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Comment by boh | Hacker News Reader

Any way you slice it, Apple made the right choice.

How so? Apple could have bought a big chunk of Tesla and flipped it back to the public market for ~10 times the price today, for a cool $500B+ profit. Even if they wanted nothing to do with the company's operations.

Of course, such an operation would typically be done by a hedge fund or private equity firm. But guess who is responsible the one of the world's largest hedge funds [1] with $200B+ AUM...

[1] https://en.wikipedia.org/wiki/Braeburn_Capital

That's easy to say in retrospect, but Apple stock would've also taken a hit buying what was a failing company at the time. It would've also demanded more resources and a strategic pivot on their part.

Apple makes long-term, informed decisions. Buying Tesla then and now is a pretty tough argument to make.

Oh, I definitely agree that the most prudent decision a few years ago was to avoid Tesla like the plague. Why would Apple, the most profitable company in the world, want a nearly-bankrupt car manufacturer on its books?

Nevertheless, with the benefit of hindsight, it was likely the wrong decision from both a financial and strategic viewpoint. It's the kind of wrong decision Mark Zuckerberg avoided when Facebook bought Instagram and WhatsApp (despite being ridiculed at the time). Over the next decade, Tesla will likely be one of the most serious threats to Apple's dominance in high-end consumer tech goods (the other being companies working on AR/VR).

It's never a good decision for Apple to buy Tesla, even in hindsight. Buying a capital intensive company within a heavily regulated industry is not the same as buying a social media company or a messaging app.

An increase in the stock price has little to do with the success of the actual business. Tesla hasn't gotten 600% better at being a car company. So far, Apple would only benefit from a Tesla purchase by selling the stock--which would defeat the whole purpose of buying it in the first place (Apple is not a hedge fund).

What?!? You cannot liquidate a majority stake in a company, much less a high flyer absurd beta name like TSLA, without collapsing the market. And nobody but Musk wants to hold all the cards in TSLA because nobody is truly confident it should be valued up here. But they want enough skin in the game to participate in the ridiculous squeeze. If you tried to market even 10% of the float (absent the SPX inclusion event) you would see a serious pullback.

I disagree, I think this will go down as one of the biggest mistakes in Apple’s history. It could be the downfall of the company. Their business model depends on owning the whole ecosystem — every computing device you use day to day. Once cracks start forming in that ecosystem, trouble starts.

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