody wants to pay for gemini. I find it unlikely that all three go down for the same reason.
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sandeepkd 12 days ago
> Alphabet has made a windfall from backing SpaceX. Musk’s company was worth $12 billion at the time of Google’s 2015 investment

How come its not a circular deal where google is investing little bit more money to make a whole lot more money

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jjtheblunt 12 days ago
that's not circular though
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Robotbeat 12 days ago
It’s only circular if it violates my narrative, of course.
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fancyfredbot 12 days ago
It's circular when money flows from A to B and then back from B to A again.

This is a series of transactions in which money flows from Google to SpaceX. There is no flow of money from SpaceX to Google. So it's not a circle.

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JumpCrisscross 12 days ago
More to the point, allegations of circular financing are about following cash. When NVIDIA invests in a company so they can buy NVIDIA chips, that raises a unique set of questions distinct from other types of conflict of interest. Affiliated parties doing business, as is the case between Google and SpaceX, has its own host of conflict-of-interest concerns. But they're distinct from those that arise in circular transactions.
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spikels 12 days ago
Google is paying $12.00 per gpu-hour which costs SpaceX $1.50-$3.50.

Who's taking advantage of who?

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