It should be illegal to buy a company with money you borrow against the value of that company. When your primary financial goal is servicing debt over building long term value - the incentives become completely misaligned.
agree to an extant, but we do it all the time with mortgages, as in buy with loan against value of the asset. the only difference is that bank wouldn't give me a 2M loan against 1M house. In this case this seems like a play on credibility of Musk that banks & other investors are willing to overpay. IMO its a mistake & misaligns the incentives but lets see.
I do however feel that there should be civility in these layoffs regardless of what Musk's belief's about performance of these employees (or Musk fanboi's). There should be proper severance/healthcare and prorated vesting.
But it doesn't hurt the pubic good if my house gets repossessed. When companies are run into the ground, it results in massive layoffs and less consumer choice. Or in this case the loss of an important and unique disseminator of information.
Similar stuff is happening with most of the local papers in the country. Although in that case the whole business model is dying. But vulture capitalists are hastening the demise by squeezing every the lifeblood out of the business and destroying what's left of the public goodwill.
>But it doesn't hurt the pubic good if my house gets repossessed...
Actually it does when large number of houses get repoed. it did happen in 2008. that was because of securitization & rating mistake by banks but that speaks to my point, if the banks have a bad valuation model & give out unservicable loans then they have to eat the loss, just that everybody was doing that in 2007 because of repeal on many laws around such speculation.
this seems to be a similar thing as long as it does not happens to be systematically tilted towards overvaluation but I'd argue businesses (esp public ones) are more closely watched and market does a semi reasonable job of valuing them over time. personally there is not a whole lot of growth left in twitter (or FB) except for changing to a new business model like identity verification or eat into FB's lunch ;-). But as I said we'll see.
"Love to borrow money to buy a company and then saddle that company with the debt so I can lay off thousands of people"
https://twitter.com/jasonschreier/status/1587457450311122945