Comment by duxup
2 days ago
>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