Author Topic: New purported SpaceX funding round of $500MM  (Read 14297 times)

Online ncb1397

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Re: New purported SpaceX funding round of $500MM
« Reply #20 on: 12/23/2018 09:52 am »

Exactly....it has value because people believe it has value. Can I suggest reading this book...Sapiens by Yuval Noah Harari. He explains it better than I can.

No, we are not in agreement. Your contention is that the dollar bill has no actual value but is perceived to have value. This would make it indistinguishable from bitcoin in that regard - obviously people think bitcoin has value because people steal it/people buy it. My contention is the dollar has value because its value is enforced by actual physical assets in the physical world that can and do materially affect people's lives. It isn't perceived value, it is actual value.

There is no enforcement that stipulates that these shares have actual value. If you owned 55% of shares, Musk still controls the company and dictates everything that occurs. You could be arrested for entering property that you supposedly own. He owns the company, not the owners of these shares. The only legal rights these shares entitle you too are access to dividends, but there is no legal requirement that dividends have to be paid. So, it very well could mean rights to nothing. If there was a police/military force that enforces ownership rights for these shares as there is a police/military force that enforces the legal value of the dollar, this would be a different story.
« Last Edit: 12/23/2018 10:07 am by ncb1397 »

Online ncb1397

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Re: New purported SpaceX funding round of $500MM
« Reply #21 on: 12/23/2018 10:18 am »

So, even though you can't vote with a share, it has value that can potentially be realized by selling it (though much more restrictive than owning public shares.)

Only because the market is under a mass delusion that ownership of these shares represents ownership in the company and rights to a share of the companies' wealth. Its similar to bitcoin. It has value because somebody would buy it. No other reason than that.

Offline philw1776

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Re: New purported SpaceX funding round of $500MM
« Reply #22 on: 12/23/2018 04:00 pm »
but I bet a lot of people are turned off by this and the pool of people is basically limited to Musk true believers which explains the notable investor being from Tesla and why they have to raise cash through both equity and debt (a lot of both markets are scoffing at the terms).

Doesn't look like they have a shortage of potential investors.  SpaceX is one of the toughest companies to get into -- long velvet rope and a line with well-dressed folks with bags of cash.

And, you can actually sell SpaceX stock even though it's not a public company.  Email Elon sent to SpaceX employees about reasons not to go public:

https://www.valuewalk.com/2018/01/elons-email-spacex-employees-regarding-taking-company-public/

So, even though you can't vote with a share, it has value that can potentially be realized by selling it (though much more restrictive than owning public shares.)

Elon has stated multiple times that companies shouldn't invest in SpaceX and expect a return any time soon. He's not coy about it and yet there are companies lined up to give them their money.  So it's a bit bigger market than just "true believers."

What a well written, informative and helpful letter.  Being an engineer who has worked in startups and who also has an MBA in finance, I respect his perspective.  His advice to employees is spot on.  I wish I knew a good fraction of what Elon demonstrably knows about finance.
Subsequent events at publicly held Tesla add emphasis to the public company caveats he expressed in the letter.

P.S.  My suggestion to folks is to take Heinlein's advice and stop the pig wrestling in this thread.
« Last Edit: 12/23/2018 04:02 pm by philw1776 »
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Offline envy887

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Re: New purported SpaceX funding round of $500MM
« Reply #23 on: 12/23/2018 08:46 pm »

So, even though you can't vote with a share, it has value that can potentially be realized by selling it (though much more restrictive than owning public shares.)

Only because the market is under a mass delusion that ownership of these shares represents ownership in the company and rights to a share of the companies' wealth. Its similar to bitcoin. It has value because somebody would buy it. No other reason than that.
So you're saying that Musk could vote to sell all of SpaceX's real assets and IP, and then take all that money himself because he has voting control?

Online lonestriker

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Re: New purported SpaceX funding round of $500MM
« Reply #24 on: 12/23/2018 10:24 pm »

So, even though you can't vote with a share, it has value that can potentially be realized by selling it (though much more restrictive than owning public shares.)

Only because the market is under a mass delusion that ownership of these shares represents ownership in the company and rights to a share of the companies' wealth. Its similar to bitcoin. It has value because somebody would buy it. No other reason than that.
So you're saying that Musk could vote to sell all of SpaceX's real assets and IP, and then take all that money himself because he has voting control?

I don't think this is really worth even arguing over.  ncb1397's stance is that a share of stock without voting rights is akin to a fiat currency issued by SpaceX, who's only intrinsic value derives from the belief of true believers.  We just need someone with a finance background to refute that (with citations if needed) and move on.  Everything I know tells me this is false, but that's not my area of expertise.


Offline Mongo62

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Re: New purported SpaceX funding round of $500MM
« Reply #25 on: 12/23/2018 10:37 pm »

So, even though you can't vote with a share, it has value that can potentially be realized by selling it (though much more restrictive than owning public shares.)

Only because the market is under a mass delusion that ownership of these shares represents ownership in the company and rights to a share of the companies' wealth. Its similar to bitcoin. It has value because somebody would buy it. No other reason than that.
So you're saying that Musk could vote to sell all of SpaceX's real assets and IP, and then take all that money himself because he has voting control?

I don't think this is really worth even arguing over.  ncb1397's stance is that a share of stock without voting rights is akin to a fiat currency issued by SpaceX, who's only intrinsic value derives from the belief of true believers.  We just need someone with a finance background to refute that (with citations if needed) and move on.  Everything I know tells me this is false, but that's not my area of expertise.

Non-voting shares are also called "preferred shares", because they have a higher claim on earnings and assets than voting, or "common shares". Dividends to preferred shares are paid out before dividends are paid out to common shares, and those dividends are generally greater than with equivalent common shares.
« Last Edit: 12/23/2018 10:38 pm by Mongo62 »

Offline ChrisWilson68

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Re: New purported SpaceX funding round of $500MM
« Reply #26 on: 12/23/2018 10:49 pm »

So, even though you can't vote with a share, it has value that can potentially be realized by selling it (though much more restrictive than owning public shares.)

Only because the market is under a mass delusion that ownership of these shares represents ownership in the company and rights to a share of the companies' wealth. Its similar to bitcoin. It has value because somebody would buy it. No other reason than that.
So you're saying that Musk could vote to sell all of SpaceX's real assets and IP, and then take all that money himself because he has voting control?

I don't think this is really worth even arguing over.  ncb1397's stance is that a share of stock without voting rights is akin to a fiat currency issued by SpaceX, who's only intrinsic value derives from the belief of true believers.  We just need someone with a finance background to refute that (with citations if needed) and move on.  Everything I know tells me this is false, but that's not my area of expertise.

Non-voting shares are also called "preferred shares", because they have a higher claim on earnings and assets than voting, or "common shares". Dividends to preferred shares are paid out before dividends are paid out to common shares, and those dividends are generally greater than with equivalent common shares.

No.

Preferred and non-voting are two independent properties a share of stock can have.  You can have a preferred share that is non-voting or a preferred share that is voting.

When venture capital firms fund a start-up, they are typically issued shares that are both preferred and voting.

Offline ChrisWilson68

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Re: New purported SpaceX funding round of $500MM
« Reply #27 on: 12/23/2018 10:54 pm »

So, even though you can't vote with a share, it has value that can potentially be realized by selling it (though much more restrictive than owning public shares.)

Only because the market is under a mass delusion that ownership of these shares represents ownership in the company and rights to a share of the companies' wealth. Its similar to bitcoin. It has value because somebody would buy it. No other reason than that.
So you're saying that Musk could vote to sell all of SpaceX's real assets and IP, and then take all that money himself because he has voting control?

I don't think this is really worth even arguing over.  ncb1397's stance is that a share of stock without voting rights is akin to a fiat currency issued by SpaceX, who's only intrinsic value derives from the belief of true believers.  We just need someone with a finance background to refute that (with citations if needed) and move on.  Everything I know tells me this is false, but that's not my area of expertise.

ncb1397 is incorrect.

A non-voting share still has rights to money generated by the company.  If the company makes money and returns it to shareholders through a dividend, the non-voting and voting shares get the same dividend.

And it is incorrect that Musk could just choose to give himself SpaceX assets.  The board of directors would have to approve that, and the board has a fiduciary duty to all shareholders.  Just because Musk has all the power to vote for the board members doesn't change that.  They still have an equal fiduciary duty to every share, voting or not.  If the board did something to benefit Musk at the expense of other shareholders, they would sue the board, and they would win.  The board might go to jail, too.

Online ncb1397

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Re: New purported SpaceX funding round of $500MM
« Reply #28 on: 12/23/2018 11:24 pm »

So, even though you can't vote with a share, it has value that can potentially be realized by selling it (though much more restrictive than owning public shares.)

Only because the market is under a mass delusion that ownership of these shares represents ownership in the company and rights to a share of the companies' wealth. Its similar to bitcoin. It has value because somebody would buy it. No other reason than that.
So you're saying that Musk could vote to sell all of SpaceX's real assets and IP, and then take all that money himself because he has voting control?

I don't think this is really worth even arguing over.  ncb1397's stance is that a share of stock without voting rights is akin to a fiat currency issued by SpaceX, who's only intrinsic value derives from the belief of true believers.  We just need someone with a finance background to refute that (with citations if needed) and move on.  Everything I know tells me this is false, but that's not my area of expertise.

ncb1397 is incorrect.

A non-voting share still has rights to money generated by the company.  If the company makes money and returns it to shareholders through a dividend, the non-voting and voting shares get the same dividend.


If you look above, I mention this is what these shares gives you right to. But there is a trend where very large and highly profitable companies with multi-voting schemes where the founders maintain voting control do not pay dividends. I think this will be another one of those cases.

Quote
And it is incorrect that Musk could just choose to give himself SpaceX assets.  The board of directors would have to approve that, and the board has a fiduciary duty to all shareholders.  Just because Musk has all the power to vote for the board members doesn't change that.  They still have an equal fiduciary duty to every share, voting or not.  If the board did something to benefit Musk at the expense of other shareholders, they would sue the board, and they would win.  The board might go to jail, too.

Such a scheme is called tunneling and is illegal. But there is a way around that. Just keep the assets within SpaceX as an effectively Musk controlled trust. You still can do pretty much anything you want with it such as build a brick tower on SpaceX property which was recently completed. Its effectively his fun money. He once boasted that he could buy an island and make it his personal fiefdom with his personal fortune after Paypal. He effectively could do this with company money as well, he just has to effectively dress it up as a factory or launch site or something.

Speaking of tunneling and being sued by shareholders, Musk came very close to that by using Tesla money to buy Solar City, a company he(and his family members) had a large stake in. He was sued by shareholders and it is proceeding to trial.
« Last Edit: 12/24/2018 12:04 am by ncb1397 »

Offline envy887

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Re: New purported SpaceX funding round of $500MM
« Reply #29 on: 12/24/2018 02:10 am »
If you look above, I mention this is what these shares gives you right to. But there is a trend where very large and highly profitable companies with multi-voting schemes where the founders maintain voting control do not pay dividends. I think this will be another one of those cases.

Because those profits are being used to aquire more assets (real estate, factories, IP) for the company. Assets that will generate future income, and that if sold will be revenue that the shareholders have a right to receive. That's why those shares have real value. They have real assets behind them.

Offline Lar

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Re: New purported SpaceX funding round of $500MM
« Reply #30 on: 12/24/2018 02:07 pm »
(mod) I think we're starting to veer off topic. ncb1397 has a view of things that isn't generally accepted but it's at best incidental to whether SpaceX did or didn't go to the equity market for funding.
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Offline oldAtlas_Eguy

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Re: New purported SpaceX funding round of $500MM
« Reply #31 on: 12/24/2018 08:03 pm »
In 2015 Google invested $1B into SpaceX when it was valued at $21B. Now after 3 years it is valued at $30+B. Google has realized if it sold it's shares now a gain of 50%. This is why investors are lined up and SpaceX has no problem in getting what it needs so long as the totals of investment in a year is less that a few percent of valuation.

What can SpaceX do with this $500M + the $200M+ loan? The cost of a Starlink Sat to manufacture is ~$1-2M. Launch on F9 ~$1M. The total cost per launch is somewhere between $50M and $100M. But now subtract all the capital equipment expenditures (Starlink - buildings and tooling ~$100M and Starship/Super Heavy - buildings, pad, and tooling $150M) which leaves $500M for launch vehicles and sats. Now add the profit margin from the operational launch side of ~ $300M + and there is a lot of cash to do a lot of manufacture and launches.
« Last Edit: 12/24/2018 08:05 pm by oldAtlas_Eguy »

Offline RedLineTrain

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Re: New purported SpaceX funding round of $500MM
« Reply #32 on: 12/24/2018 09:39 pm »
My guess is that this year's fundraising is going toward one-time costs -- e.g., real estate, construction, and tooling.  I don't think it would be a good practice to make payroll with it.

Offline MechE31

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Re: New purported SpaceX funding round of $500MM
« Reply #33 on: 12/26/2018 02:27 am »
In 2015 Google invested $1B into SpaceX when it was valued at $21B. Now after 3 years it is valued at $30+B. Google has realized if it sold it's shares now a gain of 50%. This is why investors are lined up and SpaceX has no problem in getting what it needs so long as the totals of investment in a year is less that a few percent of valuation.

When Google invested $1B, The value was closer to $10B. Using your first numbers, that's an annualized return of 14%, which isn't spectacular considering the risk level. With the updated numbers, it's around 40%, which will have people lining up.

With that said, there's "only" been a jump off 10% since April based off the article.

Online Llian Rhydderch

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Re: New purported SpaceX funding round of $500MM
« Reply #34 on: 12/30/2018 11:22 am »
MechE is correct.  When Google first invested in SpaceX in 2015, the amount invested was somewhere under US$1 billion and SpaceX was then valued at c. $10+ billion. (this article or this one).

The numbers I'd always seen was they got about got about 8.3% of equity on their investment on a $12 billion valuation.

This raise then, and the raise they are doing now, seems like smart financial capital acquisition on the part of Elon

Re arguments from authority on NSF:  "no one is exempt from error, and errors of authority are usually the worst kind.  Taking your word for things without question is no different than a bracket design not being tested because the designer was an old hand."
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Offline ChrisWilson68

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Re: New purported SpaceX funding round of $500MM
« Reply #35 on: 12/30/2018 12:08 pm »

So, even though you can't vote with a share, it has value that can potentially be realized by selling it (though much more restrictive than owning public shares.)

Only because the market is under a mass delusion that ownership of these shares represents ownership in the company and rights to a share of the companies' wealth. Its similar to bitcoin. It has value because somebody would buy it. No other reason than that.
So you're saying that Musk could vote to sell all of SpaceX's real assets and IP, and then take all that money himself because he has voting control?

I don't think this is really worth even arguing over.  ncb1397's stance is that a share of stock without voting rights is akin to a fiat currency issued by SpaceX, who's only intrinsic value derives from the belief of true believers.  We just need someone with a finance background to refute that (with citations if needed) and move on.  Everything I know tells me this is false, but that's not my area of expertise.

ncb1397 is incorrect.

A non-voting share still has rights to money generated by the company.  If the company makes money and returns it to shareholders through a dividend, the non-voting and voting shares get the same dividend.


If you look above, I mention this is what these shares gives you right to. But there is a trend where very large and highly profitable companies with multi-voting schemes where the founders maintain voting control do not pay dividends. I think this will be another one of those cases.


If you had claimed SpaceX would not pay dividends in the near future, nobody would have disagreed with you.  What you actually claimed was "Only because the market is under a mass delusion that ownership of these shares represents ownership in the company and rights to a share of the companies' wealth.".  That is not the same thing.

Companies can keep growing their value by reinvesting profits.  Even when companies distribute their profits to shareholders, these days they often do it by buying back stock, so no dividends.  It doesn't mean investors are being fleeced or that they don't make money or it's some kind of ponzi scheme.  There's a lot of real, tangible value in SpaceX.  Claiming that SpaceX stock only has value because of a "mass delusion" is not a rational assessment.

Quote
And it is incorrect that Musk could just choose to give himself SpaceX assets.  The board of directors would have to approve that, and the board has a fiduciary duty to all shareholders.  Just because Musk has all the power to vote for the board members doesn't change that.  They still have an equal fiduciary duty to every share, voting or not.  If the board did something to benefit Musk at the expense of other shareholders, they would sue the board, and they would win.  The board might go to jail, too.

Such a scheme is called tunneling and is illegal. But there is a way around that. Just keep the assets within SpaceX as an effectively Musk controlled trust. You still can do pretty much anything you want with it such as build a brick tower on SpaceX property which was recently completed. Its effectively his fun money. He once boasted that he could buy an island and make it his personal fiefdom with his personal fortune after Paypal. He effectively could do this with company money as well, he just has to effectively dress it up as a factory or launch site or something.

Speaking of tunneling and being sued by shareholders, Musk came very close to that by using Tesla money to buy Solar City, a company he(and his family members) had a large stake in. He was sued by shareholders and it is proceeding to trial.

Thanks for making my point for me.  If SpaceX is being sued for buying Solar City, imagine the lawsuits if they built a private island for Musk.

Anyway, Musk wasn't talking about making a private island with company money.  It's clear he meant because he'd have personal wealth and use that.

Online aero

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Re: New purported SpaceX funding round of $500MM
« Reply #36 on: 12/30/2018 11:32 pm »
SpaceX being sued for buying Solar City? Last I heard, Tesla bought Solar City.
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Offline philw1776

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Re: New purported SpaceX funding round of $500MM
« Reply #37 on: 12/30/2018 11:36 pm »
SpaceX being sued for buying Solar City? Last I heard, Tesla bought Solar City.

The poster meant that SpaceX's Elon Musk as Tesla CEO was being sued for the Solar City aquisition.
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Offline Lar

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Re: New purported SpaceX funding round of $500MM
« Reply #38 on: 01/02/2019 04:51 pm »
Off topic alert. Second Warning!!!!

How the money supply works, what people can buy on desert islands, whether stock is just a delusion?

WAY off topic.

'nuff said I hope.
« Last Edit: 01/02/2019 04:52 pm by Lar »
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Offline calapine

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Re: New purported SpaceX funding round of $500MM
« Reply #39 on: 01/03/2019 06:07 pm »
SpaceX updates on new funding round

Quote
SpaceX (SPACE) discloses that it sold $227M worth of shares to 8 investors as part of its new $500M funding round.

Elon Musk is listed in the filing as one of the investors.

https://seekingalpha.com/news/3420459-spacex-updates-new-funding-round

Edit: I found the SEC Form D that is the basis for the article:
https://www.sec.gov/Archives/edgar/data/1181412/000118141219000001/xslFormDX01/primary_doc.xml
« Last Edit: 01/03/2019 06:39 pm by calapine »

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