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Comment by s1artibartfast | Hacker News Reader

Those are questions of total market demand for the product. In those companies, it still seems that his ownership and management style got products built that dominated their respective markets. Falcon ate the competition and teslas are like 70% of EVs

Overvalued market caps are good for the company, bad for late investors. It means the company received much more funds than they otherwise would have. A huge win for the CEO, and early investors.

If you have a startup with a true value of 1B, but sell shares at a 100B valuation, this is a huge win for you and the company

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Musk’s style is “bad for investors, good for Musk” until Musk is the investor and decides to pay a large multiple of a company’s real value on a whim. Now he needs Twitter to be profitable enough to cover the debt, while also preserving his reputation with future investors in his other companies.

Won't happen. $44B total. $14B in debt. Twitter worth under $10B, probably between $0-5B. Creditors get paid first. Elon's money is gone forever. The hole is too deep.

The likeliest outcome is Elon hands it to the banks and says "Oops. Uh... good luck?"

If I was Parag I'd already be putting my new pitch and executive team together for when the banks call.

44 billion isn't that crazy. Twitter needs to make 2B/year to have a p/e of 20.

Twitter revenue was ~5B for the year before takeover. If Elon can keep costs <3 billion and bring back the add revenue, that would work. Firing 80% of workers goes a long way to cutting costs.

Alternatively, if he can somehow grow revenue, that would be another solution.

He is on a rocket sled in the wrong direction for revenue. That's part of the hole, not part of a ladder.

I don't disagree with the direction of revenue or the size of the hole. I just don't think it is impossible to get the revenue back.

> If you have a startup with a true value of 1B, but sell shares at a 100B valuation, this is a huge win for you and the company

This stuff doesn't happen organically. It needs constant self-promotion and over-exageration of everything that the company does. And in turn such culture starts from the top. Musk is no 80s rockstar. He has no manager dragging him to do media, it's him who does media on his own volition to self-promote himself.

I could care less what's best for Musk and Tesla. I care what's best for me. In this case the consumer. Consumers are using many times per day the products and services of all the other top 50 companies in the Sp500. You look at the stats about penetration of Tesla cars and it's basically none, nobody is using them except for rich people in rich areas.

There are 1.6bn cars in the world and Teslas are some 2 millions? The backbone of the industrial economy. Not.

Koch Industries provided American consumers with way more quality of life than Musk ever will. The sane people who could care less about politics, techno-utopian hope, Mars and all the other unsubstantiated stuff that Musk sells, have no probelm admitting this simple fact.

>You look at the stats about penetration of Tesla cars and it's basically none, nobody is using them except for rich people in rich areas.

I'm not going to directly contradict you as I don't have data to do it (and I didn't look up the data you claimed here) but I will point out that the average new 'car' in the US is an SUV with a price of around 50K. That is more than the price of a base level Model 3.

In other words they're not 'rich people cars' due to their price. A market penetration to a wealthier demographic must hinge on a different variable that correlates. Maybe interest in the environment, or technology, or geographical area, or something.

I'm starting to see Tesla taxis, so it's getting somewhere.

Who's claiming that Tesla provides the most value out of any company to the world? Basically no one. It is a profitable company though making $5 billion a quarter profit. That is no small feat

I completely agree that an overpriced valuation can be good, or at least useful. To make a new car company viable, and, remarkably, doing only organic growth, is a huge accomplishment. Tesla's valuation was an important tool to enable that to happen. I'm not going to be a prude about tech hype.

But that does not make Cathie Wood right, or prevent Starship from being the Space Spruce Goose (say it three times).

The obvious point is it’s not exactly impressive to dominate a market that everyone else realises is uneconomical. The key is his PR managed to produce massive overvaluation in a ZIRP environment. But then what we’re really saying is we’re impressed by the PR not the engineering.

Neither cars or EVs are uneconomical markets. There is money to be made, just not as much as the hype

Cars aren't uneconomical, but take a look at other car companies. You don't become the richest man on earth by running a car company. They're very efficient, and basically, not that profitable. The innovation of Tesla is they manufacture cars with a share price of a tech company.

If you're talking about a pure free market that I don't think you're correct. Right now, a 2023 Tesla mode 3 starts at 40,000, compared to 20,000 for a Subaru Impresa. According to www.fueleconomy.gov over the course of 10 years I'd save 16,000 in fuel costs. Furthermore, if you need to replace the battery in that time period, then the savings drop to only 6k. So even with government subsidies, gas cars are more economical than electric cars. I don't see how the market can survive without help from Uncle Sam.

In the market and world we live in, Tesla is making $5 billion a quarter. I don't own one and it's not the product for me, but it is a profitable company.

Tesla got over 2.5 billion in direct government subsidies and people who buy an electric car get a tax credit up to $7500.

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