https://www.businessinsider.com/solarcity-tesla-energy-belea...
There were a few lawsuits from Tesla shareholders about the acquisition regarding self dealing but they didn’t succeed:
Its not like the courts are investment banks with an evaluation arm. They are just judging if anything reaches the point where shareholders were legally harmed, which still gives a lot of gray area to the acquiring company.
The commenter you are responding to is explicitly intending to place more emphasis on the reason why the lawsuit failed. That is why they used the phrase “burying the lede” in their initial comment.
>They are just judging if anything reaches the point where shareholders were legally harmed, which still gives a lot of gray area to the acquiring company.
This distinguishes the lawsuit failing from the idea that a fair price was paid. The competing contentions are (a) fair price vs (b) unfair but beneath threshold of legally punishable harm.
Under Delaware law, there’s two standards for evaluating this kind of claim. When there is no conflict of interest, the court applies the “business judgment rule,” which is similar to what you seem to be thinking—it gives corporate officers wide latitude.
But when there is a conflict of interest, the court applies the “entire fairness” standard, which requires both fair dealing and a fair price. And a fair price means what it sounds like—it’s what an objective businessman would consider a fair price under the circumstances. It doesn’t need to be the best price, but it must be within the range of fair. And to establish a fair price, the court relies on evidence from financial valuation experts. It’s a rigorous standard that’s hard to meet.
I generally find expert testimony to be suspect. Anyone can be trotted forward as an expert, rattle off their credentials, and say whatever they feel like saying, depending on who is paying them to testify. And financial valuation is not a science; there is of course plenty of math involved that takes into account hard, objective numbers, but a good chunk of it is opinion, too, as no one an know the future.
Having said that, the Delaware Chancery Court of course has more experience in these matters than any other state's courts, so I am of the opinion that they're less likely to be duped by "experts", but sill... it can and does happen.
So swap out "punishable" and instead say "legally actionable" (or other preferred synonym) and you nevertheless have an assessment that falls under what you noted is the entire fairness standard and the upshot is the same.
Also my understanding is that courts defer to the experts of the acquiring company. And if those experts are predisposed to have a favorable interpretation that favors the acquiring company, the valuation is in the less than optimal range of a range of values produced even by them, and they, by contrast to an actual market, might be much more lenient than a market would be in determining the price. So there's a convergence of variables that underscore the difference between fair as we conventionally understand the term (which is what we were all interested in here) and whatever it means to have survived legal scrutiny in Delaware.
Which again I would say means that this debate has real teeth and it's more than semantically equivalent differences in emphasis.
(d) a court has no idea what a fair price would look like but made a finding of fact based on expert testimony despite being poorly situated to evaluate it
(As you know, but others may not - this is not always the standard vs the business judgment rule, but is the standard here)
I just wanna know where we can find these shareholders and evict them from earth because they're destroying everything.
I have no holdings in armaments or instruments of torture, apparently. But that's about the most constraint I can apply, short of self-managing.
Unfortunately the private sector has dominated the zeitgeist for decades; a kind of meta-regulatory-capture, if you will.
I can't trust that there will be a state pension waiting for me. So I'm in the private sector. Got some bonds in my mix, at least.
That is, the standard the defendants have to meet (not the plaintiffs, the burden is actually on tesla here despite having been sued) is that the transaction was entirely fair to the corporation and shareholders- the process was a fair one, the price was a fair one, etc.
I have trouble thinking of a case where you can prove all this[1] but the market would have come up with something different. Almost by definition, if the market would have decided to pay a lower price, either the price or the process was probably not fair.
[1] Which again, you have to do affirmatively. You aren't just rebutting plaintiff evidence, the burden is on you to show the fairness
When the same people are making the ask as making the buy, you literally cannot decouple the decision-making in a way that objectively eliminates cooperation.
A market cannot exist when the entities involved abandon adversarial decision-making and cooperate. One's priority is always suborned by one or the other.
Not sure the court was capable of that judgement.
It’s like everyone just forgets Musk’s announcements that never get delivered on.
The semi factory will be finished late this year.
FSD gets better each month. Obviously there is massive debate if it will be “done” in 1, 2, 5, 10 or never years
Robotaxis were announced recently, the plan as announced is for them to be sold in 2026. That has not changed.
Looks like they’ll have some kind of driverless taxi service running this year with remote operators like Waymo.
Private moon mission was canned.
I think it’s pretty strange to say Musks promises never get delivered on when Tesla sells the most popular car on the planet two years running, spacex launches more to orbit than the rest of the world combined and a ton of other stuff.
Obviously he’s utterly nuts, and doesn’t deliver everything he talks about, and is very late on many things. But you have to be blind to say he never delivers anything.
His point is that Elon may promise more than he delivers, but he has still delivered on quite a lot.
I'm required to supervise my car while it drives me to work, but it is by definition fully self driving, controlling all aspects of the vehicle while I sit with hands off the wheel watching
Per https://motherfrunker.ca/fsd/
[2017] The sensor hardware and compute power required for at least level 4 to level 5 autonomy has been in every Tesla produced since October of last year.
[2017] I think that [you will be able to fall asleep in a Tesla] is about two years
[2018] Probably technically be able to [self deliver Teslas to customers doors] in about a year then its up to the regulators
[2019] We expect to be feature complete in self driving this year, and we expect to be confident enough from our standpoint to say that we think people do not need to touch the wheel and can look out the window sometime probably around the second quarter of next year.
[2020] Robotaxis release/deployment... Functionality still looking good for this year. Regulatory approval is the big unknown
[2020] I am extremely confident that level five or essentially complete autonomy will happen, and I think, will happen very quickly, I think at Tesla, I feel like we are very close to level five autonomy. I think—I remain confident that we will have the basic functionality for level five autonomy complete this year, There are no fundamental challenges remaining.
[2020] I'm extremely confident that Tesla will have level five next year, extremely confident, 100%
[2021] FSD will be capable of Level 5 autonomy by the end of 2021
The project was unilaterally cancelled by the client, Yusaku Maezawa, in May 2024. Starship development had fallen significantly behind the original SpaceX aspirational date for the flight in 2023, and Maezawa's net worth had also halved since venture was announced in 2018.
He takes risks very few others are willing to do, but he is not nuts by any reasonable definition.
He is batshit. He is also smart and has accomplished some impressive things. The two are not incompatible.
That's common human behavior.
> False accusations of pedophilia against people he doesn’t know?
Against a single person who had just called him "insane" on TV. Not nuts at all.
> Free speech absolutist who gleefully bans speech?
Not all speech is free speech - you cannot advocate for hits on people, for example. Besides, it's perfectly legal to censor speech on his platform. Not nuts at all. Musk has made no attempt to suppress speech on Bluesky, Facebook, Reddit, Tiktok, etc.
> Corporate acquirer who accidentally fires key people
That's not how it worked. Twitter was losing money at an astonishing rate, and he had to cut expenses immediately. It is the fastest way to determine who was actually needed and who wasn't. Then hire back the ones who were actually needed.
> makes the exact same mistake as a coup leader?
It's the only way to do it when time is critical. It's also the only way when the agencies are doing everything possible to not cooperate with DOGE.
There's been no coup. Trump was lawfully elected.
Do you ever stop and think it’s an amazing coincidence that every criticism of Musk is totally unfair?
For example, where was the disgust at the person who publicly called Musk insane first? A fair criticism would have included that. A fair person would also be aware that there is not a single person on the planet who has not called someone else a nasty name.
Actually it just came out yesterday he did try to suppress free speech on Reddit.
This is false if "etc." includes Wikipedia, on which Musk has attempted to suppress speech critical of him [1].
[1]: https://theweek.com/media/elon-musk-wikipedia-controversy
He did denounce Wikipedia, and called for people to not support it. That's not an attack on free speech.
At one point with Tesla he was within hours of business and personal bankruptcy, before making a deal with an investor. The investor wasn't the government.
The taxpayer never assumed a risk there.
> but not profits) to the taxpayer
He pays taxes on profits like anyone else.
Musk said himself SpaceX would’ve gone bankrupt without NASA contracts. He needed those contracts because Spacex was too high of a risk at the time for private business. NASA is self-insured. This is the the way the government supports high-risk nascent industries, because they are the only institution capable of shouldering that risk.
It’s well-established that the solvency of his companies are tightly coupled, just like TFA. Further, Tesla is made competitive by subsidies for EVs and manufacturing. Not necessarily bad, but the success isn’t occurring in a free-market vacuum. When companies accepting subsidies go under, the govt doesn’t typically get that money back, at least not in full. (See the faux Solyndra “scandal”)
I know that doesn’t fit the preferred narrative of the mythical free-market iconoclast succeeding in spite of the govt, but that’s reality.
On the profit side, I should have said he gets a disproportionate amount of profit and the taxpayer gets a disproportionate amount of risk.
And he wasn't paid until he delivered, like any contract with a business. The taxpayers were never at risk. It was not a subsidy.
Yes, Tesla benefited from EV subsidies, like all the electric car makers. He'd be stupid not to take the subsidy.
> You may want to familiarize yourself with counter examples from Musk biographers, like Seth Abramson.
I read "Elon Musk" by Ashlee Vance.
I don’t know the specifics of these contracts, but I very much doubt it based on my experience. That’s not how any Government development contract I’ve ever worked on has worked… There are startup payments, payments for milestones (including many at the start for various design stages before anything was built), payments at varying levels of build, etc… - often more than half (sometimes more than three quarters) of the contract value was paid before the final product was delivered.
We did some pretty cool things too (this was in defence satellite communications) but various Government customers took like 80% of the risk on the development most of our big products (obviously we had already proven our design abilities with smaller components but much smaller scale), which we would then sell to them and other Governments.
I’d implore you to research more about how the CCP is administered. There are payments before any astronaut gets a ride. Meaning if the company goes out of business beforehand, the taxpayers lost that money without receiving the actual service intended. That’s also why NASA selected two CCP contractors, it distributes the risk. Maybe you think socializing risk to the taxpayer makes him a smart businessman, I just wish people would comes to terms with the fact that his wealth is inextricably linked to taxpayers. Like I said before, it’s not even necessarily a bad thing but call it what it is. I personally think the hybrid public-private arrangement works well when it’s not being abused.
Regardless of all that, the point was that Musk is not a paragon of free-market capitalism. Nothing you’ve pointed out negates that point, yet people still cling to that narrative for…reasons. I suspect it has more to do with cognitive biases than reality.
When I had the roof replaced, I had to pay half up front.
And so on. This is normal business practice.
There is nothing not free market about progress payments.
(Besides, if NASA was fronting all the money, SpaceX wouldn't have gone bankrupt if the rocket blew up. But what I've read was Musk bet the company on it not blowing up.)
I decided to check one detail. The EV subsidy came in the form of a tax credit to the buyer, it is not paid to the car manufacturer. Musk had nothing to do with it.
> I suspect it has more to do with cognitive biases than reality.
Imagining oneself as dealing in reality rather than cognitive bias is yet another cognitive bias. Everything written about Musk is subject to cognitive bias one way or another.
Businesses can leverage POs to fund operations. That’s why the NASA contract matters.
Yes, the EV subsidy goes to the buyer. The point was it makes the product more competitive at its price point. That point still stands. Besides, Tesla also benefited from multiple other taxpayer benefits. For example, they get hundreds of millions in tax incentives for their factories. Again, their profitability is propped up by taxpayers.
I’ve never claimed to be completely unbiased. However, we do have the benefit of testing out narratives with facts. The mental gymnastics needed to deny that these ventures/profits are somehow not related to taxpayers is, in a word, “nuts”
It's utterly inappropriate. First, your card is submitted and approved prior to you getting the ride. The uber is going to get that payment, you have no choice. Second, I wouldn't be surprised if the amount is put on hold with the credit card company before the ride begins - I know gas stations do this. Third, it's a trivial amount of money compared with buying a house. Fourth, the uber driver cannot operate if he hasn't already bought the car and the gas.
> That point still stands.
Musk had no control over it. The tax credit was given to the consumer. It also was for all EVs, it was not targeted at Musk.
> they get hundreds of millions in tax incentives for their factories. Again, their profitability is propped up by taxpayers.
A tax abatement is not a subsidy. A subsidy is a payment. Tax abatement is not "propped up" by other taxpayers, they did not get their taxes raised by it, and the company was not previously paying taxes for that location.
I'm curious why you (apparently) think that anyone could have done what Musk did? Why didn't you (or anyone else) get those subsidies and tax credits and contracts and create Tesla and SpaceX? I've read that Musk is an imbecile who somehow failed into being the richest entrepreneuer on Earth?
Tesla + SpaceX is worth about $1.2 trillion dollars. If the government started it with a billion dollars, consider all the taxes Tesla + SpaceX + Musk + employees + investors has paid since. Wow what a return on investment! And as a bonus, NASA gets to shoot off rockets that cost only 10% of NASA-built rockets.
C'mon, this is bordering on a disingenuous argument. You can't acknowledge the different between a service and a product. That's literally the novelty of the CCP. In general practice, you don't pay for a service until after its rendered. But not the case in the NASA contract. If your Uber doesn't show up, you'll get reimbursed whatever small hold they put on. You're only out the service. If SpaceX went belly-up, NASA isn't getting milestone payments back and they don't get their ride. They're out payment and service.
>Musk had no control over it.
Are you claiming that subsidies don't get factored into a business plan? Again, the point is government action makes the business more competitive/profitable. Subsidies to the consumer absolutely impact that. Tesla's own filing acknowledge this point. E.g., they mention regulatory credits add $2.7B to their revenue. They also mention how consumer subsidies impact consumer demand for their cars, and how tax abatements are fundamental to projected operating expenses and financial obligations. Their own statements run afoul of the narrative you're defending.
>they did not get their taxes raised by it, and the company was not previously paying taxes for that location.
Correct. We agree the taxpayers are losing an income stream. If your house was built in a location, do you think you could claim "well there was nothing here before, so not paying income taxes is of no consequence"? It's a weird take if you think the public isn't offering something of value with beneficial tax breaks. If they are offering something of value, they are helping the business. I also agree the taxpayers can benefit from it, I don’t think they have to be in conflict, just acknowledged.
>I'm curious why you (apparently) think that anyone could have done what Musk did?
I've never claimed that, you seem to border on fanboy admiration of him. I think Musk is a once in a generation entrepreneur. I also think his business MO is heavily reliant on government contracts and special treatment. Those two aren't necessarily mutually exclusive. But the latter is contradictory to free-market ideals. That's the point that you're constantly side-stepping. Worship him if you want, but also acknowledge his success is tightly coupled to governmental help.
SpaceX has done amazing things. Buit I'm going to venture we have different opinions why. IMO, t's because they get to operate under different rules. I think the main advantage that NASA is buying is a plausible way to skirt a lot of the rules (political and technical) they must abide by. CCP does not, and that's largely why they can do things differently. That's not a guarantee of success (see: Boeing) but it sets the table.
You may not realize it, but we've had this same tired discussion a while ago. At that time, I said we will see Musk's business acumen with what he does with Twitter. Apropos of TFA, that doesn't currently put him in good light. 6 months ago it was valued at $9B, and then shortly later valued at $45B so that he could essentially sell it to himself at that valuation. At the very least, that indicates a lot of uncertainty. That is a suspect valuation, but to be generous there are some differential outcomes: 1) xAI becomes profitable largely due to the synergies from the sale of Twitter/X, 2) xAI is profitable in spite of the purchase, 3) xAI does not become profitable. It will be interesting to see, and I will be interested to see if we'll ever get insight into the private company to find out. It will also be interesting to see if future success is still coupled to government/political help; I suspect that's a drug hard to break from.
He sells rockets to the government at 10% of what it would cost the government to buy them elsewhere. It's clearly Musk helping the government. Besides, Musk did not get subsidies for SpaceX nor special treatment.
> Are you claiming that subsidies don't get factored into a business plan?
No, I claimed that Musk had no control over the EV subsidy, which was given to buyers of electric cars from any company.
> acknowledge his success is tightly coupled to governmental help
Making a better, cheaper rocket is helping the government save tens of billions of dollars.
> contradictory to free-market ideals
The government keeps taking our economy farther and farther from the free market. Government taxes, subsidizes, and regulates. It isn't really possible to run a free market business in the US.
I know it's cool these days to dump on Musk and denigrate his achievements with "you didn't build that" (as if anyone else could have done it), but history will show him to be the greatest entrepreneuer the world has ever seen.
The government has subsidized other companies. None of them succeeded like Musk did. Not remotely. The idea that the government created Musk is just nonsense.
What you're describing is Lockheed, Boeing, Rockwell Collins, etc. SpaceX is the opposite--it provided NASA a service that was necessary for NASA to operate, at a fraction of the cost of competitors: https://ntrs.nasa.gov/citations/20200001093.
The fact that NASA makes interim payments on the contracts doesn't turn a purchase of services into a subsidy. "Free market" does not mean "off the shelf." It's extremely common in B2B settings for buyers to shoulder some up-front costs to develop products or services that aren't available in the market. For example, Apple made a large up-front payment to a supplier to speed up development of sapphire glass: https://www.cultofmac.com/apple-history/iphone-sapphire-glas....
Buyers take-on some risk when they do that, but that doesn't make it a subsidy. In Apple's case, they take on the risk in return for the bet that a supplier can provide them with huge volumes at a low price. In NASA's case, it took on some development risk because SpaceX promised a large reduction in launch costs.
You’re muddling points. I’m not saying the NASA contract was a subsidy. Tesla is a better example of subsidies.
No private capital was willing to contract to SpaceX until the risk was lowered. They’ve succeeded in doing so and deserve credit. However, they would have never gotten to that point without taxpayer dollars. Governments were the only institutions capable and willing of taking on that high initial risk. That point still stands. It’s odd that your stance denies that when Musk himself has admitted it.
The payoff for government was getting rockets at 10% of the cost of other rockets.
The government pays spacex to complete contracts. They pay tens of thousands of companies the same way - defence, bridges, trains, roads, etc. in fact, every government does this. It’s also worth pointing out spacex have completed those contracts much cheaper than competitors who have not delivered (ie star liner). As far as the gov giving out contracts for space stuff, spacex are literally the best option, and directly save taxpayers money.
Tesla gets subsided because the government wants to encourage EVs. Oil extraction and refining, corn, education, healthcare, defence and literally thousands of other sectors are also heavily subsidized. Again, every government in the world does this for sectors they want to encourage.
You are so hell bent on your “Musk bad” line you didn’t realize it has nothing to do with him or his companies. You are angry at how governments around the world pay for and subsidizes sectors every single day.
We agree the government supports sectors they want to encourage. See my previous comments about supporting high-risk nascent industries. That’s a different point than the one I was making, which is that support is a large part why those industries can exist during their initial high risk phase. My point is he is not a paragon of free-market capitalism because they rely on government support during high-risk stages. Both points can coexist. It also doesn’t imply I think he is “bad”.
You are trying to shoehorn a different discussion. I’ve never said Musk is bad. In fact, I’ve said he’s a once in a generation entrepreneur and that his companies have delivered wonderful things to the taxpayer. My claim is that his success is not the free-market ideal because it relies on government largesse. In your head, you appear to view it through a completely different lens because you seem to want to construct this “good vs bad” false narrative. The fact that you are bypassing the points reiterated multiple times isn’t conducive to a curious, nuanced, and thoughtful discussion
It is exactly the same for SoaceX and Boeing, other than Boeing getting way more money for the same job.
Free-market capitalism is like the Easter bunny - a nice bedtime story for children. It doesn’t exist.
I don’t know why it’s difficult to actually read and critique the point being made, rather than constant digressions into others, but it makes for boring conversation. If you have a point that SpaceX didn’t need government contracts early, then make it. I’d be curious to hear it, but I don’t think the data supports it.
You’re making out like SpaceX are doing something unique or morally wrong, when what they are doing is perfectly common, and the government couldn’t function without companies doing what spacex are doing.
Your message makes no sense. This is everyday stuff across the entire economy.
The only story Is that spacex saved the government (taxpayers) billions compared to paying Boeing who can’t even deliver.
Also show me when I say SpaceX was doing something unique or morally wrong. Was it when I said other contractors do the same? Was it when I pointed out Boeing’s shortcomings? How any when I said SpaceX has done wonderful things for the taxpayer? Or how the public-private partnership works well?
Why do you insist on ignoring all the things we seem to agree on to fabricate an argument? Is it because you are incapable of admitting sometimes the government does good things? You are tilting at windmills, my friend.
Keep it concise and to the point. Make it worthwhile.
His high-risk bets have largely been buoyed by government contracts
SpaceX wouldn’t have survived without govt intervention. I think the same can be said of Tesla to a lesser extent. That’s not bad, it’s the way things work with high-risk nascent industries.
He’s also never criticized (while busy criticizing European democracies) Russia or Putin, which are obviously nazi at this point.
Since you seem to champion him a lot, I'd really like to hear your take on his Nazi salute.
> No disrespect.
But you disrespected me anyway :-)
Marques Brownlee:
https://www.youtube.com/watch?v=UJeSWbR6W04
They are expensive though, but nice looking.
> And Tesla trucks?
https://www.dhl.com/global-en/delivered/responsibility/dhl-t...
Tesla is currently building a dedicated factory in Nevada for the Semi Truck. Production is starting end of this year and ramping up in 2027.
The private moon mission is off because the costumer pulled out. But Starship is still in development and is contract with NASA for a moon mission.
Of course Robotaxi isn't close to existing.
Musk announced in January that it was to launch in June, in Austin.
And then there's the ones he did deliver on, like spectacular re-usable rockets, Starlink, Neuralink, etc.
"""“I feel very confident predicting autonomous robo taxis for Tesla by next year. Not in all jurisdictions, because we won’t have regulatory approval everywhere. But we will have regulatory approval at least at some point next year,” Musk said toward the end of the presentation. “From our standpoint, if you fast forward a year, maybe a year in three months, but next year for sure, we will have over a million robo taxis on the road.”""" - Musk, April 2019
GP is referring to Tesla's promise to build electric semi trucks, not the pickup truck that Cybertruck is.
> And FSD is basically here which means robotaxis are basically here. Now there are just regulatory hurdles and the long tail.
AIUI, Tesla FSD is at best Level 3 automation (probably more like Level 2), which means it requires constant driver supervision to keep the car from committing suicide. That's pretty far from being "basically here", especially since Tesla seems extremely loth to accept any responsibility for FSD-related crashes.
https://www.sae.org/binaries/content/gallery/cm/content/news...
But later today I’ll be heading out in a Waymo robotaxi which will actually be here.
They issued a 127 page supporting decision on why they found it was a fair process that generated a fair price.
Want to say which part you take issue with that shows it was not capable of the judgement?
FWIW - I actually hate tesla, i just also hate the sort of drive by shitting on other fields that HN seems to do sometimes. If there are concrete reasons to believe they aren't capable, let's have that discussion. Otherwise, there's no need to denigrate others capabilities without evidence based on our feelings :)
edit: oh it's not copyleft, but specifically quid pro quo so tesla gives you their patents if you give them yours
Quid pro quo is well adjusted for the context.
> They issued a 127 page
I am sure they wrote a lot of words. But it kinda seems like they were wrong given the evidence.
Solar city shut down. The evidence shows that it was a poor acquisition.
I can just point to that huge failure that we can see right now.
Companies eventually failing does not mean they were bad deals at the time (or even a bad deal later). Not everything succeeds. The question is not "did anyone successfully predict the future" or even "was it a good thing to buy" but instead "was it a fair price and a fair deal at the time they bought it". So i have no idea why you keep bringing up what happened later as it it's relevant at all, and won't tell anyone why you think it's relevant to the past.
Given you refuse to read and cite a single thing that the judge actually got wrong and keep citing the end of solar city as if this somehow changes the past about whether it was fair deal for a fair price at the time, it's hard to believe you are really doing this in good faith, so i'm out.
(FWIW - i was the first solarcity customer in maryland, and given my experience i certainly have no love for them, but you aren't presenting any coherent argument here)
and
"paid a fair price"
are two entirely different things.
Was it actually fair as evaluated by any outsider on first principles? Probably not. Was it criminally unfair? No.
The court ruled:
> Even assuming (without deciding) that Elon was Tesla’s controlling stockholder, the Tesla Board was conflicted, and the vote of the majority Tesla’s minority stockholders approving the Acquisition did not trigger business judgment review, such that entire fairness is the standard of review, the persuasive evidence reveals that the Acquisition was entirely fair…
> Equally if not more important, the preponderance of the evidence reveals that Tesla paid a fair price—SolarCity was, at a minimum, worth what Tesla paid for it, and the Acquisition otherwise was highly beneficial to Tesla. Indeed, the Acquisition marked a vital step forward for a company that had for years made clear to the market and its stockholders that it intended to expand from an electric car manufacturer to an alternative energy company. The Court’s verdict, therefore, is for the defense.
"The trial court noted that these “process flaws flow[ed] principally from [Musk’s] apparent inability to acknowledge his clear conflict of interest and separate himself from Tesla’s consideration of the Acquisition."
"Upon recognizing these process flaws, the court then turned to what it identified as the strengths. It found six."
"Regarding fair dealing, the trial court noted that the road leading to the Acquisition was not entirely smooth. The court found, however,that the “Tesla Board meaningfully vetted the Acquisition” and Musk “did not impede the Tesla Board’s pursuit of a fair price.”Although Appellants assert that the court failed to make a finding of fair dealing, the court’s opinion can only reasonably be read and understood as concluding that the flaws did not overcome the findings of the process strengths and that the process, overall, was the product of fair dealing."
Read that as a ringing endorsement if you like.
> In instances where there are process infirmities, the Court is obliged to study fair price even more carefully. I have done that here. After careful consideration, I am persuaded Elon presented credible evidence that Tesla paid a fair price for SolarCity. Plaintiffs answered by proffering incredible testimony that SolarCity was insolvent, and then provided some “also ran” theories on value that their experts did not ultimately endorse, or at least not persuasively so. Given this, I have no credible basis in the evidence to conclude that a “fairer price” was available, and therefore, no basis to conclude that the price paid was not entirely fair. Indeed, the price was, in my view, not “near the low end of a range of fairness,” but “entirely” fair in the truest sense of the word.
Grandparent is not correct, you can’t just assign “whatever” value in self-dealing transactions.
The SEC and IRS weren’t born yesterday. It reminds me of people who come up with basic self-dealing transactions with some tax benefit and act like the idea wasn’t around 100 years ago and that regulations aren’t already in place.
Where are the solar roof tiles? What’s happened to the tax payer funded factory in NY?
At least in Delaware. I have no idea what corporate law is like in Texas.
Nobody does, really. Texas is relatively new to its 'corporate registration friendly' game, and at least on paper the statutory law is the same. Texas courts don't have to follow Delaware's case history, but it's also not a given that they will rule in a vastly more owner-friendly manner.
That's a big if, and I think most people would be pretty skeptical of the possibility of that happening. The fact that outside investors seem to value it at under $10B suggests that's a common enough opinion.
I had an employer taken over by PE and shredded, for the crime of only managing 10% profit margin. Apparently, to some, if 20% of revenue doesn't go into someone's pocket, your business is a corpse. I think the world needs to chuck that attitude in the bin.
Businesses often use an opportunity cost of around 14%, so if the business is earning only 10%, then they are losing 4%.
For example, if you start a risky venture that earns 2%, when you could invest the money safely in bonds at 5%, it doesn't make sense to do the risky venture.
It's not an "attitude", it's maximizing the use of the money.
How'd that work out in the past with the previous owners?
Long history of not being profitable - 2018 and 2019 feel like more of an anomaly than a trend.
https://www.teslarati.com/x-investors-winning-big-elon-musk-...
Crush every competitor through regulation?
https://sherwood.news/tech/companies-hoarding-nvidia-gpu-chi...
If anyone makes it work (whatever that means) in software they could buy it?
X is clearly worth a lot more than just it's revenue would indicate.
What is the most influential social media site worth? Perhaps all of the money in the world...
https://cdn.bsky.app/img/feed_fullsize/plain/did:plc:y5xyloy...
Where are the advertising dollars coming from on that horror show
Certainly not $45 BILLION of income over even a century
However, secondary markets for these megacorps are relatively liquid, so the valuations are not actually completely baseless.
But you'd have to be on the side of fascists to believe that.
they know what they buying when elon promotes his lmao, elon twitter deal is backed by saudi. elon himself come to saudi asking for an investment from royal prince saudi
safe to say that if they want spent 40 billion for twitter, they would spent more with AI flavored company (they are saudi after all)
For example, I had a run-in with the property tax assessor. He assessed my house at an unreasonably high price. I filed a protest, and then had a conversation with him. I offered to sell him the house at a considerably lower price, and he could then flip it for what he assessed it at.
He refused.
I eventually did sell it, for considerably less than the assessed value.
As anyone following stocks knows, the fair market value of a company can vary dramatically minute by minute.
If I were an investor in xAI I would be furious about this. They're almost certainly overpaying for Twitter and there's definitely going to be litigation.
Edit: It sounds like the combined entity is taking on Twitter's $12 billion of debt from when it originally went private. As of last December xAI had raised "more than $12 billion" in total [1], so the deal attaches Twitter's debt to that ~12 billion pot of VC money. Unless I'm really misunderstanding something this deal looks like a bailout of Twitter and a huge new liability for xAI.
It's definitely possible my hot take is wrong and the xAI investors support the transaction. I hope so because if not there's going to be some brutal lawsuits over this.
[1] https://www.nytimes.com/2024/12/24/technology/elon-musk-xai-...
The valuation of those 2 companies combined should be < $10 billions if we are very very generous.
X is heavily in debt, diminishing user base, and bleeding money. 0 profits
xAI is yet to make any actual revenues outside of ... X. Also bleeding money
Although I would admit, that these companies are not valued based by their economics, but rather on political power they provide to the owner.
Edit: I misread, Musk said it's an all-stock deal, so you're right, it's all funny money. I think that means the combined entity is taking on that debt. It's still great for Twitter and bad for xAI investors because the combined entity now has both the $12 billion debt and all the VC xAI raised.
This is a terrible and inefficient use of money. It’s inevitable that this paper house will fall over
It's still wildly overvalued, and at it's unclear how long the market will stay irrational.
Obviously you then have to actually do those things before the value crashes, so whether it works or not depends on whether investors continue to expect you to.
The current value fluctuations have more to do with politics than the company. The media is writing a lot of negative stories right now, but they also have the attention span of a goldfish and ultimately some new Current Thing will replace the existing one.
Remember, these megabillionaires are due to stock valuations, and live rich lifestyles on the basis of lending against the value of stock. If that value drops and a margin call forces actual selling, then Musk loses shares in Tesla.
I have to think this stunt is related to Musk needing some liquidity somehow, or being unable to cover private liquidity crunch with public assets.
TSLA is ludicrously overvalued. P/E is 150, based on Q4 earnings which were 1/3 "real" revenue, 1/3 mark-to-market-BTC (aka one shot), 1/3 CAFE/subsidies which Trump will nuke in 6 months.
But the "real" earnings that were already flat in Q4 are seeing a huge drop in EU/CN and who knows in the US. If "real" revenue drops 20%, the "real" earnings might drop 70% or more.
Anyway, that 150 p/e is ACTUALLY 450 in my mind, but after Q1 reports it will ACTUALLY be almost 1000 or worse.
The only thing keeping the stock afloat is AI hype, but 1000 p/e ratios are for people with market dominance and fundamental leads on competitors. Tesla is arguably middle of the road in both self driving and robots.
What surprises me is that the drop in sales numbers seems to have zero effect on the stock price, at least not yet.
I was trying to stay apolitical but a CEO doing Nazi salute and not being fired is uncharted waters, at least in the last 80-85 years.
I keep going back to the horsemeat episodes on mad men, and the papa johns CEO getting booted. This is simply unprecedented in brand management. Brands take decades to build, and are especially important for car companies.
He had a sizable chunk of collateralized borrowings against his Tesla shares even before the Twitter acquisition. There was the risk of a margin call during year following the acquisition, but AI became the latest hotness so he was able to spin up a company to cook up some more market bubble.
You could make the same “bleeding money” comment about many historical social media acquisitions – at least Twitter has advertising and subscription revenue. And it’s similarly suspect to argue that xAI is failing due to lack of revenue, without mentioning the astronomical valuations of its peers in the AI space, many of which are not only lacking revenue but also have no distribution channel comparable to the scale of Twitter/X.
xAI has one of the leading models in terms of investment and user base, and it’s rapidly improving on its evaluation metrics.
Twitter/X is one of the Top 10, if not Top 5, social media properties worldwide. It has hundreds of millions of monthly active users and maintains the lead in public consciousness as the “go to” place for 1-N broadcasting of information. While Bluesky shows promise, it won’t be dethroning Twitter any time soon. When has Bluesky been the source of breaking news?
And you cannot separate these two businesses. Twitter/X and X.ai are fundamentally coupled to one another. Twitter is not only a data source for X.ai but also a distribution and retention channel. There is an “ask Grok” button under every Tweet. And it’s not the only LLM that can be summoned via Tweet – with similar automations from companies like Perplexity proving there is value in the channel – but it is the only LLM with a native integration into the interface and first dibs on freshly-generated user content and breaking news.
All while the same CEO claims that the public company is the leader in the field ?
Even by Tesla & Musk lawlessness standard that would be too wild.
> Even by Tesla & Musk lawlessness standard that would be too wild.
Not to be overly snarky here, but, uh: what standard? They have proven over and over that they could not give less of a shit about either societal norms or the laws of the nation.
Which they spend 3 years or so building and which seem completely useless. The only big unknown would be how much Tesla did Boring Company for that.
So yeah...
IMO this is going to be meteoric in nature. As in the meteor hits the ground.
If the world wasn't perceptibly irrational, I'd short.
But it's not is it. Try looking at the trends long term, not just YTD. It's remarkably stable, trending upwards. Yes it gain a bunch of value from October to January/February, which is has lost. Investors seems to have traded on the "First Buddy" effect, that didn't actually do anything for Tesla, so that value has now been removed and we're back on the original trend line.
How the hell drop in sales and lose of brand value hasn't caused to stock to absolutely tank is beyond me. Is someone artificially keeping the price stable? Do investors see something I don't, or they do just not care?
Given his political involvement, I would assume that the maximum end date for this house of cards is the date when Trump is no longer in power - which is less than 4 years away. The real date is probably much sooner, but who knows when ?
BTW: find it: https://top500.org/lists/top500/list/2024/11/
https://electrek.co/2023/06/21/tesla-dojo-supercomputer-is-f...
Definitely on the FSD timeline right now - they are maybe at 1% of what they announced they would be today. But hey, it's Optimus now !
Where are you getting this from? All numbers I see indicate the user base has been growing globally. https://backlinko.com/twitter-users
So I'd argue that the statement theat Twitter/X is bleeding users can't be conclusively decided, but it seems your statement that Twitter has been growing globally is incorrect at least for the last reported quarter.
The levels of .. self-fertilizing transactions here boggles the mind. I guess that's the idea.
xAI does have some pretty massive datacenters with 200K+ GPUs.
It is a fact that grok3 is a strong competitive model. Surely it had to be trained somewhere? They went from 0 to what they have now in 1 year
It breaks my heart because my rust belt hometown got a substantial investment from the state they had been chasing for a couple decades.
$700M of the Buffalo Billion went to a Solar City facility, Elon even said they were going to build the solar roofs there!
New York State didn't dare pick a fight with him as the factory set empty for years.
Full story via Bethany McLean, 2019:
https://www.vanityfair.com/news/2019/08/how-elon-musk-gamble...
If you have evidence that’s not the case, that would be interesting to share.
There's no substantiation of that either way.
I don't think that's the true at all. There's a vast and visible footprint we can see with batteries (pretty sure every major solar company in the U.S. that has a battery storage option does at least some Tesla) that has no equivalent with solar rooftops. The former are ubiquitous while the latter are so far as I can tell almost entirely non existent.
And if that's too light on data I'll put it this way, I'm reasonably confident I can find 10 solar companies that install Tesla batteries for every one that does Solar City roofs.
I have a SolarCity install that came with the house.
The Power Purchase Agreement lease seemed shady at first, but ultimately I believe it's working out better for my family than for Tesla.
I'm paying just under 11 cents per kWh and it can only go up a maximum of 3% per year for the next ~15 years.
The result is that solar generally has a generation cost of ~$0.04/kWh (which includes the cost of the land) but meanwhile you have customers happy to be paying $0.11/kWh. The trade off is the one-time cost of installing it on individual roofs is more labor intensive than doing a large-scale installation in a field somewhere, but that just means it's competitive rather than having a massive advantage.
You can absolutely draw adverse inferences from Tesla's refusal to report certain straightforward, useful numbers. For example, their refusal to publish any real safety statistics, to the point where Elon Musk himself has to invoke rubbish numbers like the 'community tracker'.
If, after all the lawsuits and accusations of failure, and the reporting about the near-zero deliveries and idled factories, the Tesla Energy division is giving you no numbers on the solar roof, and is lumping them together with a totally different product like batteries, there is one thing and only one thing that that means: the numbers are awful.
Even if its low for solar, it doesn't mean it was a bad deal. He acquired existing customers he could sell other products to.
I suspect most of the business is battery storage and the Powerwall was introduced by Tesla before the acquisition.
According to the company filings the solar assets Tesla acquired are still generating revenue at the rates projected during the acquisition.
But even if it's true I assume they are including their utility-scale solar and battery packs, which has nothing to do with Solar City: the panels are generic, the customer lists are not residential, they don't use the fancy shingles. Solar City did not help them in any way with these getting or fulfilling these contracts.
Self dealing is also permissible with companies. Corporate officers and directors must still meet their fiduciary duties to shareholders. And the potential for conflict of interest changes how courts will evaluate the transaction if a shareholder complains about a breach of fiduciary duties. Ordinarily, in Delaware, operate transactions are protected by the “business judgment rule” that gives wide latitude to corporate officers and directors. https://plusblog.org/2023/11/28/the-business-judgement-rule-.... But if there is self dealing, courts will scrutinize the actual fairness of the transaction. But self dealing isn’t per se impermissible.
In most countries you absolutely can. The difference between market value and the sale price might be considered and taxed as a gift, but such a deal is generally not prohibited.
I'm certain we'll see a pile of public funds handed over the xAI in the future.
That's Trump for you. Populism up front, oligarchy in the back.
Oligarchy is generally how people who don't deserve wealth can get it. As pointed out by you, that doesn't exactly apply to the world's (already) richest man.
And who exactly would you look for to help the federal government build "a better mechanism for managing costs and outlays", if not someone who has built multiple successful businesses (managing costs and outlays at impressive scale) in very different industries?
No that's just one of it's outcomes. The proper definition would be "a small group of people having control of a country, organization, or institution."
> that doesn't exactly apply to the world's (already) richest man.
Given the appropriate definition and his involvement in owning not only a social media company but also having a role in federal government policy and now apparently investigations I am completely baffled by your assertion.
> And who exactly would you look for to help the federal government build
I figured someone would summon this fallacy. He has acquired wealth. This does not demonstrate any skill in spending tax payer money efficiently in a regulated environment. This is particularly true if you're willing to assume that oligarchy played some part in his acquisition in the first place.
> if not someone who has built multiple successful businesses
He likes to call himself a founder. Of business that already existed and he purchases a controlling share in. It's amazing that people accept this distortion of reality.
> managing costs and outlays at impressive scale
Presumably he has people on the payroll who do this. I imagine that the entire financial success of these companies is not down to a single person. How does he find time to do anything in a day?
I imagine the federal government could, you know, just do the same thing. Hire qualified professionals to do the job?
> Not sure that tracks.
Outside of the reality distortion field that some people willingly occupy it most certainly does.
> It's amazing that people accept this distortion of reality.
Indeed
In 2021, the last full year before Musk's acquisition, Twitter generated $5.08 billion in revenue.
Under Musk's ownership, X's revenue has declined significantly. In 2024, X reported $2.7 billion in revenue, which is nearly half of its pre-acquisition level. For 2025, global ad revenue is projected to grow to $2.26 billion, marking its first annual increase since the acquisition.
So yes on paper, X is more profitable than Twitter was before the acquisition. Its 2024 adjusted EBITDA nearly doubled Twitter’s best year, despite a much smaller revenue base. But whether that profitability is sustainable or comes at too high a cost—strategically, reputationally, and culturally—remains an open question.
1. Musk owned an estimated 80% of X and an estimated 50% of xAI [1]. We don't know the specifics of the deal, but we do know it's an all-stock deal, so in theory this should help Musk own more of xAI, which sounds like better-performing and more promising company atm.
2. Tesla has been a big name in AI for a while now, but has been awfully MIA when it comes to generative AI. It's always focused most on vision, sure, but it's not hard to see how other types of AI could fit it's strategy.
Imagine a conversational virtual assistant in your car, or in their robots, or the possible manufacturing applications. In my opinion the device manufacturer + AI lab combo, especially for a device that sells on its promise of cutting-edge technology, makes more sense social network/LLM combo. Beyond the product applications Tesla would greatly benefit from the prestige and marketing of cutting-edge AI.
Nonetheless Musk owns only about 12% of Tesla [2]. It makes more sense for Musk's fortune to ride the wave of this new industry with a private venture he owns. This 12% ownership is down from 22% in 2018 btw [3], before the Twitter acquisition in 2022, which was largely funded by liquidating his Tesla stock [4]. Musk seems to be very much divesting from Tesla— both in effort and in money.
3. Where does this leave Musk, Tesla, and xAI?
- I think it leaves xAI in the position of being the most important company for Musk right now. Best-case, it becomes a "big tech" company. I'm sure we'll keep hearing much more about it, although I don't rule that Musk could try to sell it or merge it if it gives him control of a tech company with a solid business model or strategic importance.
- Musk I think is definitely in a better position than before, fortune and power-wise. He's been diversifying away from a company that's had an insane PE ratio for a while [5], but most importantly, he's been doing so in a pretty smart way. If he had just sold Tesla to buy government bonds, the share price would've crashed. Instead everyone buys into the "he's eccentric and went through a divorce" story. Social network ownership has given him plenty of political power— I don't doubt unbanning Donald Trump is how he got close to him the first place. And now he's converted imaginary wealth from unattainable hype at Tesla into ownership of private company riding the hot tech wave of the moment, concrete political power and self-regulation via his seat in government, and evergreen influence/relevance via his own social network— a tech baron's dream.
- Tesla is not doing great, and Tesla investors are the ones getting the short end of all this. I think Musk realized self-driving is too hard, be it due to tech or regulation. I think he realized he can't compete vs Chinese automakers. I think he's pumping and dumping. If he can get a good deal he might try to merge it with xAI in a way that offers him full control of the company (maybe even private ownership), but otherwise I think Musk is ready to let go of it. He's used its insane valuation to get himself better assets.
[1] https://www.barrons.com/articles/xai-buys-x-musk-twitter-2e5...
[2] https://www.investopedia.com/articles/insights/052616/top-4-...
[3] https://www.thestreet.com/investing/stocks/how-elon-musk-con...
[4] https://abc7.com/post/elon-musk-accused-improperly-selling-7...
[5] https://www.macrotrends.net/stocks/charts/TSLA/tesla/pe-rati...