Hacker News new | past | comments | ask | show | jobs | submit login
Twitter CEO fires two top executives, freezes hiring (theverge.com)
1032 points by danso on May 12, 2022 | hide | past | favorite | 936 comments

So there's two options right - the first is that Parag is for some reason making big strategic decisions about the direction of the company despite the fact that we all know he'll be gone if the deal closes. Or he's making big strategic changes at the behest of the acquirers before the deal closes.

Neither of these things seem particularly kosher moves to make. The question is how to figure out which one it is.

It would seem weird for Parag to be following Musk's orders given how Musk has behaved. It also seems weird for Musk to already have the insight into the company to know specifically who to fire. There's not much advantage to making these changes now.

On the other hand, going rogue and making big strategic decisions about the company really has the potential to burn Parag's reputation for wherever he would move next.

I guess there's a third option - that Musk has expressed a specific view, Parag has a different view, but that they both think that this move is necessary anyway so just got on and did it.

You're discounting the very real possibility that Parag is operating as if the deal will not go through, and is making large strategic decisions in anticipation of that being the case.

For Parag, I don't see it "burning his reputation" at all, considering either a) he's right and will face the tall task of helming a Twitter that continues to disappoint its investors or b) he's wrong and it won't be his problem when Elon fires him next year.

CEOs of large companies that are forced out during acquisitions often fail upward. It really depends on how they behave right before the close. Effectively, the CEO has to advocate for the company and get the most out of the acquisition, and if they do, they are often rewarded (with seats on board or choice of next job). realistically, he will be able to retire for life after this if he chooses, and will be able to select a job offer that works well for him.

Job offer or not, $42 million for doing almost nothing is a great deal.

I'm always curious .. how do these execs negotiate such contracts (where contingencies like getting acquired/fired lead to a payoff). Does this start at the VP or EVP level? I assume there are professionals/lawyers involved in the contract part (representing the exec I mean)?

Smaller orgs VP level. Larger EVP. You almost always retain a lawyer to review these things. Change in control is a very common trigger for a lot of things in most employment contracts of this nature. The downside is you end up with much more ironclad covenants and restrictions. But your comp is often at a FU level if you do get fired so it balances most of the time.

I'd recommend reading "Barbarians at the gate". It will give you a very good idea.

When it comes to levels, those kind of golden parachutes are offered only at top levels. VPs, SVPs, etc. are help and get normal packages when they leave, at least in normal, large blue chip companies.

It's simple.

You say "this company turns over 20 billion a year revenue. If I want to I can flush the whole damn lot down the toilet."

"Pay me to not do a shit job."

Latest in executive compensation research. As advocated by expensive consultancies.

I think some CEOs actually do that. For example the CEO of Boeing certainly decided to flush the thing down the toilet.

Hindsight is always 20/20

You might enjoy reading the book "Pay without Performance: The Unfulfilled Promise of Executive Compensation" [1]

TLDR: Companies don't engage in arms-length negotiation with CEOs. Shareholders don't hold companies to account for various structural reasons.

[1] http://www.pay-without-performance.com/

I've only seen it at the CSuite (and occasionally key SVP levels).... almost always if you're brought in from the outside.

> $42 million

I would be happy enough right now with an extra $420,000!

That would be nice

Not if your one desire is to run large corporations and you're easily bored.

I'd consider myself easily bored, but I think $42 million would give me plenty of novel ways to entertain myself. (I definitely would _not_ want to run a large corporation though, so I guess it's a good thing I'd never get hired for one of these jobs anyways)

Hell, even if you managed a year or two, you’re still walking away with tens of millions that’s pretty close to financial security for the rest of your life.

Tens of millions is only "pretty close to financial security". Wow.

I think there's a part of the HN population that has delusions of becoming billionaires one day, so they talk about tens of millions like it's not much. They'll likely never have either.

Financial security in the Bay Area requires a house there ($2-3M, nowadays) plus $COST_OF_LIVING/4%. This is easily $5M net worth. It's in "two Googlers and a successful exit at some point earlier" territory.

Granted, this threshold is less than $10M, but it isn't orders of magnitude less

All of which is to say that it is basically impossible to stay in the Bay long-term unless you make an absolute fuckton of money.

Well, you do have two other options.

One is to commute in 2hr or more every day. Which a lot of service workers have to do.

The other is to share a house or apartment with roommates (if you're single) or with another family (surprisingly common, because what else can you do?).

These are both lifestyle decisions that differ substantially from what most people think of as "normal", past your 20s.

What I'm saying is, merely living a "normal middle class" lifestyle in the Bay requires absurd money. So I can understand why people act like absurd money is normal.

You don't have to live in the Bay Area. You don't have to commute since they were talking about retiring with $42 millions.

Fair. Anybody with $42M has it made, anywhere.

You don't need $5M to be "safe" in the Bay Area. You do need some money - enough to afford to get a mortgage on a place to stay - but once you get past that, things get easier. The thing is, it takes money to start making money. It takes money to start to be able to afford the things that will make your cost of living go down. It does suck, but it's not $5M.

I used to work in car sales in the bay area. Basically every car salesman and every mechanic at a franchise car dealership owns a home. Maybe they drive 30-75 minutes to work, but they are 25-35 and own a home in California. The older ones own a home within 15 minutes of their job.

That they bought themselves? What's the cheapest home available within an Hour of SF, 500k or more? Do you really think a car salesman barely pushing 100k a year can swing that? Or are you implying that car salesman in the Bay are making top 1% salaries?

I wasn't talking about car salesman that work in SF proper. Yes, 1 hour from there is basically still pretty expensive. But if you can work anywhere 30 minutes outside SF, and then live another 45 further, you own a home. And yes any decent car salesperson is making $100k. I made on average $250k but I was a bit better than top 1%, and I know a few that made more. I suppose you could say I only socialize with high performers. Sure every car dealer also has a few people that struggle to pay their apartment rent. The industry is setup for an good salesperson to support a family. If you can outperform average by 2x, which is possible if you're really on it, you can make 2x+ that amount. Same applies to mechanics that are good at their craft.

If you put $5M in index funds, you’d grow it by about $400k a year (8%) on average, to start. It’s hard to imagine going broke with that by doing “normal middle class” things. For added security, one could add in a part-time job.

8% is extremely optimistic. 4% is more like it, maybe even 3.5%. I'll use 4% for what follows. That's $200k. Take out 20% LTCG, now you're at $160k.

Rent is like $3k/mo, so $36k/yr. Say you have modest living expenses of another $34k/yr. Now you're at $70k/yr to break even. That leaves you with $90k to save/compound.

So, ok, you're doing very well as a renter with $5M invested, even in the Bay Area. And, given that you have more than twice the income you need, you'd probably be ok with only $2-2.5M. As in, breaking even with passive income.

Which would work so long as you don't want to own a house, and so long as markets don't melt down. That extra security seems to cost extra.

9% is the long term annual return of the stock market over the past century.

Sure, but if you retired in 1997 to live off the interest on an investment in the S&P 500, by 2008 you'd have made an annual return of... 0%.

If you used cromd's figures of $5M in funds and lifestyle expenses of $400k/year you'd have spent ~80% of the principal (although you'd probably have reigned in your spending unless you were mad)

A boat doesn't just need to survive the harbour's average water level - it needs to survive low tide and high tide.

4% is the historical number you could take out for expenses in the worst case scenario. IMO it’s not pricing in modern existential threats, such as a war that crosses the ocean, or existing regulatory differences that make it more difficult for larger firms.

Yeah, maybe 4% is all one could manage to withdraw to survive the longest downturns. I haven't dug into that much. But, people are maybe debating different things - some are likely talking complete early retirement whereas my comment was more about "financial security" (or at least the claim it's "basically impossible to stay in the Bay long-term unless you make an absolute fuckton of money").

For me, financial security means something more like: money will be low on my list of problems. I could get more money by turning my attention there. I might have to work, but it could be some low-stress job, and losing it isn't a big deal. I could afford extra care for an elderly parent. I won't be knocked out by most random things that pop up, specific to my personal life, though I can't control what happens to my country etc.

For some, it means they don't have to work at all, and can't be ruined by market downturns that last decades. And further for some others, it means they can survive wars and societal collapse.

I think both are valid to wish for, though at a certain point it's a burden on yourself to control things you can't control. If there's a 1.1% chance of widespread nuclear war in our lifetime, and you want to be 99% certain your lifestyle won't take a hit, one needs to save and spend a ton to be able to weather it all.

financial security is subjective.

Come on, do some math on this. Any engineer at FAANG, even excluding their stock grants, will probably have close to 10M in retirement accounts by the time they retire given max contributions and historical returns.

Oh I agree 100%, personally it’s more money than I’d know what to do with, but I’m also aware that there’s a chunk of users here who’s respond with “well after tax this that, etc etc” with some justification as to why it’s not quite enough, so I thought I’d attempt to cover all bases hahaha.

only on HN

Reminds of that "temporarily embarrassed millionaires" quote ... /cc @sitzkrieg (sibling comment)

Most people spend proportionally to what they earn, so I don't see why one year salary should necessarily provide the lifetime of financial security, regardless of what that salary is.

There comes a point where it becomes increasingly difficult to "spend what you earn." I mean, you can do it with dedicated effort, of course, but even if you're very in-the-bubble, it's hard to think of buying ultra-expensive commodities (boats, art, highly expensive cars), or your third or fourth house, or other things that can plausibly eat up tens of millions of dollars in a year, in the same category as, like, "Well of course I want to send my children to a swanky private school instead of public."

There comes a point where people start buying things like Twitter.

That’s a trap though. It’s far more sensible for most people to live well below their means and create options for their future.

I've stated what I've observed and experienced. Whether it's a "trap" or "sensible" is irrelevant.

Depends on the people. If you want to be safe to retire early, it is a good idea to keep living humbly while you are making a lot of mone and not adopt the Jet Set life.

I've seen example of people selling their company, retiring early and stay low-mid budget. One particular example is very wealthy but live in a small house, drive a 10y old compact hatchback car. You wouldn't know his fortune just by looking at his habits. He enjoy more a BBQ with his neighbors than going to expensive places to eat and help around when someone in the village needs an additional hand. He is still probably spending a lot more than I do traveling on holidays and he has nicer furnitures but he is still doing it like most people do, only a few weeks a year when the kids are out of school. What he has is the ability to justify buying expensive but sturdy stuff that last, instead of things that break and have to be replaced on a regular basis.

Fair point.

But it’s a bit ridiculous to get 42 million USD and not be satisfied. And the original comment is ridiculous to suggest that it’s not sufficient compensation.

If your salary was $25k/year (a respectable amount for the majority of world population), would $1M seem like a lifetime financial stability? I think so. Yet if your salary is $250k/year, it probably wouldn't, and this would sound ridiculous to people who make $25k/year.

If you make 25k/year getting 1M is almost as good as getting 42M, because you are not used to thinking about anything you can do with 42M that you can't do with 1M. However, if your salary has been 10M/year, you most likely can easily see many ways to spend 42M, which are not something you think about often when you make 250k/year.

Does this make sense?

Most people on $250k are just trying to “survive” (as in, have a house and a family) in a high cost-of-living area. If a house costs $2M then $250k is only just sufficient after deducting taxes and living expenses. Their spending is not so different from someone earning $25k in a low cost-of-living area.

There’s nowhere in the world where the cost of living requires $10M/year. To spend that much money you are forced to spend it on high-end luxuries. Of course there are people who could easily consume that amount of money, but most people on that income would put it into investment instead of consumption.

Financial freedom is supposed to cover more than just some standard "cost of living" in a given area. It should let you maintain your lifestyle without having to work for it. Maintaining the lifestyle includes keeping your spending habits, so if you have been spending 10M/year, then achieving financial freedom would mean you can keep spending that much for the rest of your life.

It's a different question how many people actually spend 10M/year - I have no data about that, but I can easily see myself spending that much if my income has been 40M/year for several years. To me personally spending that money would not necessarily mean buying some high-end luxuries. It would probably involve trying to make some changes in the world and influence things. But yes, luxuries and interesting experiences too. If you're interested in this question, try finding more information about lives of famous rich people.

Like lossing it all day trading XD

My one desire is to be financially independent. We don't all get what we want.

With 42 million, he's fine. Time to care about someone else.

not almost nothing. He's a bit of a tackling dummy at this point. That being said, he's the world's best paid tackling dummy. Even if Musk purchase does not go through, not sure how he stays as the board basically said when they agreed to Musk's offer we have no current plans to create anywhere near the value Musk says he can.

Sign me up.

See my previous comments

What fucking sinful country i live in

$42 million is a pittance for a man at his level. VCs with a tenth of the risk have taken home more money than that over the years from several deals. He has also been at the company for a very long time. I’d be enraged at a $42 million exit when I’m a child prodigy who has worked his ass off to finally helm one of the most publicly visibly corporations on the planet.

Huh, it's just a job even at position of CEO. To think he has taken risk while doing his well paid job is freaking hilarious. He did not build the company,nor is he some A level tech celebrity. So 42 million is BIG FUCKING DEAL.

Yeah I was like, wtf is GP talking about this guy is an employee who climbed from SEng to 42m exit in a decade. At no point was he even remotely close to missing a credit card payment; what a sweet deal he's set for life now.

Where are you pulling “he did not build the company” from? Anyone below the executive class is riskless and contributed nothing to the company?

Most child prodigies and most people that work their ass off don't become millionaires, much less ones that can earn a million a year from interest. Also he did receive compensation for all the years he worked, no?

Why are you being intentionally dense? Compensation in the valley comes in the form of stock options more than anything else. This is like saying someone slightly less consequential to google than Jeff dean or Sanjay ghemawat should be happy with $50 million for giving a large portion of their lives to the company. Are you guys smoking something?

Most child prodigies don’t even work in corporate America and a lot of them don’t care for wealth. They’d rather go into theoretical physics or pure math.

No human being needs $42 million for anything, let alone more. I'm sure he'll be fine.

Oh I didn’t know the antiwork idiots from Reddit had found their way here. That’s my bad. I should’ve realized.

The initial ideal of capitalism is, the people who make good decisions capitalize more “decision power” (=money) because it will be good for the future economy to concentrate power in their hands. Those who hold power are the best ones.

It’s just a fun theoretical thought exercise, in which there’s no limit to how much one would accumulate, if their decision making is good to the infinite. He didn’t tank Twitter into the ground, therefore he deserves a good share. In practice, they use this money for themselves instead of reinvesting it into other endeavours.

You need more than that if you want to set up a steelworks or a silicon fab. I understand that you probably mean no human being needs $42 million in pocket money to spend on gigantic houses and medium-sized yachts, but c'mon.

Yeah but he’s no Musk.

I wonder if he will leave Cali to avoid taxes?

Too late for that.

> realistically, he will be able to retire for life after this if he chooses, [...]

People who have enough drive to become CEOs seldom want to retire like that.

There's a possible difference here between "doing things that Twitter and its owner(s) will profit from" and "doing things as Musks wants them". If the two diverge, the first is the winning strategy, burning far fewer bridges than the alternative.

If it's unclear, people who don't particularly care for Musk (aka people who know Musk minus people who want to be Musk) may well start from the assumption that the current CEO was right. And if Musk-era Twitter doesn't succeed as wildly as some (one) person predicts, they stand to look even better in contrast.

I'm not saying that Musk will necessary fail––he's had quite a bit of success compared to, well, anybody. But he's been involved with a few duds, as well, and has set rather high expectations. It's an almost classic case of decision-making under uncertainty and I'd guess a Twitter CEO has seen a relevant case study or two.

I worked at a big company that was being acquired. The bigger acquiring company needed our company to sell off some divisions to avoid regulatory issues. So we were in this "going to be acquired.. one day" phase for like 18 months.

In the meantime our company actually had to tell the a subsidiary of bigger acquiring company.... to sort of shove off on a partnership we had with them.

This subsidiary was crap and they were not holding up their end of the partnership. It was reiterated many times that "while we will likely be acquired by their parent company our job is to operate in the interest of our current stockholders and that best interest is to no longer work with <subsidiary>".

No word if the acquiring company ever responded negatively. By all accounts they understood (and really had a bigger picture in mind).

That situation seemed pretty logical to me.

so what happened?

Company eventually acquired.

Never heard about the subsidiary again.

It maximizes his chance of survival either way.

The probability that Elon is margin called by year end is roughly 40% according to option prices.

- 60% chance you get fired either by Musk or investors if you don't turn the ship. - 40% chance you Musk is margin called and doesn't take over, but still might be fired by investors or acquired by someone else who may in turn can him.

> Elon is margin called by year end is roughly 40% according to option prices

The margin loans will almost certainly be replaced with outside equity prior to closing.

I am wondering what is in it for those people lining up - they are paying 20% over the market value to be locked in with musk.

Tesla is up 995% over the past 5 years.

And it's back to prices it was at in 2020.

Do you think more people bought Tesla 5 years ago, or in the past 1.5 years? Because the latter folks are underwater.

Are you suggesting that twitter will have a marketcap approx worth tesla / facebook / berkshire hathaway / johnson and johnson in 5 years time?


> Tesla has plainly kicked the ass of the European and Asian auto giants

Tesla had 1.4% of all cars sold in 2021, by number of units. Going by revenue it's somewhere around 1%. It is kinda hard to see that as kicking the asses of the competition.

Kicking ass would be more like what happened with smartphones, where iOS + Android went from 0 to >90% market share in the space of five years, leaving Nokia, Palm, Blackberry etc. as brands nobody would assoviate themselves with. Nothing like that is happening in automotive.

Smartphone upgrade cycles are annual/biennial. Car upgrade cycles average 7-10 years.

Not that I expect Tesla to dominate like apple and android have, but I do think we’ll need to wait a few more years before we know the answer.

You're comparing apples to oranges. "iOS" market share is iphone market share, which is still very small but with a huge profit margin, android market share is the market share of dozens of phones brands. Nokia and Palm both sell android phones in 2022.

I don't see how that's comparable to Tesla VS old automakers

Palm and Nokia both used to sell hardware with their own locked in OS, and saw that as critical. Both were big names once.

It would be like if Ford was stuck selling rebranded ‘awesome edition’ Tesla Cybertrucks instead of F150s at 10% of the revenue.

Tesla gets a lot of press. But the flash is always bigger than the reality, except when it comes to stock price.

1.4% is massive for a car manufacturer built from scratch in just over a decade. You can’t really scale car manufacturing the way an existing computer megacorp could scale phone production.

Expensive cars in the emerging EV market. 1.4% is great.

Tesla has 14% of the EV market, VW Group has 12% - and closing fast.

They also have a much larger dealership network.

dealership network eats their margin, plus vw has to discount all of their own legacy sales they cannibalize

It eats their margin, marginally (typically 5% kickback if a dealership meets sales figures, per car) as they're almost entirely franchises.

But that dealer network means when you need your car serviced, or repaired, you're never more than a short(ish) drive away from one.

I don't like a world where the only way to assess someone is by how much money they make for investors. That's a bleak reality, so I prefer to act as though a person's behavior matters in the hopes I might create it by force of will. You can recognize the negative with the positive. Anything else is revisionism.

Other countries and economies have chosen not to reward value-creators for the value they create. So far this has not worked out well for these countries and economies.

The money they make for investors is a direct measurement of the value they create.

This is the mindset I spoke against. Did you reply to the wrong comment?

Not in the short run. In the short run markets can be irrational (which I believe they are with Tesla), in the long run sure

The question is not whether he's been successful. He has been, the question is whether this is the peak valuation akin to Cisco during dotcom and whether he is over leveraged at this point.

Some of that depends on whether Twitter can partially self-fund the acquisition itself over time.

Most likely it can, that much more so if Musk negotiates a lower price. Debt is very inexpensive right now, especially for large corporations with a strong balance sheet. If Musk owns all of Twitter, he gets their $6 billion in cash and their balance sheet has no consequential debt issues.

Twitter is operationally profitable, despite being very poorly run in terms of cost structure. Their margins on sales should be far greater than at present; they have a bloated employee count and have for a very long time. There's no reason Twitter can't spit off $1b in operating income on $5b in sales.

Further, Musk has ~$9b in cash (per Bloomberg), lots of very rich friends (eg Ellison, Google founders, VC billionaires, etc etc) that believe in him, and lots of assets in Tesla and SpaceX he can borrow $10b-$20b against if needed.

That said - I don't think levering himself to the moon is wise and I don't think paying $40b+ for Twitter is smart. Particularly at this point in time (with the global economy shaky, the US economy contracting in real terms, China's economy shaky, and financial markets sinking).

People have kept asking this question for the past 12 years. Meanwhile my TSLA shares bought in 2013 have been doing just fine.

Your shares did well in of the biggest untinerrupted market bull runs in history????

Survivorship bias is a hell of a drug. The real test to see whether it's wisdom or luck is to predict the next Tesla. I don't think many people who point to their Tesla stock performance as vindication could come up with a repeatable theory of investing. If they could, their TSLA gains would be nothing next to their next investments.

That's how I know people who make that argument don't actually know anything. It's like someone still talking about that great touchdown in high school at 50. Where's the next one?

You don't see Elon Musk bragging about his $22 million from Zip2.

Those companies don’t come often, but you don’t need many winners to be all set.

I saw Google before the rise, Amazon, Apple, Bitcoin and Tesla. I only acted on Tesla after seeing all the other ones before but didn’t put my conviction into action.

It’s not very hard: you read HN daily/weekly and listen to the trends. Pick one that keep coming and interest you and dig deeper, you are not in a hurry as HN is way early in the cycle, the danger is being too early and giving up before it catch up. (Bitcoin)

Pick one big potential winner, calculate the expected value as good as you can Good/Bad scenario, place your bet, let the time do it’s thing.

An example of a bet I didn’t do: Bitcoin was 1$, I knew that if it worked very well it could go to 1M$. Let say you think that the probability of success is 20%: (1M$/1$)*20% = 200 000 to 1. You then place let say 5k$ on bitcoin and forget about it for 10 years.

At the moment, I don't see a trend that catch my attention beside AI and for the moment I think Tesla will be the winner in that trend.

Look up the book: one up on wall street

When evaluating whether the shares "did well," you can compare to the rest of the market.

Since mid-2013, the S&P 500 is up ~150%, Nasdaq is up ~300%, and TSLA is up 3290%.

For the same sort of consideration for which one would buy a newspaper in the third millennium: there is something to gain from directing a powerful megaphone, even if it doesn't make money directly.

I don't have any background in finance, but it seems like there are a couple of possibilities.

First, given the recent precipitous fall in the NASDAQ, there's speculation that Musk will lower the offer (which seems quite reasonable).

Second, I'm not sure there's any reason to assume these new equity investors are paying the share price Musk is paying. If Musk pays $54.20 a share, and needs to raise 25% of the acquisition cost by issuing new equity, he could sell 49.99% of the new company at say, $30 a share to his partners and still raise the required capital.

Leveraged buyout at an inflated price in the short term. Banks backing the loans will get guaranteed interest payments on the loans plus a lucrative contract debt servicing and consulting fees in the medium term. Long term they'll IPO again and/or find a fool to acquire them.

Well I bought TWTR at it's peak... I'm voting my shares against a buyout (won't matter), mostly because it locks in a loss that I feel would have been recoverable in the next 5 years...

Have you considered opportunity cost of not using this money for other investments?

I cunningly bought TWTR at the top too and thus was hoisted by mine own petard. basically as a retail investor I have no leverage so all in all I'm happy to just get my money returned.

Right it seems unlikely to believe that Twitter is undervalued but that nothing else is equally undervalued to invest in after getting a small profit off of the Twitter investment.

If you believe in Matt Levine's Elon Markets Hypothesis, paying 20% over market to be in close proximity to Elon's Twitter feed might be a bargain.

Seems an expensive bribe.

Being “locked in with Musk” has been one of the best investment strategies of the last decade.

The more likely scenario is that some of the financial backers like Larry Ellison will ask Elon to renegotiate the buyout price due to current market conditions and the deal will fall through.

Twitter is worth a lot less than what it's trading for. Musk's bid is rather idiotically high. Twitter's shareholders will be desperate if they start to see the full mauling that other prominent, hyper overvalued tech stocks have enjoyed lately. They will take a lower offer accordingly, whether that's from Musk or other. The stock is going into the $20s if they don't take an acquisition offer from someone.

> Musk's bid is rather idiotically high

Well, it was either $54.20 or $69.00 (I suppose he could have gone for $44.20 but would that have tempted anyone?)

A real meme-lord would bid $42.069

Twitters P/E ratio is 186.12!

The incoming cashflow is substantial and if they simply cut off the R&D it would be a very profitable company.

Generally most of software development (including what you would think of as maintenance) is counted as R&D for tax purposes

> The probability that Elon is margin called by year end is roughly 40% according to option prices.

The way tycoons frequently do this involves putting collars around a significant portion of the margined stock (and for a sizable position like this, the trade would flow through to option prices on tesla and the stock itself via delta hedging or whatever the trade desks are doing as part of the trade)

> The probability that Elon is margin called by year end is roughly 40% according to option prices.

This sounds like “two more weeks, MOASS, trust me bro” level of analysis. How can you possibly have enough insight into Musk’s financial holdings to make such an assertion? Nevermind the structure of the Twitter deal itself, which doesn’t exactly require him to fork over $40 billion in cash.

Musk has published his margin loans backed by tesla stock. Those come with a clear margin requirement iirc.

It is then easy to calculate 'at this price, the loan will face a margin call'. Options pricing implies a probability of a certain price being hit by a certain time. So they imply a probability of the margin loans Musk has getting a margin call.

Ofcourse, getting a margin call wouldn't mean the loan falls through. Guessing that would require deep insight into Musks personal financials.

>The probability that Elon is margin called by year end is roughly 40% according to option prices.

How did you deduce this from options prices? IV?

The crypto crisis should significantly diminish musk wealth no?

No, why would you think that?

His wealth is mostly owning 20% of Tesla, plus some extra few billions from owning significant fractions of SpaceX, The Boring Company, and Neuralink. Presumably there’s some cash in there as well, but on his scale a hundred million is a rounding error.

It still confuses me that being part-owner of an old dot-com payment company, part-owner of a mid-sized car company (by number of cars sold), and part-owner of a (very good) rocket company make a person richer than anyone has ever been in the history of the planet, but that's probably because I just haven't looked into it enough.

It's confusing because wealth in this case is based on valuation, which in the case of Tesla is based entirely on what some people think the company will do, monetarily, in the future. In my mind, Bill Gates is truly richer than Elon, because he has a diversified portfolio and could convert more of his holdings into other, different holdings, with less friction.

Bill Gates would be straight up wealthier than Musk if he didn't donate half his wealth to his foundation. If you consider that part of his wealth (in the sense of total lifetime income so far, not figure spending power, so subtracting off personal consumption/spending), you don't have Musk being suprosinly more wealthy.

Considering the Bill & Melinda Gates Foundation is essentially chaired by the two directly, why wouldn't you consider that wealth (that they get nice tax treatment for donating to) isn't theirs?

Once he has donated it to the foundation, it is no longer fully under his control. It is a charitable organization, and subject to many laws about how the money is spent.

So it's never included in any measure of his total wealth.

(GP's point is that if it were, and also all the past charitable spending was, then Gates works be richer. (

I'm really confused how you're confused. What is a better way to become the richest person than by owning and growing a series of hugely successful companies that provide products and services to people?

To my knowledge, none of these companies were run at a profit during Musk's involvement. While this is a normal part of growing a business, it leads to a bias on what people think could happen - rather than what does happen.

How much money did musk really make? how much of it is an artifact of monetary policy.

80% of Musk's wealth is either confidence in Tesla's future, or memes, depnding on your perspective. It's not even pretending to be about completed work.

Let's see if TSLA is over 500 two weeks from now...

It's on free fall. Btw I just did an overview of the current EV market and there isn't even one car maker that is able to make them under ~35K$ VW and a few others will sell in huge volume next year (VW 1.2 million in 2023 actually, much more than tesla) but I see currently no validation from the car makers that they will reduce the costs. The main bottleneck is apparently the price of the materials and I don't see why they would get lower considering demand is exploding. That's why I studied the hydrogen market and it looks like a lot of hydrogen cars are coming in the next two years, they will have greater range than EV and to be seen but are likely to be cheaper to significantly cheaper. It's true that the availability of hydrogen is an issue but it will progressively be solved, California is already covered for example. So yeah current bet is the démocratisation of carbon neutral cars in massive volume will be via hydrogen, unless EV materials price find a solution.

I think that's the big difference that causes confusion here: Musk is wealthy, not rich. The companies are worth a lot, but generally not producing dollar bills for him. His ownership in companies worth a lot is why he's valued so high, rather than strictly how much money or cash leverage he has.

The majority is due to the fact that Tesla's valuation skyrocketed in 2020-2021. The second-largest car maker by market cap is Toyota at 217B. (They're about double VW group, the next-largest.)

Tesla's market cap is now 740B. For a while there it was over 1T. Here's a fun visualization:


VW will produce more EV next year than tesla (800K)

Hopefully they will produce 800k EVs. In 2020, they produced 263k EVs, so they'll roughly need to triple production.


Tesla produced 936k cars last year, so VW will probably need to build more than 800k EVs to surpass Tesla in 2022.


Interesting. BTW they target 1.2 million in 2024

*In 2021...

That "mid-sized car company" has revolutionised an ~120-year industry while still managing to remain at the forefront, that's why its valuation is so high (even though I also do believe it's over-valued).

I'm not saying this as a Tesla-lover nor as a fan of Musk, in fact, as a lover of gasoline engines and of cars in general I see this as a tragedy (I regard EVs as refrigerators with some wheels attached), but it is what it is.

Where is the revolution? There are competitive cars vs tesla for electric. Even if tesla have an edge, it's evolutionary, not at all revolutionary.

Tesla produced the first ICE-equivalent EV sedan that was not merely a "compliance vehicle" in decades.

Then, it turned out, people bought them by the hundreds of thousands, single-handedly recreating the market for EVs.

Then, other manufacturers noticed, and started realizing they might be left behind if they didn't take EVs seriously.

Now, sure, there are many competitors, but even still they have only been built in small quantities.

How long Tesla's edge will last is an open question, but there's no question that Tesla has single-handedly exploded the demand for EVs in the consumer vehicle market.

The real ace was releasing an EV sports car, the Tesla Roadster. That's what caught people's attention. They were able to see how EV drivetrains were actually better than their ICE counterparts and that electric motors can do much more than drive golf carts – despite having powered everything from submarines to locomotives, people still thought they were weak.

Otherwise, Nissan would have been Tesla. They have produced some of the first practical EVs, way before Tesla did. Unfortunately, they made them for the Japanese consumer, not for the average american. At least not initially.

I daily drive a Nissan LEAF. Any Tesla model is vastly more practical as an only car.

I love my LEAF, but a little over a dozen times per year, I have to trade cars with my spouse to accomplish some particular day's driving.

You’re right that the Tesla Roadster led the charge — no pun intended — for EVs as uncompromising vehicles.

But I don’t think Nissan would’ve been Tesla: they didn’t think people would pay for a full-range EV (and still don’t, looks like?) and didn’t prioritize it. For many Americans that means the LEAF could not be their only vehicle.

The supercharger network also played a huge role in normalizing EVs, in particular in making the Tesla Model S the first car you could convince yourself was a great car that “happened to be an EV”. The S isn’t perfect, but it doesn’t have any huge, obvious EV-related deficits, like the LEAF’s range and charge time.

Nissan would never have been Tesla. They might have been the largest producer of EVs if history had run a different way, but that's a million miles away from being Tesla.

I am not an expert in cars and yet I know the Renault Zoe was commercialized in 2012, the year of the model S, for a reasonable autonomy and a much, much cheaper price. I believe tesla were the first to sell low volume, pricey EV cars. Their range and timing advance is only because of choosing the rich over the middle class, aka a lesser impact. Although it's true EV were and remain not cheap but it's getting quickly much better and it's definitely not tesla that will lead the dance of democratisation

I'm no Musk fan, but let's be honest, Tesla released the Roadster in 2008. An expensive luxury product, no doubt, but years ahead of the Leaf or Zoe.

And the Leaf looks like the typical electric cross between a clown car and a golf cart. The Roadster was based on a Lotus Elise. It looked great.

If you took the badges off, I think most people would have a hard time telling the LEAF (EV) and a Versa (ICE) apart. The LEAF is no 911 or Jaguar E-type, but it's not a "hey, look at me; I'm electric!" clown car either.

Maybe the current generation. I recall the original Leaf looking very clown-car-ish but I guess that's subjective.

Didn't the Zoe have a 22kwh battery? I don't doubt that it was practical for some things, but that was exactly the kind of car that many (especially in the US) used as an example of the "impracticality" of electric back then.

it had a 210km range for the first iteration and 1/3 of the model s https://www.renaultgroup.com/en/news-on-air/news/renault-zoe...

Don't forget the importance of charging either. When the 3 came out, GM was considering the Bolt a direct competitor. They had the mindset that people were only buying these as city cars.

To this day, GM sells that "direct competitor" with a ~55kw charging limit.

Tesla is what made the other manufacturers realize that people were willing to wait 15-25 minutes on DCFC while road tripping electric cars.

By the time Tesla had sold 100,000 Model S cars in the US, Nissan had already sold over 110 000 Leafs.

Tesla created the market for high-performance EVs. They did not create the overall EV market. The high-end market is only a small part of the numbers.

The Leaf that Nissan sold while the Model S was Tesla’s only sedan (ie 2012-2017) was not an ICE-equivalent vehicle. It was explicitly a city vehicle with a < 75 mile official range, an effective 40-50 mile range, and no fast charging.

If “high-performance” means “can handle the daily driving needs of > 50% of the population” then I guess you’re right, Tesla only created that market.

The daily-driving needs of 95% of the population are incompatible with a 100k$ car. The Leaf fit the needs of more people simply by virtue of having an acceptable price.

The Zoe also had a 150km+ effective range, which is more than enough for most people (maybe less so for Americans).

zoe was 210km and very cheap, it's mystery why it didn't took off

The Model S was the first EV that “happened to be” an EV. You didn’t have to compromise on range, power, comfort, or anything else to own it. That’s why it succeeded. It was a great car, and happened to be an EV.

Tesla’s chief designer himself: “We are past the idea of an environmentally friendly vehicle needing to look different. People don't want to sacrifice anything, including style, to own an efficient car.”

You definitely needed to compromise on range power and comfort. The 60kWh version was more expensive than an BMW M4, S5, or A6, all in more powerful, comfortable, etc...

You definitely had to compromise to own it, on almost everything aspect. Despite everything else, people were buying it because it was electric.

Every $100k vehicle is different, that’s not what “compromise” means. And the Model S had comparable power and comfort — not for everyone of course — to the cars you mention. Obviously people were buying it because it was electric, that added $30k in battery cost alone, you wouldn’t do that if you didn’t care about it being electric.

But my point is that could do everything an American expects a baseline car, like a Honda Civic, could do - it worked as a car in addition to being electric, which is more than can be said for the Leaf and Zoe, on range and charge time concerns alone.

The Model S had far inferior comfort, especially the 2012 version. It got better. You had to compromise on everything in exchange of getting an electric car.

> But my point is that could do everything an American expects a baseline car, like a Honda Civic, could do - it worked as a car in addition to being electric, which is more than can be said for the Leaf and Zoe, on range and charge time concerns alone.

Sure, at 100k$, which is too much for what an American expects of a baseline car. I am sure Renault and Nissan could have done it to if they had multiplied the price by 4, but then it would defeat the entire purpose of a practical everyday car. It's like saying that Ferrari makes practical every day cars because of the GTC4Lusso.

I can't tell if either I'm doing a terrible job making my point, or you're deliberately misunderstanding me.

Let me ask you this: The Model S outsold the Leaf and the Zoe, and helped launch a new car company that has now sold more BEVs than any other manufacturer. Why do you think that is?

One possibility is that they made EVs that many people wanted to buy, and people bought them. I'm proposing that this is the case, and the fact that the Model S sold well despite costing $100k is an extremely strong indicator of this.

New EVs, even those from established manufacturers, are emulating Tesla, not the Leaf or Zoe.

Without Tesla, we may have had many Leaf or Zoe-like vehicles, but given how uptake of those vehicles went, it seems unlikely that we'd be where we are today -- in California, in 2021, BEVs were ~10% of all new vehicles sold.

Personal opinions of the cost or style of Tesla's EVs aside, one can't deny that Tesla made EVs attractive in the eyes of Californian consumers, and as goes California, so goes the world (for better or worse).

"The high-end market is only a small part of the numbers" correct, but in a parallel universe where Tesla didn't exist & the typical EV looked & performed like a Leaf, would anyone actually want an electric car? Marketing and psychology are important.

Sure, as evidenced by the fact that more people bought cars that performed like the Leaf and Zoe than Model S's.

Also the Renault Zoe looked just like the Renault Clio, that is, a normal car.

bought != wanted...

> There are competitive cars vs tesla for electric

It is my belief that those "competitive cars" wouldn't have happened if it hadn't been for Tesla.

That is quite unreasonable to expect. The Renault Zoe came out at around the same time as the Model S and had over 150km of reasonable range, at half the price a Model 3 sells at today. It was already competitive.

I doubt many people choose between the two though, they're very different propositions.

150km of range is wet shit

150km of real world practical range is more than adequate. It's only 50% less than what the model S was when it came out, which is more than enough for the majority of people in the world.

> It's only 50% less

Do you realize how bad that is? People had to adapt to the S limitations.

no it was 210 km

MySpace, BlackBerry come to mind.

At least those were new markets.

At the end of the day you can't explain love and people love Elon Musk. Guys from all over the world are in a sort weird parasocial relationship with the guy. That never happened with the CEO of MySpace and BlackBerry

I feel like the growth of people that bash him is higher than people that worship him. In any case there is a parasocial component to it indeed.

I think you will find a much bigger 'silent mainstream' of those who Respect him for the significant progress he's brought into our world.

Worship and bashing/hate are the domain of the crazies/extremists/zealots who are a vocal minority, really a small proportion of the world. Most people thankfully are more balanced and rational in their perspectives.

Nissan was selling the Leaf after the Roadster but before the S/X/3/Y.

The Leaf and the 3 basically met in the middle at the same time at about the $45K price point for similar cars.

Tesla was only first in the category of outrageously expensive cars for virtue-signalling rich people who fake-care about evironmentalism. And fake self-driving.

I bought a top-spec 2015 LEAF for $33K before $10K of incentives. If someone paid $45K for a LEAF around the 3's launch, it better have had $10K in cash in the trunk.

Looked at another way, if the LEAF and 3 cost the same, would many people have bought the LEAF?

Similar cars? Sure, they both have four wheels and are electric. I don't see many similarities though. Tesla's emergence put the world on track to end ICE cars at least a decade sooner. That is a lot of CO2 that will not be put into the atmosphere. Getting people with expendable income to fund it is both a smart strategy and very equitable.

Their recharge network still sets them apart as well.

But why? Did tesla open source key scientific innovations in the scaling of batteries? Don't think so. See e.g. The seres f5 from Huawei. I don't know wether it's great but about the main metric, it has a higher range than teslas (1000km)

Zoom out a little and try and think about the bigger picture.

In many industries, you can see these "bar-raisers."

Starbucks didn't invent coffee, but they created a mass market for a more premium sort of coffee in a country that previously didn't see coffee as something more that a thing you chug down in the morning so you can wake up.

Nintendo didn't invent video games, but they raised the bar for home consoles after the "great video game crash" and have repeated the feat several times since despite rarely if ever being on the cutting edge of tech.

And so on.

Tesla did something similar. Previously, electric cars and hybrids were seen as dorky and decidedly uncool by most. Tesla changed that public perception. It's hard to imagine the "luxury" electric car market existing without them. Perhaps another company might have accomplished the same feat, but Tesla was the first one to pull it off.

From a raw innovation standpoint, these advances are huge because by creating new market segments, they ensure a flow of money into those markets. Tesla's expense has paved the way for billions if not trillions of dollars into EV R&D and battery R&D. That matters, a lot.

This is a bit of a "why dropbox when i can rsync" comment.

Tesla brought glamour and practicality to a field stymied by boredom and theoretical concerns. They pledged to build an EV people would actually want to use, bringing all the latest tech to drive UX with no regard for tradition. They set to solve consumer problems, and they are succeeding in doing that.

Great drive UX as opposed to what? Have you driven a modern Mercedes of the higher price tiers? They're pretty damn great to drive or be driven in (comfort and fun wise), but they don't have gimmicks like the door thing and such. If you're talking about those gimmicks I disagree, and if you're talking about "motor/battery/esc technology" I also disagree, they didn't innovate anywhere, they just hit the right market with their product in my amateur opinion.

If they "hit the right market" it means that market had not been hit before, so by definition they've done something new.

I don't have an interest in Tesla nor do I particularly like Musk, but objectively speaking, they must have done something right - they started a mass-car company from scratch in the third millennium, something very very hard; they popularized a technology that had failed to get traction for decades, and have taken the fight to behemoth corporations that had been bearish on the sector's overall future since the '90s. That simply cannot be just marketing or "gimmicks".

Glamor? Sure. Practicality? Eh. Maybe for daily commuting. When the IC companies convert over, Tesla shareholders are going to feel a ton of pain. The novelty will have worn off and the company will still pace at a mere fraction of its competitors. And at the very least, they'll all have vastly better QC than Tesla.

> Practicality? Eh.

The "supercharger" network is something that no other manufacturer was doing or was seriously interested in doing, and it's an extremely practical concern.

> When the IC companies convert over

... a lot of them they might well end up buying batteries from Tesla. Tesla will also continue to be the benchmark against what EV will be measured, in the same way Ford continued to be a reference for decades after competitors matched them.

Aren’t most citizen travel miles from daily commuting and going to nearby shops?

The only people who buy a car for their median usage are people who can afford two (or more) cars.

Everyone else has to buy to cover the 99% pctile or they’re screwed when they need to do something somewhat unusual (long drive to grandmas house, move, vacation, family emergency, whatever).

And for those who say ‘just rent!’ - I’ve tried, and most of the times you’d want to, you can’t get a rental, because a bunch of other folks got there first! Rental companies can’t buy enough cars to handle peak usage a few times a year.

Yes, but people don't buy vehicles simply for commutes, and IC vehicles will be around for decades for actual work. Nobody along the gulf or southern east coast is going to be buying an electric car as their sole mode of transportation if they have any common sense.

Depends on one’s definition of common sense.

If 90% of the time one can own a median vehicle wherein they never have to go to the gas station, the vehicle lasts 1,000,000 miles, they aren’t emitting CO2, and gas prices go past five dollars…

it might be common sense to use the savings from the situation to rent vehicles to satisfy the other 10% of your needs.

"Common sense" = "I want to be able to get out of town without being stranded on an interstate when evacuating for a hurricane when traffic comes to a standstill and there's no way to recharge."

But hey, maybe your idea of common sense is to sit around 16 feet in the air with 120 mph winds blowing against the side of your moving brick.

That’s a very specific location dependent common sense, the same reasoning could be used to justify purchasing nuclear bunkers if you live in Finland.

Tesla dragged the rest of the auto industry, kicking and screaming, into the EV business.

EV was, at best, a curiosity and definitely nobody's main focus, until Tesla first showed EV cars are not golf carts (with the rooadster) and then that they can be a desirable higher-class sedan (with Model S).

If Tesla went bankrupt today, we'd still be firmly on the path to phase out ICE cars.

This was totally unconcievable just a few years ago. Tesla did that.

> Tesla dragged the rest of the auto industry, kicking and screaming, into the EV business.

I would say that the advance in battery technology, the laws introduced by state of California and north european countries did more than Tesla ever did.

Also the Renault Zoe, still top selling EV cars in europe, had her first concept car showed in 2005 and was on sale only 5 months after the Model S in 2012. The Leaf also predates the Model S.The 1st generation Tesla Roadster sold poorly like most other contemporary EVs and most of the sales happened in her last year in 2012. It was as niche as all other EVs in the market in its first 3 years of commercial life. The Mitsubishi i-Miev and its Citroën and Peugeot variant outsold the Tesla Roadster by more than a factor of 10. Almost 30000 cars between 2008 and 2014.

What Tesla achieved was showing the wealthy people they could greenwash their way to the same energy wasting life by going EV. A good publicity stunt.

Zoe was a concept car, as was VW eUp. At the time, established car companies were doing concepts that looked like golf-carts and taking about "e-mobility".

Look at i-Miev and the Roadster and tell me which one do you think a typical car lover would love more. If you think that would've taken over the car market .. then you're definitely not in the same circles I am :-)

Other car makers started paying serious attention only when Tesla inexplicably didn't go under and Model S started to be a success.

The first Zoe was a concept car, the second one was a production model and it didn't popup from anywhere. It has been the most sold EV in europe for many years already.

>Look at i-Miev and the Roadster and tell me which one do you think a typical car lover would love more. If you think that would've taken over the car market .. then you're definitely not in the same circles I am :-)

The car industry do not care what the typical car lover love more. They have been a dying breed for more than 3 decades. The i-Miev and derivated counterpart sold 12 times more than the roadster because they are actually usable things and not enthusiast toys. It even outsold the Model-S in all the other markets than USA when they were both available.

The Model-S,X,3 and Y success came much later. The automotive industry definitely had a more cautious approach in the upper end segment but they weren't sleeping.

citation needed. many of these companies had documented plans to transition to primarily electric vehicles over a period of many years. why is it that you are so convinced that this market shift was causes by one brand? is there any evidence other than observation?

To answer your question, they did open source their innovations. In the future you should consider not asking rhetorical questions that you don't know the answer to. Also, when you don't know the answer, you probably shouldn't pretend to know. Other people might make the mistake of thinking you are informed rather than a productive citizen of the society which exists in your imagination.

As to why - ICE dealers didn't want to lose recurring revenue streams and ICE manufacturers didn't want to disrupt the means through which they would service the loans that they took out to build out their present ability to manufacture at scale. The incentives were perverse and in some cases still are perverse enough that the ICE industry has to be forced to help kill itself off, rather than dying willingly because it is right.

I assume revolutionary in that other companies have only really started taking EVs seriously due to the success of Tesla.

People constantly attempt to pretend Tesla didn't spark the EV revolution, because they can't stand to give Musk and or a US company credit.

It's the same reason they aggressively pretend Apple didn't spark the smartphone revolution (when it all very obviously derived from the iPhone and its dramatic impact, right down to the design of the phone and interface being copied by everyone else).

It's the same reason if you say the US invented the Internet here on HN, you'll get confused replies by people from outside of the US that are entirely ignorant of that fact, because of foreign revisionist history and the desperate desire to deny the US credit for its vast accomplishments (the America bad brigade). The same goes for eg the transistor, microprocessor and countless other prominent technologies that revolutionized the world.

So what?

It's still a business and it is tiny compared to the big players. Tesla is only a slightly better value than crypto given how insanely overvalued the stock is. If the company had an $80B market cap, it would still be vastly overvalued.

If Tesla had a market cap of $80B it would be trading at 6.06 times Q1 earnings annualized. Having grown revenue 81% and gross profit 147% in the prior year…

It’s currently undervalued at 10x that price.

Re being small: its operating income was greater than Toyota in Q1, and it has two new factories that are yet to ramp production.

Tiny compared to ICE sales which will soon be regulated out of existence in many countries in the coming decades.

Nissan and Renault took EVs seriously before Tesla came out with the Model S - Renault was working on the Zoe since before 2008.

Renault were working on the since before 2008 (2005 apparently), yet they only brought a product to market in 2012.

The Tesla Roadster was developed around the same time, yet deliveries started in 2008. By the time Renault got around to actually making the Zoe available to customers, Tesla had been selling the Model S for 6 months. I don't think they were taking EVs particularly seriously if they took that much longer to put out a less sophisticated product despite having vastly more resources at their disposal.

Sure, because the Tesla Roadster is half a car, and cost is no object. They literally took an existing car, and built an EV conversion kit, money be damned.

Making the first mass-market EV was going to take multiple years, no matter what. You need to engineer the entire car, at scale, and you need to hit a price-point. Tesla didn't have such an issue. I can't stress enough how much more difficult it is to make an affordable product than one where price is no object.

The revolution is in manufacturing and vertical integration: you have to look at margins. Tesla’s operating margin was 19.2% in Q1, and is apt to rise. Very few other companies even make a profit on their EVs, and none that do are anywhere close to Tesla’s margins, to my knowledge. This means that nominally competitive electric cars aren’t. In principle Tesla could squash its pure EV competitors by selling below their cost of production, and any legacy auto company transitioning to EVs will be in a similarly dire position.

Incidentally, these margins are also far higher than those of ICE manufacturers. For example, Toyota in Q1 had lower operating income than Tesla, despite having 4x the revenue.

There is no revolution to speak of. Tesla is an evolution in the high-end EV market. In the mid-range market Tesla was late to the punch and faces stiff competition, and in the low-end market they aren't an entity to speak of.

There's no competition in the mid/low cost market - there are no mid/low cost EV's. The leaf rides like a bottom end ICE compact and costs as much as a very nice ICE sedan, and not really that much less than a low end tesla. Honda/Ford/Toyota don't have anything in the EV space. They might have something on their web sites, but no dealer will have them in stock.

Of course there are low end EVs. The Wuling Mini EV (which is the worldwide best seller iirc) can be had for 10,000$ with 200km of range. Also, at price of a Leaf or Zoe, you don't get a high end sedan, you get a Honda Civic, which is one of the cheapest sedans.

> in the low-end market they aren't an entity to speak of.

So... like Apple?

Far more people can afford iPhone, iPad, MacBook Air than can afford any Tesla car.

iPhones are in the low-end market because you can buy them used at reasonable prices. You can get an iPhone SE 2020 for less than 200$. You can't get a Tesla used for 5000$.

Well, refrigerators killed the ICE industry :D

What about the Thanos car though?

> part-owner of a mid-sized car company (by number of cars sold)

Because the market doesn't, and shouldn't, value things solely based on a snapshot of current business, as opposed to a projection of future business, based only partially on the current snapshot. A phrasing that gets at the market's thinking looks more like "A car company that effectively created the electric car market, right before the entire industry started making credible commitments to switch primarily over to EVs, all while being the most successful company at getting some degree of automated driving into consumer hands and awareness". Your phrasing implies "pre-Cruise GM, but with less sales"; it's no wonder why you're confused.

Note that I'm not claiming that Tesla is appropriately valued right now, and as someone who works in AV, I think their approach to self-driving is misleading and irresponsible. But it sounds like the bulk of your confusion comes from a significant misunderstanding of what the stock market _is_.

The stock market is not about retributing merit though. When the EV market will be very significant, there will be no strong reason to choose a tesla over dozens of alternatives. There will be Huaweis/xiaomis equivalents for cars.

Not to forget much more strong brands outside the tech circles. It is not like all of Porche, Ferrari, Aston Martin, McLaren and so on just drop dead and stop producing cars. And these have much bigger brand value for traditional customers than Tesla will ever have.

As I said, I don't think tesla is properly valued right now (though I haven't looked into their financials rigorously enough to have a strong opinion).

The market is betting on Tesla being "Apple for EVs", with a combination of first-mover advantage and innovative secret sauce. Apple similarly had competitors but an Apple bull in 2008 is a very happy man today.

I was narrowly responding to the parent comment's misunderstanding of what valuation is: specifically, the fact that it includes more than simply the current state of the business, incorporating future success as well.

"Tesla's market prices relies on super optimistic assumptions" is a sound complaint. "Tesla is a midsized car company" is a nonsensical one.

> But it sounds like the bulk of your confusion comes from a significant misunderstanding of what the stock market _is_.

I think OP would not be the confused one in 6 months time.

Stock market only cares about the future when people care about the future. AKA when there is optimism in the air.

The 2015-2022 wave of optimism was quite frankly uncalled for and overextended given the reality at the base level. Especially what happened 2020-2022.

> I think OP would not be the confused one in 6 months time

Apologies, but this doesn't make any sense. The OP referred to the current size of Tesla ("mid-size car company"), with no reference to future cash flows, which is what the majority of most stock prices are made up of.

Looking at where tesla will be in six months _is_ looking at the future, which is the exact opposite of what I was remarking on. If the complaint had been "Tesla is overvalued due to irratuonal exuberance that its future revenues are unlikely to deliver on", I wouldn't really have any disagreement.

It's all about the car company. This company only sell cars for a rich elite but the market bubble over it is the most remarkable of modern times.

I'm not sure if the target market will be even the elite, but upper middle class. Which happens to have gotten rich working in semi-associated markets.

Yeah, I know a lot of "upper middle class" folks in the US who have bought Teslas.

To be slightly more quantitative, we're talking about folks who make roughly $100K and up, particularly the ones who and don't have kids.

So, roughly the top 15% of earners in America.

Well for one thing you're downplaying several massive, global businesses.

PayPal is a $25b sales, $4b operating income giant in the financial sector (payments / payment processing specifically). They have an $83b market cap and have sales equivalent to Germany's largest bank. Musk doesn't own a meaningful part of PayPal, it plays no role in his present wealth (other than he sold his ownership stake in PayPal to fund the early days of Tesla & SpaceX).

Tesla is very obviously overvalued by a lot (by $400b-$600b at least), there's no rational argument against that. However being a major owner of BMW, which is perhaps what Tesla is best compared to in size and profitability now, is still a rather dramatic financial position to have (obviously). If we (when the market does) adjust Tesla to a more rational valuation, Musk would be a lot less rich, but still among the ~20-30 richest on the planet. Owning 16% of a segment-leading, tech-leading, growing car company that generates $12-$14b in operating income, is a very good business to be sitting on.

SpaceX is a lot more than a very good rocket company. Their connectivity business will likely be worth tens of billions of dollars in the future. No other entity on Earth can presently match what they've accomplished in rocketry and satellites, that includes China, the US Government, Russia, or their corporate peers. The connectivity network they're building is exceptional and very, very difficult (and expensive) for others to compete with. The value of their ability to deploy zillions of satellites rapidly, will increase dramatically as more uses are figured out for such constellations (the US Government in particular).

> Owning 16% of a segment-leading, tech-leading, growing car company that generates $12-$14b in operating income, is a very good business to be sitting on.

Every rational thinking person sees Musk and his behavior and throws any financial statement produced by Tesla straight into the bin.

They are cooking the books 100%. Musk believes in manifestation, self-fulfilling prophecy and faking it till you make it.

In the early days of PayPal he'd order to get parts of old fridges, paint them black in order to convince investors that PayPal had "supercomputers"

Probably the deciding factor is he owns a relative large portion of those: Almost 20% of Tesla and almost 50% of SpaceX

Compare to Jeff Bezos, for example, who owns 10% of Amazon

> a person richer than anyone has ever been in the history of the planet

Tesla's P/E ratio is currently 106. I have no idea why Tesla is so expensive.

Tesla is currently valued at over 20x Ford even though Ford did 13x Tesla's revenue last year. That stock should have dropped through the floor a long time ago.

It is because (some) people believe/have faith in Musk. To some, he is a icon/leader to follow blindly. They trust him a lot.

Which is because, his work/impact as ceo is visible on company and industry levels. contrast that with mba shortsighted ceos and/or ceos who sit on their assess waiting for golden parachute to deploy (thats the sentiment, irrelevant if unfounded). Charisma and beeing somewhat casual/releatable person on tv also helps.

Only makes sense if Tesla becomes something else other than a car manufacturer (robots, robotaxis, etc).

If it's just about EVs they should soon be priced below Ford. Even self-driving is insufficient as long as a driver needs to pay attention. Other companies are catching up - who cares if they need more hardware and can't do just vision, it's becoming cheaper.

Like a power company with a nation-wide charging network?

A lot of the richest people in history (other than royalty) just owned one part of one company. Sometimes a car one. Why's that surprising?

I think Mr Musk will no longer be the world's richest man by end of 2023.

The most successful payment company, the top car company on terms of valuation and the top rocket company. We've never seen that profile. Usually it's someone who had monopolized an industry like Gates or Bozo doing under one company.

That's kind of arbitrary because Microsoft is an OS, apps, computer, and peripherals company; and Amazon is a retail, logistics, and cloud services company.

Tesla is a battery-based company, but could also have been a transportation company and included Boring and SpaceX.

And Mastercard and Vida are both bigger in payments than PayPal. And PayPal was mostly Thiel's Confinity, which merged with Musk's X.com bank.

Corrected for inflation, John D. Rockefeller is probably the richest American ever.

Hmm, according to this calculator [1], Rockefeller's net worth of $1.4B in 1937 would be worth $28B today.

Elon's is around $240B, so it sounds like 10x the amount.

Even by different calculations, it seems like an order of magnitude is a big difference.

By GDP, they are both worth around 1% of the US GDP, but the US GDP is many times what it was then, particularly post-WWII.

Musk's buying power seems significantly more than Rockefeller's by any metric.

1. https://www.usinflationcalculator.com/

I think Rockefeller probably wins when the contest is 'fraction of available wealth captured'. The world is far richer today than it was in his days. We have wealthier people, even inflation adjusted, but I don't think we've had any one since who owned so much of what existed.

Tesla is also a worldwide company and trading around the world is significantly faster and easier than in Rockefeller's days.

Your figures are clearly correct. I accepted what an article said without checking into it myself. Thanks for doing the work I should have done.

Elon Musk is nowhere near the richest person in history. Augustus Caesar and Mansa Musa IX were multi-trillionaires in comparative spending power.

there is a great wikipedia page for this

One theory goes that the same people are invested in Tesla and Crypto. If their crypto holdings are wiped out they might have to sell their stock holdings to keep their roofs over their heads. Even if it's not that bad they might become more risk-adverse now one of their big bets has failed.

Not endorsing that, not an expert. Just think it's not as absurd as you suggest.

Bloomberg pegs him as having $9b in cash, $3b Twitter, $40b SpaceX, $3b Boring Company (silly valuation), $5b in misc liabilities, and the rest Tesla.

Musk's share of SpaceX is worth more than an "extra few billions". SpaceX is valued at around $100B, and Elon Musk owns about 47% of it.

You’re getting downvoted for no apparent reason, but there’s an argument to be made here that crypto crashing would cause retail investors to pull out of investments altogether, and meme stocks like Tesla would take a hit. Bloomberg, WSJ, etc. are all writing about this potential contagion effect today.

But what's changed? If Parag wanted to go this direction why didn't he do it when he took over as CEO?

A thoughtful CEO doesn’t take the role and immediately start making changes. It takes some time to absorb what’s going on.

It's not like he was an outsider, he was CTO for about 5 years before he became CEO. He knew what was going on in the company.

Knowing Parag, he probably didn’t actually have strong opinions about Product until it was his job to.

It’s been like 5 months. I’d imagine he’s still learning about the issues.

He's been at twitter for 11 years and was the CTO, should take a couple weeks to get up to speed on the knowledge delta between CEO and CTO.

You might be underestimating the complexity of being a good CEO (not to say he is) at a public tech company under a lot of global government scrutiny.

We've passed an inflection point from a bull to a bear market.

Ding ding ding. Congratulations, you are tonight’s HN winner. The Twitter deal didn’t go through, and you totally called it.

I remembered the parent comment from yesterday and came to say the same thing. It aged very well.

If the deal falls through then Twitter will probably have to announce some big changes to keep its stock price from falling too much. Although this move could have been made after the deal's collapse is announced but maybe he wants to have things in place before that happens.

It'll be a bloodbath if the deal falls through since there was a runup when Elon first started sniffing around.

The fact that it's not pegged to the purchase price already shows there is some skepticism that it actually closes.

If Elon bails the deal. Twitter will be at 1/3 the price and there will probably be massive layoffs.

> So there's two options right

There are far more possibilities than those two. Here's just one off the top of my head (I assign no probabilities here, just pointing out this false binary): This person is being fired as a result of some investigation or process that began prior to the acquisition process and whose results have only just been reached. There are a whole range of process driving, "my hands are tied" scenarios that could explain this.

Another would be that this person was doing something that could derail the deal (deliberately or not), and the CEO felt the best thing to do was to protect the deal by firing him. Given that he's on paternity leave, and "Parag asked me to leave after letting me know that he wants to take the team in a different direction", that doesn't seem likely.

Although if you were fired after being investigated and the company is keeping it quiet, then surely going with the standard "spend some time with the family excuse" and keeping it quiet rather than drawing attention to that fact would be basic self preservation.

They could have ignaled that they're not willing to work for Musk, so they're being shown the door ahead of time to minimize turmoil later on.

There's more to this than just today's events supporting your theory that the wheels were in motion before Elon's bid -


Another possibility is the interim person lobbied hard to have the job and made some rather convincing arguments.

What about the possibility guy was going to be asked to leave regardless of recent events, but the executive team decided the least they could do after he put in good time is allow him to collect some PTO on parental leave before handing him the official pink slip? I don't know what Twitter's benefits are but I imagine they have an, "unlimited leave" policy. Could be they've disagreed for a while and an argument came to an affront similar to, "Look man, I'm going to take leave to spend time with my new child, then we'll decide if it's the right move for me to return." Frankly this is a pretty boring conspiracy regardless, people leave jobs all the time. All I have to say is I hope dude enjoys a nice Summer with his family without worrying about this dumb product that for the most part narcissists use to trick themselves into thinking anybody gives a shit about what they have to say.

Twitter does have an unlimited leave policy.

Is it plausable that people at that level would need PTO? They've got 10s of millions in the bank.

> So there's two options right - the first is that Parag is for some reason making big strategic decisions about the direction of the company despite the fact that we all know he'll be gone if the deal closes. Or he's making big strategic changes at the behest of the acquirers before the deal closes.

It's conceivable that he already had a backlog of changes in his mind that he wanted to do at some point, sooner or later. But due to acquisition coming, sooner or later has turned into now or never.

If he legitimately believed these changes were best for the company before, he might still believe so.

In other words, yes, there's a reason, but not necessarily a nefarious one. It could be, or maybe it's as innocuous as urgency.

Seriously? Having been on both sides of a number of acquisitions I can tell you that these kinds of personnel changes are made typically at the (possibly indirect) request of the acquiring company. Things like "We've got a really create CMO that we're bringing on, we don't need any headwinds to them getting traction quickly" means "Get rid of the people who think they are in charge of marketing so that our person can set the table they want to set it." Or, "Some of our team is uncomfortable with Bob in the role he's in, he just doesn't seem like a good fit you know?" or any number of ways to communicate what executives they want moved out so that there will be spaces to be filled when the new team moves in.

And in a deal like this where there is no "plan B" the CEO's exit compensation is entirely predicated on their ability to "set the table" well for the incoming executive team. So yeah, Parag is doing what Musk or Musk's team told him need to be done prior to starting there, and if he told them he wouldn't do it then no big package for him.

That would normally happen post close. You are normally mandated to maintain the current operating position prior to close.

I understand the 'normally' part as in "this is how it should be done." And yet in the roughly ten or so acquisitions I've been on the "inside" for (which is to say was at one of the two companies and was related either peripherally or intimately in the transaction from start to finish), every single one of them had some executive shuffling (aka separating) prior to the close.

Clearly, it is biased to Silicon Valley and my experience is probably different than someone who worked in non-tech companies, but if I put it into a rule of sorts I'd say; During a fund raising round executive positions are the most secure and individual contributors the least, during an acquisition these are reversed.

I think there's also the possibility that Parag is vying to keep his job as CEO, and so he's trying to guess what he thinks will impress Musk, and executing on it while he's still in charge.

> On the other hand, going rogue and making big strategic decisions about the company

Parag isn't a strong character like that. He's someone who plays by the rules and only says empty conventional things, without any personal opinion or feeling, couched in formal modern US corporate/tech language, with the required progressive veneer. I'm pretty sure he only thinks things along similar lines.

Others provided a bunch of alternative options. I'll throw another one in the mix. Parag has been a CEO a few short months. If he's about to be out, he won't have much to show for his time. Bold moves now can show potential future boards of directors that he has what it takes to take on this role elsewhere.

There's a third option, which is that Parag is doing what he things is in the best interests if the company under the circumstances.

Because regardless if whether the acquisition falls through or not, this whole thing has underscored the need for changes at Twitter. The top two execs may need to go in order to move forward no matter what.

Your options are reasonable guesses as well, just not the only two possibilities.

Another option - get rid of the talent before the next guy comes in to run it, because you don't like him.

Burn his reputation? No one knew who this guy was 2 weeks ago. Now he will just fail up like all other execs.

Well as CEO it's his Parag-ative.

There is also a simple possibility that these two executives would have been fired anyway. Average executive tenior at a company is only about 4 years, and executives leave or are asked to leave pretty frequently.

As for the hiring freeze, new funding sources are essentially cut off until the purchase either goes through or officially fails. New loans or lines of credit requests are likely to be reject due to the uncertainty around whether Twitter will be acquired or not, and addition sales of stock would be seen as a bad faith act because it would essentially lose the company funding if the sale goes through. Increased spending could cause liquidity issues for Twitter for this reason. It is a known fact that Twitter is not a particularly profitable business, and given all of these facts those executives may have been let go purely for financial reasons.

Trying to read into this without more knowledge regarding internal motivations is purely speculative and cannot provide reliable information. What's more, every major company would be aware of these likely motivations and would see his actions as ordinary under the circumstances even if it turns out his motivation was to keep Musk from having access to those employees.

In short, there would have be extremely compelling evidence of intentional malfeasance for this to impact his reputation or future career prospects any more than Musk acquiring Twitter.

So many possibilities. Top people with favorable clauses might be finagling their own golden parachutes.

Also my first thought - you'll probably get a better severance from your long-time coworker than the new guy who came in with the stated belief you've done everything wrong.

Isn’t there usually some sort of removing of the skeletons from the closets before a deal closes? Yahoo revealed there massive data breach while their deal was closing and such.

A third possibility is the stock market tanking and inflation rate spiking. Many top companies are either freezing hiring or downsizing.

However, it does look better on the balance sheet when you get rid of two of your major cash burning expenses and their future vesting schedules.

CAP rate = net operating income / value of the asset

Basically you can immediately increase the value of your company by lowering expenses without having to justify a lower CAP.

What if they wanted to leave and he gave them cover?

What if the board wanted them out?

There's lots of possibilities that don't have much to do with ol' Musky.

Look at the tweets of these guys a few months back. Both have several positive mentions of Tesla, Starlink and/or Musk himself. They may actually be Musk fanboys....

It may be that they are fired because Parag and the other leaders are concerned they will (or have already) share(d) information or otherwise cooperate(d) with Musk in ways Parag wants to prevent.

He is on paternity leave so unclear how much any of these options hold-up.

Twitter full of spam bots, user numbers not genuine and all growth in fake users might be justifiable reason for firing:


Fourth option is that the deal doesn't go through. Deals fail to go through all the time. If you just sit around and the deal doesn't go through you're fucked. The CEO's job is to manage the company as though the deal won't go through, until it actually closes.

My own guess is that this is doubtful that Musk drove this.

That said, he is a very large shareholder already, and so if he, as a large shareholder, communicated something to the board, and they acted, then the claim that isn't kosher rings a bit hollow - large shareholders communicate with boards and some activist ones go further.

Internally I suspect there is some concern about Musk. The head of legal was reportedly crying regarding this buyout. They've got their misinformation management efforts around the biden laptop story and other issues (vaccines etc etc) that musk may not back as fully as Gadde did. So they could be moving some deck chairs in advance of Musks arrival. Be interesting to see how it shakes out, may not be smooth - Twitter is HQ'ed in San Francisco.

It's also possible the deal provided an ad-hoc loyalty test and these to execs failed it.

> It also seems weird for Musk to already have the insight into the company to know specifically who to fire

If in his viewpoint (he wouldn't be alone thinking so) Twitter recently became less appealing - booting the Lead of Consumer Product team seems perfectly reasonable to me.

Despite "we know he'll be gone" Parag may as well want to try to keep his chair when Elon takes over and is making changes that would be favored by the new leadership. And if the deal doesn't pass - firing the team leads (possibly) responsible for company's recent bad press and maybe Elon's move itself seems justified.

Third possibility is getting Musk to withdraw his offer. The article comments on missed intermediate growth targets. Musk has put the deal on holding pending proof that the user count is not inflated by fake accounts. So I see this all as an attempt by Parag to "save" the company from Musk and his goal to make it an open "free speech" platform.

Not weird that he's doing things at behest of Musk which I think is likely. It may be part of acquisition agreement either implicitly or explicitly. Musk most likely has people he knows in company (he is friends with Jack) that are advising him and suggesting changes. Much easier to oust top execs before coming in then later.

In what way has Musk behaved that makes it weird for Parag to be following his orders?

There are a lot of other options as well.

Maybe he already wanted to make those changes but didn't dare to make them. Maybe he now changed his mind thinking: if I don't Musk will.

And on goes the list of reasons you can think of..

Agree. This seems very odd. They should be all hands on deck through the buyout and then see what new ownership wants to do.

twitter has no strategy, it became apparent the day they killed vine, and it is still true today

Or the deal is not going to close?

"SEC is investigating Elon Musk over his late disclosure that he had purchased Twitter stock"


Was there a time in the past few years where Musk wasn't actively investigated by the SEC? Hasn't hindered his business ventures much, so far at least.

This has nothing to do with Musk so I wouldn't try to attribute it to him.

Imo mostly likely scenario is they’re removing evidence / firing people as if the evidence is discovered.

If you saw their prior earnings they were over reporting by at least a million users. The people they fired would have potentially known that, or at the very least should have.

Further, due diligence will be done prior to sale. At which point items such as the above can / will be discovered.

Finally, there have been a lot of political decisions made by Twitter (banning a sitting president, etc). If that was done at the behest of government (as some claim) or advertisers (others claim). The result is the same, they made a decision which strategically let Trump start a competing and growing platform. Not good for business.

In any case, I suspect that’s the reason for firing.

And what do you know?

> Twitter deal temporarily on hold. Elon Musk wants to evaluate if spam and fake accounts do indeed represent less than 5% of the platform's users base.



In this version of events, it's likely we'll be able to see how lean Twitter could actually be.

Hope so.

Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact