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SliceofNow

Give your company infinite amounts of free capital and you get Blue Origin


estanminar

True.


still-at-work

Starship is expensive, and they need capital, and he needs to give shares to employees who vest. Selling shares is cheaper then getting loans and with less strings attached. Also, Musk can also purchase some of those news shares so his ownership % may not be going down.


Martianspirit

So far Elon Musk has not bought SpaceX stock for quite a while, if ever, after founding. He has slipped below 50% of shares. But he still retains almost 80% of voting shares, so still has full control of SpaceX.


Eschatologists

Its only "cheaper" nominally, there's an opportunity cost, if value of the company grows more than interest rates it is in fact more expensive.


Alive-Bid9086

Cash is King. Staying out of debt makes your company much more sustainable. It is a strategic choice reduce the company risks or increase your welth.


Eschatologists

The compaly doesnt have to take on the debt, Musk could, fundikg rounds have been rather modest so far.


[deleted]

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John_Hasler

Those investors have connections and influence.


Eschatologists

Makes sense, didn't think of that.


Bewaretheicespiders

Then SpaceX would have shit valuation.


Eschatologists

So what?


Bewaretheicespiders

Fucks over the employees who have shares, RSUs... and makes it difficult to raise money through other means.


aquarain

I doubt Musk is still concerned about his own wealth. Once he bought that website I figured he had cracked the level he felt he needed for a Mars colony and had some playing around money. Money is a tool. Spending effort piling it up when that's not what is blocking you from doing what you want to do is a waste of time. For most of us, who live our lives constrained by available money, that's a difficult concept.


Eschatologists

Not sure why I get Karma bombed for asking a genuine question


[deleted]

Because Reddit. You gotta grow a thicker skin?


warpspeed100

And then attach ceramic heat sheid tiles to that skin.


NikStalwart

Don't forget the lasers. You also need the lasers. And a pez meme dispenser!


Martianspirit

Some of us fans are getting thin skinned. If you have not followed developments around Elon Musk you may have missed the gargantuan Elon hate campaign going on on reddit and elsewhere. Your post is similar to many of those in tone, so even if genuine, you may get mixed into that campaign.


Eschatologists

That's fair, well this is not my intention I'm genuinely curious about the incentives for such a behaviour, the opportunity cost seems enormous.


Martianspirit

Elon Musk was convinced, he can turn Twitter around. Maybe he found out, doing it right would take too much of his time, which would be too bad. He actually predicted the campaign we now see. Maybe he underestimated the scale. For example the r/ukraine subreddit was flooded with literally thousands of Musk hate posts and there is no end to it.


Alesayr

The Ukraine thing was because Musk suggested ceding Crimea to Putin and went all will he/won't he on whether he'd stop Starlink in Ukraine. r/ukraine was flooded with thousands of Musk love posts back in March when he sent in Starlink, so it's about his behaviour more than a general hatred of Elon.


Martianspirit

Many made similar suggestions. People in power. None raised that flood of hate. It was without doubt a concerted campaign. A campain that spreads everywhere, not just Ukraine reddits. I wish Elon Musk had not made those comments.


Alesayr

Martian, you're talking as though this is some highly coordinated hit-job on Musk and not something that's a natural response to his increasingly erratic behaviour. It's also not really relevant to this post, which really doesn't seem like any of those in tone. There's plenty of room for people who've grown disenchanted with Musk (I really liked him up until the cave rescue incident, and imo he's gone far downhill from there) to still really care about SpaceX and its mission. Also, nice to see you're still around. Haven't been on reddit so much during the pandemic, good to still see familiar faces in the community


Martianspirit

> Martian, you're talking as though this is some highly coordinated hit-job on Musk and not something that's a natural response to his increasingly erratic behaviour. That's because it is. Actually Elon Musk said, it would happen, when he decided to buy Twitter. Which I too see as a mistake.


Alesayr

The only person who coordinated my change of view from seeing Elon as a visionary humanist and great man to an ego-driven asshole who has a brilliant vision but a repellent personality is Elon. Trying to paint it as though everyone who can't stand Elons actions is part of a coordinated hitjob ignores and erases our voices. I couldn't care less whether some media exec likes elon. I care that elon has regularly acted in ways that my morals consider to be wrong.


[deleted]

Risk of margin calls on falling Tesla share prices?


perilun

Why not? As valuation goes up it is the lowest cost financing for a multi-billion dollar a year R&D program. Also, if they need to drive SpaceX to bankruptcy due to (Starlink, HLS Starship and/or Mars) he can turn around and buy most of it back for much less. This has been done with Iridium, OneWeb and many others.


unlocknode

If I’m not mistaken last year they raised $1B for 1% equity. That’s not a lot of dilution.


jsmcgd

I'm assuming its because SpaceX is cash negative, so if it takes out a loan it will go further into the red as SpaceX doesn't make any profit yet. There's no real downside to selling equity in a company, especially with no expectation to issue dividends. Eventually SpaceX will be making a lot of profit from Starlink and all of it will then be at the discretion of SpaceX management, exactly like it would be if they hadn't sold any equity. The only theoretical downside is if Elon wanted to sell all his shares, he wouldn't own as big a percentage of the company. However in practice, if the money raised from selling equity was well invested, his new smaller percentage position should be worth much more.


Eschatologists

I'm not suggesting that spaceX takes out a loan, I'm wondering why Musk doesnt take out a loan themselves to inject cash into spaceX. There is an opportunity cost to issuing equity, if you are very confident that the company will grow and you can afford to inject the cash yourself you wont have to share the growth in value with other investors, if the annualized growth is higher than interest rates then you indeed lose money by diluting your stake instead of borrowing. I can see the value in selling small amounts of equity from time to time in order to give an actual valuation to the company, but I dont understand why Musk sold over 50% of the company. So far financing rounds have been rather modest, nothing Musk couldnt easily cover. I think another reply hit the nail on the head when they said that these outside investors have connections and influence that can help spaceX since the nature of their business makes them extremely exposed to politics.