Because of the fees, you will pay a minimum of 0,74%.
Also because these mortgage instruments are traded at a price less than 100, you have to take out a loan larger than the amount of money that will be payed out. For example, to loan $100 you might have to take out a loan where you start out owing $105, which further increases the actual interest.
The CEO has shown willingness to fund Tesla Motors and SpaceX with almost all his personal funds. If I remember correctly, he is worth more than Tesla's debt, and unless he is somehow unable to liquidate enough assets to cover that debt, it won't be the end of Tesla.
> Why is the Tesla stock illiquid? It's publicly traded.
Pardon me, imprecise phrasing. SpaceX stock is illiquid. Tesla stock is liquid, but if Tesla is having financial difficulties its stock will go down. If Elon can sell Tesla shares, Tesla can sell Tesla shares.
> I'm sure he could sell SpaceX stock on the secondary market quite easily
Not "quite easily". One, he's a super material insider. That makes the process more complicated for everyone involved. (It would be difficult to avoid giving everyone else the right to participate on the same terms.)
Two, he's a super material insider. The fact that he's selling will scare away many buyers.
Three, he's a super material insider. His selling SpaceX stock to prop up Tesla screams that nobody is willing to finance Tesla in the open market. It would immediately lead to a rout.
I'm not convinced that selling some of his SpaceX stock on the secondary market is difficult, or that selling some of his Tesla stocks would cause a rout, especially when the immediate consequence would be paying back the debt, thereby saving the company.
But I hope some experts (e.g. stock analysts) would comment on this scenario, I think it's interesting.
> I'm not convinced that selling some of his SpaceX stock on the secondary market is difficult
Selling SpaceX stock is not difficult per se. The CEO selling his SpaceX stock for the purpose of purchasing shares in a public company, of which he is also the CEO, is. (Source: this is what I do for a living.)
> selling some of his Tesla stocks would cause a rout
Elon Musk selling his Tesla stock to buy new Tesla shares, thereby giving Tesla cash, wouldn't be a problem. (Though it's a roundabout way for Tesla to issue new shares.) Elon Musk selling his SpaceX stock to buy new Tesla shares would be. It shows Tesla was unable to raise capital in the stock markets.
Why is the Tesla stock illiquid? It's publicly traded.
It's not liquid as far as Musk is concerned. Ignore the aspect of "CEO dumps $COMPANY stock" for a moment. The kind of numbers Musk would need to dump would also affect the share price. 'cuz, you know, a bunch of supply just came online without corresponding demand.
My understanding is that the majority of his personal net worth is from Tesla (+Solar City) and SpaceX. Would that limit his ability to personally fund Tesla?
Just did some rough math on this. He's reported to have 55% of SpaceX, recently valued at 27.5B [1], and ~19% of Tesla [2], most recently at ~44B, for a combined net worth of ~23B (before any debt). He therefore definitely couldn't personally buy out Tesla at current prices, and any significant investment of personal funds would require the sale of SpaceX shares.
Also, much of his liquid pocket money has come from loans backed by his Tesla Stock. This could be a problem if Tesla stock price drops too much, as the stock he has pledge is required to be no less than a multiple of the money he has borrowed. [3]
You state that he can't buy out Tesla, which is true. But why does he need to buy out Tesla to cover their debt? On the contrary he would need to sell some of his Tesla (and perhaps SpaceX) stock and give the cash to Tesla to cover their debt.
Those are really good questions. I don't know what form a transfer of cash from Elon to Tesla like that would take. Tesla issuing new shares for him to buy?
Honestly, on paper there isn't any reason why Tesla can't just sell additional shares to the market in general, not necessarily just to Elon, in order to get enough money to cover their upcoming debt payments. Elon has publicly said he won't sell shares because Tesla won't need the money because it will be profitable[1], but some people are skeptical [2]. Maybe he just doesn't want to walk back his statement?
Also as previously mentioned, he can't sell all of his Tesla stock without paying back some of his personal loans.
You seem to have some reasonable answers about tesla, what do you think about tesla's increasing sales & production of model 3 producing postive cash flow, since they are now in the mass production and away from the thrashing around trying to increase production phase (and hopefully not digging a hole and burning it kind of like the poorly executed early "production hell"). If they make & sell 50k model 3s per quarter at 60k and make 25-30% margin, that's $750 million (50k60k.25). That is approaching a sustainable business if they produce $3 billion a year. Take out say a billion in infrastructure spending (new stores, super chargers, etc), that looks much better than losing 700 million a quarter. I thought they were losing money because of wasteful production ramup.
Thank you, being reasonable is really important, and being unreasonable when investing can be very expensive!
Producing 55k Model 3's per quarter [1] will definitely help with the cash flow situation. I think the biggest questions that determine if they can be self-sustaining are:
- Can they ramp up Model 3 production quickly enough to meet the debt obligations they have accumulated to date?
- What will the average Model 3 margin be, given the price distribution from 60k to 35k?
The bull case [2] aligns with your basic assumptions that the 3 will add significant cash flow that allows them to get over the "debt maturity hump". Note that their analysis does include other sources of cash flow (energy credits, remaining line of credit).
The bear case, basically, disagrees. They suppose that there will not be sufficient demand for the higher end Model 3, given increased competition from vehicles like 2019 Jaguar I-Pace (69.5k, 240mi); Chevy Bolt (37.5k, 235mi); and maybe Hyundai Kona EV (? $, 250 mi). This could then put Tesla into a negative spiral, where shrinking orders cause their accounts payable to not keep up with their lagged accounts receivable.
Also it's worth noting that they are probably on track to spend 2.5B in capital on PP&E this year based on 1.25B in first six months [3], and spent 3.6B, 1.3B, and 1.6B in the previous three years[4]. Adding in another 0.75 - 1.0 in selling/general/admin and R&D costs per quarter, on top of the cost of producing their cars and servicing their debt, makes even the 3B/yr in Model 3 gross profit case less of a slam dunk for Tesla success.
I think it really could go either way at this point, and the next six months will be telling. Elon does has a tendency to just make things work, but I am taking a risk here and siding more with the negative case.
W1, what do you think of Tesla new 'medium range car' tonight? I think it's a master stroke. They now have a 45k car (yes, not there yet for the 35k one), but consider this - the people buying this now will get the 7500 tax credit if they get it before the end of the year. So people who were thinking of waiting till they could buy a 35k car can now buy a 45k car! They will pay tesla more, trading off getting that car now for 7500 off. Vs the 35k car, it's 10k more money but effectively 45-7.5=37.5 for more range.
I think it's a brilliant way to harvet more money from people and maximize the benefit of the fed tax credit.
I should be honest that I want tesla to succeed because we need aggressive electric car companies to move the whole industry along. I don't want them to fail. I think their business strategy looks better than ever. IF there is a bunch of people, lets say 100k americans who want this car in this range and price, they'll be golden.
Thinking about q3, q4, q1/19 - the i-pace won't come in their small 20k annual run rate until next year, so it doesn't matter much for now. It does look like a reasonable car. Probably better interior than the tesla, decent range, good design - without access to superchargers not very practical for long trips, but I think it's a perfect example of what legacy automakers can do if they try hard. The other big question is where will they get enough batteries to mass produce an ev - apparently that's a major reason they can't make many. It's the best competitor to the tesla so far. Does that car have chademo or ccs charging? I've never seen a ccs charger, wonder if there is one around seattle.
The chevy bolt is a great little car, it's just not as a sexy as the m3 (will tesla take this over from bmw's namespace :-)). Of course it's half the price of the current selling model 3's. I think the bolt is a fine car, not too sexy, but sales in the us are anemic, yet people complain they are hard to find. Also gm isn't making many of them, perhaps for same reason as ipace. hyundai kona ev looks like a nice car too.
All those cars are inferior evs to even the model 3, but they aren't that far away. If only they could mass produce them, and the biggie, get auto dealers to try to sell them - that's the part that's really missing so far. It's literally against their own interest at least in the short term to sell evs.
I think you should look out more than 6 months. Tesla has enough customers world wide for the 3 to sell another 100-150k of them - remember they are hardly even selling them in Canada up to now, just recently ramped up. It's only after the pent up demand is handled that we'll know. I'd say look at what q3 and q4 next year do - Tesla sales are set through mid next year just be putting their cars in other countries. The optimistic case if they'll reduce manu. costs and be able to make the base short range model and survive making a 35k car. Meanwhile, and this is the exciting bit, the higher-midrange of bmw, mercedes, audi, maybe low end porsche will face significantly reduced sales because of model 3. Those companies aren't doomed, but the 3 is so awesome, there's so much pent up demand. Even in seattle the sales office was packed last weekend, and they put 100s and 100s of them on the road last month.
How does secondary market transaction work, in these cases? Is it only when a round is raised that shareholders can take money off the table, or does it ever happen between rounds as well?
In some sense, yes, but check out Sarbanes-Oxley: https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act. Public companies are under much more scrutiny in terms of compliance, and they have a certain type of pressure to post good quarterly results that private companies don't.
I don't imagine Sam Altman made enough money from the sale of Loopt to lead a $50m round (only guesswork though). Is he somehow leveraged by having raised a fund for "personal investments". The latter would be a really interesting.
Maybe @sama himself could answer this, if it's not too personal.
>Today Asana closed a Series C financing round, raising $50M in new capital. The round was led by Y Combinator president Sam Altman. Sam participated alongside a number of other customers, investors, and leaders for whom we have deep respect.
As always, the people of HN have found the weaknesses in this product that the founders haven't thought of at all, and they will surely shut the whole thing down now.
The Starship Robots are really cool. The sort of stuff I dreamt of as a child after staying up too late reading Asimov by flashlight. If I found myself working on a project like that, I would be more than thrilled. I probably came off too negative in my first post. When presented with a machine out of a childhood dream, I was suddenly laden with the fear of reality.
It is a great idea, and I hope they execute it perfectly. The path they choose around the roadblocks will be the real magic.
I'd argue that the product page doesn't sell properly if everyone is freaking out over possible issues. If they've solved for obvious problems, they should discuss those solutions a little. Otherwise it's not much more than a fancy Big Trak.
The landing page is probably just for showing people that they're working on the product. Very few of the eventual consumers are going to visit the site in its current form.
Yes, dismissive comments are a problem. It is better to respond to new work with an open mind and to be constructive when criticizing. Still, posting another dismissive comment doesn't improve the thread.
More helpful would be including specific information about things like (a) what we shouldn't be so quick to dismiss; (b) what the founders have probably thought of; (c) how to post more substantively; or (d) how to criticize more constructively. Then we learn something.
So this guy invites people to interviews by saying: “You know what, I've really enjoyed this conversation. Is there any chance you have a couple hours in the next few days to come in and meet a few people on the team?”. Then, as stated under "PHASE 3", the process is not staying for a couple hours and meeting a few people on the team, but actually an interview lasting at least 50 minutes with hiring manager, a 90 minute session working on a problem, then a talk about culture, another technical interview and finally an interview about fit.
This might be an effective way to get people to accept the invitation, but it doesn't seem totally honest.
There's no way a competent hiring manager would ask someone to come in for a "couple of hours" to meet the team, and then ambush them with a full-on technical interview. This would not lead to a successful outcome.
I think from the context of the entire article, you need to read between the lines and assume that it was obvious to both the candidate and the hiring manager that the next step was a full technical interview. The hiring manager was simply wording it in a way that sounded less intimidating.
Actually, this exact thing happened to me. I was asked to come in for a couple of hours to meet the team and see the office. When I arrived I was taken to a room where I was interviewed for 3 hours, by 3 different interview teams. Two of them were whiteboard interviews, then an interview with management.
Needless to say I rejected the offer, I was so unimpressed with the hiring process. Disgusted actually.
Did the disgust manifest after, or during, the 3 hour process? Curious to know whether there were other factors in play (perhaps curiosity?) that made you stay throughout the ordeal.
I recently did some interviews which were described as "can you come meet with our engineering team in more depth". Which I read (correctly) as "technical interviews", but the description was certainly a bit coy.
I think people tend to use euphemistic language to try to preserve a "we're all buddies here" atmosphere, and out of sense of discomfort with the idea of interviewing.
(Though it's not such a huge deal, to me -- any time I'm talking to someone, if we're considering working together, it's fair game to get into technical questions, IMO.)
Yeah, I'd be pretty annoyed if I thought I was going to get a social introduction and a tour around an office and then unexpectedly had to do a full technical interview.
No, it is not. When you get older you will learn that women are people, just like you, and sometimes people just want to talk. Don't worry. Just talk to her like she was your sister or mother. After a while, it will become natural.
The point is that meeting a few people can be an "interview", which is really different than a hardcore structured technical interview.
In this analogy, its like showing up to that coffee and immediately start trying to make out with the person. Yeah, we both knew that might be where this is going, but that's not how the game was set up at this point.
>No, it is not. When you get older you will learn that women are people, just like you, and sometimes people just want to talk. Don't worry. Just talk to her like she was your sister or mother. After a while, it will become natural.
Of course I assume it isn't your sister or mother, or someone you can't date for whatever reason (you're married, she's married, seeing someone, homosexual, and so forth).
The fact is if you're in such a situation, there's always this question hanging over it. You (the two of you) can turn it to friendship if that's what you're after, but there's always this possibility, and you might as well acknowledge it and not question whether the situation allows it to become something else.
I don't think I've ever been misunderstood in such situations.
Anyway, the point is it's quite clear when you're being courted for a job. You might expect it to be slightly different when the proposer is not the usual one (if a girl asks you out, is it different? Yes.) Maybe slightly fewer of the trivial coding type questions.
This seems to insinuate that financial firms are not as numerous or maybe not as big as before. Does anyone know whether the financial sector has significantly grown or diminished from 2001 to now?
Finance is still a dominant sector in NYC but has been dropping since the late 1990s (accelerated post 9/11, but there's been a long term trend of back-office jobs being eliminated or moved out of the metro area).
Because of the fees, you will pay a minimum of 0,74%.
Also because these mortgage instruments are traded at a price less than 100, you have to take out a loan larger than the amount of money that will be payed out. For example, to loan $100 you might have to take out a loan where you start out owing $105, which further increases the actual interest.