Comment by anon291
18 days ago
All financing is circular. This concern is beyond the pale contrived
Financing is circular because creating a liability for one party (debt) creates an asset for another (the bank) off of which more debt can be secured
A bank / financier sells trust and reassurance. They otherwise invent most money from thin air.
That’s not the point. The issue is that loaning/investing to a client so they can buy from you conflates your investments with your revenue.
It may be fine, or not. It it has been a frequent type of manipulation to obfuscate the real accounting situation.
Yeah, it's basically creating the illusion of demand and revenue. Lots of fraud in the past relied on companies "investing" into companies which then bought from the investor. I'm not sure to what degree this is happening now, though, and to what degree this is benign.
I’m not sure anyone can really say now, the terms and details are too opaque. But, given the history the opacity is itself a red flag.
People are investing because if Nvidia are essentially buying shares with graphics cards then they're motivated to make this stuff work. If the invested in company's share price tanks, Nvidia loses out, and I imagine quite a few people are willing to win or lose alongside Nvidia.
In general for these deals, and the ones with SPVs even more we don’t know. It may be as straightforward as equity for GPUs, but not enough information has been released.