Behind Musk's X Turnaround: Pick-and-Choose Financials | Hacker News Reader

Behind Musk's X Turnaround: Pick-and-Choose Financials

bloomberg.com

16 pointstoomuchtodo9 comments

>Even under those unusual calculations, X’s debt burden was roughly nine times adjusted earnings — far beyond the baseline of six that bank regulators characterize as risky.

Ouch.

As the article notes, it's hard to measure investment interest to be because the business IS better, or if they're banking on Musk generating government pressure (corruption) to MAKE business be better.

Also I would add another, is investing here just ... a bribe?

> they're banking on Musk generating government pressure (corruption) to MAKE business be better

The thesis banks on patronage. Musk de facto controls a $7tn money spigot [1]. Losing billions investing in X is a win if he even sputters your way.

This is the reason power concentration corrupts economies--Musk's proximity suppresses market signals in favour of political ones. Elon's ironically recapitulating the South African economic disaster.

[1] https://fiscaldata.treasury.gov/americas-finance-guide/gover...

> I wrote the other day that “the way finance works now is that things are valuable not based on their cash flows but on their proximity to Elon Musk,” and I am already tired of it. It was a joke? But in a couple of years there are going to be 800-page textbooks on Elon Musk Proximity Pricing; it will be a whole unit on Level 1 of the CFA. You might think that “did Elon Musk tweet about a thing” would be a simpler valuation metric than, like, “estimate its cash flows in perpetuity and apply an appropriate discount rate,” but I don’t know, there’s a lot going on.

Money Stuff: The Elon Markets Hypothesis - https://www.bloomberg.com/news/newsletters/2021-02-10/elon-m... | https://archive.today/cZo0E - February 10th, 2021

https://archive.today/UkboS

> The threat of litigation — and Musk’s advisory role to Trump — has been a topic of conversation among some advertisers as they decide whether to return, according to several ad industry sources. While few believe X’s product or ad offerings have improved in the past year, marketers are weighing the possible downside of ignoring X and what that might mean in terms of retaliation from Musk.

What crazy times we live in. I’m not even sure the proper term one would use to describe a situation like this.?

> I’m not even sure the proper term one would use to describe a situation like this.?

'Mafia state' is the term traditionally used to describe a similar situation in post-Soviet Russia.

See neo-feudalism, mafia state, illiberalism, tyranny, and obeying in advance.

What you're describing is the inevitable cost of corruption. It's not merely economic cost, it's the loss of freedom. In this case, freedom of association.

Commissioning CEOs to cabinet positions temporarily or even to serve as colonels in the military (if they are good at logistics, for example) has been a pretty common practice, and always not without some conflicts of interest. But for that person to still retain their CEO position is pretty unprecedented.

Maybe the closest example would be something like JP Morgan, who was regularly relied upon by the government as an advisor on economic matters before the US Federal Reserve was a thing.

> The almost $1.4 billion adjusted profit figure it shared is a vast improvement from the losses Twitter posted in pre-Musk days. The adjusted profit came from a measure known in industry parlance as earnings before interest, taxes, depreciation and amortization.

To quote the late, great Charlie Munger: "Every time you hear 'EBITDA', substitute it with bullshit earnings".

Wasn't this largely the playbook at Tesla as well? They famously used very cooked non-GAAP numbers to essentially lie about the profitability of the stock for nearly a decade.

And largely it worked! People bought Tesla shares in such droves that company enjoyed very favorable equity financing to build themselves.

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