[somat]

A stupid/naive question. Why does this affect SpaceX? They have their money(The IPO) Any third party trading value does not change that. Sure there may be individuals, officers of SpaceX who hold these instruments who will be negatively affective, but the company itself?

My best guess, it makes it harder to get loans in the future.

[Octoth0rpe]

> My best guess, it makes it harder to get loans in the future.

Which is pretty important! It's my understanding that from all that money they raised during their IPO, a good amount of it went right back out the door again to pay off misc loans for the twitter acquisition. They may only have bought themselves 6 more months of time given their purported burn rate (mostly driven by AI investment), so they're going to need more loans really soon, or another major stock offering.

[soleveloper]

> They may only have bought themselves 6 more months of time given their purported burn rate

If they had only ~6 more months they (+auditor) had to issue a warning. The 6 is not a hard number, AFAIK, but surely a point where it must be reported.

So honestly, I doubt it's the case.

[estearum]

At least as written, GP says bought them six more months of time. Not implying they had 0 months to begin with.

[Octoth0rpe]

That was indeed my intent. Pre-IPO, SpaceX already had _some_ cash in hand, and was burning >4b per quarter IIRC; so presumably _some_ runway. That said, they also got the anthropic/openai monthly payments coming in soon (already started maybe?). The next earnings release will be the interesting one IMO.

[sgt101]

You will note that with the unlocks coming there is going to be a lot more spaceX stock on the market quite soon..

Currently 4.9% of the company is on the market.

Mid Aug... 15%...

40% by December.

Elon unlocks next June. Could be quite academic by then.

[aynyc]

This is about their bond, not that share price. If you are in the US, it's like having low credit score, everything you want to do financially such as leasing or financing a car, buying a house, etc.. will be more costly (higher interest rate) from the lender.

[dofm]

Except that it's not clear really that lenders will be able to judge on that basis alone. SpaceX is a different kind of unicorn: it's a government contractor run by the richest man in the world who controls a media echo chamber and gets people elected.

That article compares them to Oracle. Who are, as it goes, pretty similar: run by rich people with a media empire who have their teeth deep in government systems.

These bonds could get worse and worse but if US state and federal governments continue to put thumbs on scales it doesn't matter. The US free market isn't uniformly free.

[ForHackernews]

He's only the "richest" man in the world because of the inflated valuations of his companies. At some point the market looks like a dog chasing its own tail:

Q: Why is this stock so valuable? A: Duh, because Musk is worth a kajillion dollars and everything he touches is gold!

Q: Why is Musk worth a kajillion dollars? A: Because he holds so many shares of extremely valuable companies, silly!

[dofm]

There is this, but he is also a quasi-government figure. As Trump weakens he will reappear in that sphere.

[yieldcrv]

you’re right, the bonds of this overlevered money losing enterprise AI and space cargo conglomerate should be trading at a premium

[inigyou]

The bond price is an outcome of lenders judging, not a cause. Lenders have already judged.

[dofm]

Of course. But you have a bond buyer who can put their thumb on the scale, and has shown willingness to do so. That buyer also tried to interfere in (succeeded in interfering in) the business of law firms that worked for anti-Trump causes, has directly interfered in the renewable energy market to benefit its backers, etc.

What is to say that SpaceX and Oracle won't get these benefits? (Government buying bonds, trashing ratings agencies, leaning on banks to lend etc.)

Nothing obvious, I posit. So what is the value of a bond when a government is increasingly likely to manipulate the market for it?

And that is putting aside the second order of government interference: foreign governments putting their thumbs on the scale with their own investment funds and influenceable buyers, to buy influence over a government that favours these firms.

[hn_throwaway_99]

Nobody doubts all this. What the bond market is saying is that even with all of that, there are plenty of viable scenarios where bond holders aren't paid back.

After all, if you truly believe what you say with conviction, the sensible thing to do would be to buy up as many SpaceX bonds as you can if you think they're so undervalued.

[DennisP]

Institutional bond traders are pretty sophisticated. They're aware of all the possibilities you mentioned, and pricing the bonds low anyway.

[dofm]

> Institutional bond traders are pretty sophisticated.

I am old enough to remember Long Term Capital Management.

[riazrizvi]

They have a $5bn credit line, and this means the creditor might increase the interest on it.

It's better described as "it increases operational risks to SpaceX". When they face some future difficulty, the odds they can come out of it are lowered. Which is itself a factor that partners consider, including employees, because obviously people prefer to bet their livelihoods on more of a sure thing.

[lumost]

This is a potentially strong indicator of how institutional investors view spacex. Given that Spacex is in a high depreciation/capital intensive business, a high cost of capital and potentially difficult capital terms is problematic.

Spacex will raise more money again, they have no known path to structural profitability.

[mixdup]

This is effectively an increase in interest rates for SpaceX. That's how it affects them

[danielmarkbruce]

There is the affect as you say - but more interesting is that it just suggests people who sit around analyzing companies all day think there is a pretty decent chance this thing goes bankrupt.

[groundzeros2015]

Companies need to raise money for investment. Even Apple doesn’t have cash for all the things they want to do. Suppose they want to lease or buy a piece of real estate.

[threetonesun]

Apple has a giant pile of cash and the last time they issued bonds was to do a stock buyback so that might not be the best example, although there's a fairly small number of companies in their unique position.

[groundzeros2015]

That’s kind of what I’m saying. Their most recent issuance was 2025. Even when you have a lot of cash it’s inconvenient to spend cash on all purchases

[clickety_clack]

It makes borrowing money much more expensive going forward.

[panphora]

The losses fall on bondholders now, but it does make it harder for SpaceX to raise money going forward. And if they actually slip into junk territory, some institutional investors will be forced to sell (mandates only allow investment-grade), pushing prices down and yields/spreads up even further.

That can snowball: wider spreads → higher borrowing costs → more stress → wider spreads. The existing bonds' coupons are fixed, so the real bite is on future issuance and refinancing.

Lots of capital-intensive companies (SpaceX is definitely in this category) lean heavily on debt markets to fund ongoing investment and roll over maturing debt, so losing cheap access is a big deal.