SpaceX, from a financial standpoint, is just an elaborate Ponzi scheme for Musk, who treats all of his companies as his private fiefdom and personal piggy bank. In reality, none of them are genuinely profitable, and depend on government subsidies and capital investments to survive. The goal is to just build a barely viable business and then scam people with bullshit promises. Any real cash flow is immediately converted into cash for his personal use. Though from time to time, he uses that cash prop up another of his ventures. Very likely, all of this will come crashing down at some point, and it will be revealed that his companies are nothing like what they seem.
this post was submitted on 15 Mar 2024
559 points (98.1% liked)
Technology
59204 readers
2746 users here now
This is a most excellent place for technology news and articles.
Our Rules
- Follow the lemmy.world rules.
- Only tech related content.
- Be excellent to each another!
- Mod approved content bots can post up to 10 articles per day.
- Threads asking for personal tech support may be deleted.
- Politics threads may be removed.
- No memes allowed as posts, OK to post as comments.
- Only approved bots from the list below, to ask if your bot can be added please contact us.
- Check for duplicates before posting, duplicates may be removed
Approved Bots
founded 1 year ago
MODERATORS
I feel like Twitter (I will always deadname it) was the beginning of the end for him. Unfortunately, things like this can take years or decades to resolve, but whereas 5 years ago he had the midas touch and could do no wrong now there seems to be nothing but a stream of negative news about him.
Time will tell
beginning of the end for him.
Naw, imho it was the Thai kiddy-submarine incident. He seemed at least semi-plausibly not horrible up until then; but then firmly established himself as just another piece of shit billionaire when he couldn't handle some diver stealing the spotlight from him.
Good point, I had forgotten about that nugget in the sea of shit nuggets around that man.
Yeah, that's when I started to call him "The pedo guy" (using his own words).
At that point he'd outed himself as an asshole to the general public, but he still got big results with SpaceX and Tesla. That incident could have been lost to time and a legacy of undeniable successes.
Hyperloop is where things went cuckoo-bananas business-wise IMO. The delays and broken promises at Tesla were weird, but anyone who'd heard of subways could tell the whole hyperloop thing was doomed to fail, and it became increasingly obvious to anyone who read tech headlines that he wasn't just any asshole, but a clueless asshole.
The "midas touch" is basically just securities fraud. Something he can't get away with forever.
In what sense? Lying about the actual capabilities of the business? Full autonomous drive next year and Mars at 2022?
All of those statements existed to either drum up investment money or get people to buy non-existent products. So those things are examples of securities fraud too.
I would argue that SpaceX is now to important to NASA, and therefore the US government, to be allowed to fail. It may not be under Elon's control, it may not be called SpaceX, but it will continue to exist.
Then it would be another Boeing, Lockheed Martin, Northrop Grumman, etc.
I would bet that they'd be owned by one of those.
They've literally made reusable boosters and have multiple operations to deploy satellites and go to the space station (not to mention starlink ) . While I'm not a Musk fan, those achievements are irrefutable. SpaceX may or may not be making money, but it's a far cry from a ponzi scheme. It's why so many are trying to copy their technological achievements.
It is a Ponzi scheme from a financial sense. In the end, it's just a launch provider. It's not suddenly going to become the next Apple in terms of market value. But it is valued like that, and they were able to raise billions of dollars by lying about its potential business ventures.
Not that I am doubting this, I just don’t know enough, but do you have any sources on all of what you’re saying?
Like I know the guys a scumbag, but I want to be accurate in what his scumbaggery entails.
I agree but isn't Tesla real and well selling, at least in the US. Wouldn't it be profitable?
Tesla is certainly making a fair bit of money. Though it only got there because of a shitload of government help, both from the US and elsewhere, and indirect government help, like the government pretty much forcing other automakers to purchase EV credits from Tesla to make their fleet average CO2 numbers lower in order to avoid fines.
Which I'm not 100% against, but then again, Musk constantly complains about government subsidies on various things, while receiving a shitload of government help himself. Same level of hypocrisy as his whole "I'm a free speech absolutist" thing.
E: spelling
Eh, a quick Google search said that Tesla wasn't profitable for 17 years and survived due to government subsidies and investor funding. After that they've been making ~$15 billion per year and sold around 1.3 million cars worldwide per year.
In contrast Toyota sold 10.3 million vehicles and made $61 billion in profit.
As with their 17 years of unprofitable business they are currently more proportionally profitable, but a big portion of that is Musk fanboys and limited supply. If they actually started selling more cars they probably wouldn't be as proportionally profitable.
Additionally, Tesla is supposedly becoming less profitable due to several factors including not making a new model in 10 years, reports that they fraudulently marketed features (being sneaky with how range is calculated so that the true range is way less than advertised), and Elon's antics hurting sales. Elon's antics are a big deal, some people who wanted Teslas before don't want them anymore because they don't want to be associated with him (like flying a Gadsden Flag in the mid 2000s vs now).
Elon's antics don't stop there, he's also hurt the investor's opinion as well. A big reason Tesla's stock was so high is because people were buying them and not selling them. This caused their price to stay super high, but when Elon bought Twitter he sold a ton of stock. The price was at an all time high over $400 per share, his selling cratered it to ~$115, and is currently around $165. Investors don't like it when the owner of a company single handedly tanks their investment so the owner can make a bad investment, even more so when the writing on the wall says he'll sell even more of the stock to fund the bad investment.
How is that even legal?
It's private equity. So presumably they have more discretion around buy backs than public stocks.
So, while Elon Musk is an asshole, and these terms are awful, there is more to it:
They involve stock awards, which are given by the company to the employee. They can either be options (which give you a choice to buy at a certain price, and presumably you wouldn't do that unless you can sell for higher price), or outright stock grants . They are given as part of compensation, and vest on a set timetable. (So, if someone was given 1000 shares, the employee would still see 1000 shares in some account, but they may only be able to access 100 of them every six months). So, this whole discussion is about shares the company gave to the employees in the first place.
Then, the other wrinkle is that SpaceX is a private company. That means that employees can't just go sell their shares on the open market. So SpaceX graciously offers to buy back these private shares at whatever they think they are worth at the time. While this sounds fishy, the only other real alternative is for the employees to hold on to the shares and sell them if they go public....
.... However, simply receiving the shares when they vest is a taxable event. So if SpaceX didn't offer some way for mere mortals to turn their shares to cash, then in effect they would be saddling them with an enormous tax burden and no way to raise the cash to pay it. So they have to do it this way.
Do they really need to confiscate an employees shares if they hurt Elon's fee-fees? Of course not. But that's the only dumb bit here. The rest is pretty standard for a private company who attracts workers with stock benefits.
Sounds to me like the scam is to attract workers with stock benefits.
In public companies, it's not really a scam. It's a legitimate tool for these companies to get and keep the key people they need. The stock benefits are over and above their salary, after all, and equate to real money.
It's the startups and private companies where this all gets a bit scammy, because there is no liquid market for these shares. And those companies are more likely to offer extra stock instead of a competitive salary, but that stock may not be able to be cashed out until the company goes public, forcing the employees to stay until the IPO, unless they give up that theoretical big payday.
As long as you exercise all the stock they give you one way or another, you can leave whenever you like. You still own the stock if you leave. The real scammy part that no one seems to mention is to give really long vesting periods
It is part of the calculus of employment. You get these shares and you deem if they are worth something (you think the company is compatently run and will IPO) or you think they are worthless.
You can talk about how pointless and probably predatory that is, but that is the current system we inhabit.
Fwiw I walked away from imaginary shares. My public company went private by a hedge fund. Honestly hedge funds are good at making short term cash so maybe that was a bad decision, but I wanted no part in the next year or more of layoffs. Plus my imaginary stock was still on a vest cycle so it would vest probably after the stock was skyrocketing.
I have read that the actuality includes a loophole you didn't speak of:
Once someoen owns shares, they can privately-sell them, or give them away, or will them to someone..
Once enough people have done this, the "private" company becomes actually publically-traded, though not on any exchange..
..creating some legal difficulties, re regulations.
From that bit, which I never would have known to even consider ( some article I read, some years ago ), then it looks like people can sell their shares to another private-individual.
Maybe some jurisdictions prohibit that.
I don't know, I'm just identifying an angle people apparently haven't commonly considered.
_ /\ _
All Musk companies are sweatshops.
To think that amount of wealth can be earned is fucking naive. More than naive. More than how a child is naive. It's willful ignorance, full stop, and if you are for it, you're the enemy of the people.
This is only true as an "Achilles and tortoise" argument. I agree it can't be 100% fairly earned, but then nothing can.
Can it be 80% fairly earned? 60%?
It’s willful ignorance, full stop, and if you are for it, you’re the enemy of the people.
If somebody declares part of the people enemies of the people, then they are enemies of the people themselves.
That's a good question actually, the first one at least. I'd be fine with 80% of it being earned if someone did 80% of the work. I know life is a bit more nuanced than that, but people are smart and it is achievable, or at least close to the idea.
The second part though is not logical and I really don't think I need to explain why, but I am willing to.
The second part though is not logical and I really don’t think I need to explain why, but I am willing to.
When you make the concept of "enemy of the people" acceptable, first people to use it are those with most power.
Isn't that market manipulation and anyway completely illegal to force buy back stock at 0$ ?? If I force you to sell me your house for 0$, whatever if it's in a contract, that would be illegal in Europe. 1€ would be fine tho.
€1 would not be ok in Ireland, there is a rule about under value sales to stop people selling their assets to spouses when they go bankrupt.
SpaceX isn't public, this is an internal stock system used for employee rewards. Like bonuses, but kinda more arbitrary and more gambly
Sounds like a healthy work environment
As a wise Arabian parrot once said, "Why am I not surprised? WHY am I not surprised!?"
I mean.... isn't that also a legal thing?
If you know insider information that's not public (A company misbehaved being one of them) you are not supposed to trade stock to financially gain from it.
Now that's what you're supposed to do... Politicians have proven that's rules just for peasants, and most stock traders heavily benefit from this type of information, and unless your Martha Stewart for some reason, you get away with it... But my point is legally, if you know they misbehaved, that's immediately insider information?
Edit: I misunderstood the headling/rule. Sorry. Quite a shit thing that granted stock can be revoked, especially after you pay taxes. I wonder how legal it is, because if they can revoke it, is it actually yours and thus do you have to pay taxes on it?
It's if SpaceX decides that the employee misbehaved, not the company that misbehaved, that allows them to ban that employee from selling private stocks. Also if you leave the company for any reason you lose out on 6 months of them or if you are fired they will buy back all of your stocks at $0, all the while you are paying taxes on your stocks. So the employees could possibly end up losing money from taxes on something they never actually got because the company said so.
Also, i guess the next question is what counts as misbehaved since the company gets to decide? Does calling in sick for a day count? What about if they want you to do something that they legally can't ask you to do and you say no? It sounds more like a ploy to control the workers even more, whether or not what SpaceX does is legal. Sure if its not legal they can sue and maybe even win, but SpaceX could drag out the suit till it has to be dropped from a lack of funds on the employees side or make it not worth the amount they would win.
Oops I misunderstood the direction. (I think it was if the employee deems they misbehaved. (I assumed "It" was the employee, not SpaceX. More obvious in hindsight I guess, my bad.)
Didn't Martha Stewart go to jail?
That's kind of the point I was making. (She was the one who didn't get away with it)
I'm a little naive about how this works but how does buying and selling unlisted securities work? What does it mean to get unlisted stock? If someone was given stock as a perk but was fired what happens to the stock? I've never worked at a startup so I don't know how that works..
When I've worked at startups I've received stock options. Pardon my amateur explanation, but they're basically the option of purchasing some amount of the company at a specific price (strike price) by a certain date (if the company is public).
If you believe the company will do well, or you can wait long enough before being forced to buy or forfeit them, then you can buy at that strike price. If the stock value is higher than your strike price when you sell, then you have made money that you can now be taxed on. If you've bought the options and the value is lower than your strike price, then you've got a loss if you sell. You can also hold the shares until they go up, or ride it all the way down to $0.
I've heard about companies that will buy your options as a way of purchasing equity in private companies, but I have no experience with them.
That's the best explanation I can give. I'm no expert, so please fact check me if you're in a position where this is relevant.
Pretty much that. You are promised number of stock options at fixed price far before company goes public. If there's ever an IPO, you can purchase your stock at that price and decide to do whatever you want to do with it. You can sell it and get money, or you can keep it and get income.
It's what Musk did with PayPal. He never worked at PayPay, he never was part of PayPal, but the company that later came up with PayPal once merged with company Musk was part of and he got options. He was fired really fast from that company, but they can't take his options, which is how he got rich after PayPal sold to eBay for billions.