Looking Askance Yet Again at MuskWorld: WEIRDNESS OF THE DAY

The early money paid $75 billion for a stake now marked at $1.57 trillion: 20x. But the cash flows to justify that do not exist. They are not on any horizon. So why? This is just plain weird. This is not NVIDIA, or TSMC, or Samsung, or ASML, or Apple, or any of the hyperscalers wth real cash flows: So far $150 billion has been paid in to MuskWorld over the years,. Half of that was in the recent SpaceXAIGrokTwitter IPO. Earlier investments and this latest tranche has bought a roughly 55% share of the $3 trillion current market capitalization of MuskWorld. So call it: Musk, $1 trillion. Option-sweat equity of engineers and managers, $0.35 trillion. Investors in the SpaceXAIGrokTwitter IPO, $0.08 trillion. Early other investors, $1.57 trillion: a 20x valuation of their cash contributed. But there are no dividends. There are no stock buybacks. There are no prospects of any. And the technology demonstrations are unimpressive and unconvincing as things to stoke realistic dreams of wealth via returns to investors. For example, most recently: Brad Munchen: Tesla’s Cybercab Event Flops Hard : ‘Few numbers… Austin only… doesn’t comply with… safety standards…. Non-disclosure agreements…. 100% Tesla influencers and Tesla employees. No backpacks or large bags allowed…. Plus-one[s] couldn’t be an influencer or member of the press…. Musk… a “no-show”…. Tesla[’s]… fleet has reached 1 million unsupervised miles…. Emphasis on many points that lower the Cybercab’s production costs…. The Cybercab… will use… in-house-made 4680 battery cells…. Pricing target… 93% below Waymo’s $2.70/mile…. [BUT] whatever Tesla engineers boasted about lower costs… is belied by… “butterfly doors”…. Only 45 Cybercabs registered…. "NHTSA is… evaluating the situation”…. Two-seat Cybercab looks inferior to Amazon’s Zoox…. Cybercab… is only a concept until Tesla achieves Level 4 autonomy for… FSD… MuskWorld had two profitable businesses: (a) the making and selling of electric Tesla cars to rich left-wing Americans who wanted to lean-in to a green techno future by declaring allegiance to that project and so living a little way into the future; (b) the selling of StarLink internet broadband boosted (ha! ha!) by the world’s most impressive marketing department. But then Elon Musk spectacularly exploded the first of these. Not just the attachment to TrumpWorld. Not just the six-figures of extra disease deaths worldwide from his destruction of USAID. The neofascist aesthetic of the battleship-grey dumpster. And much, much more. And internet broadband sales, even if you do have the world’s most spectacular marketing department, is a tough business. How durable are StarLink’s profits, anyway? And if they are durable, how large can they be? The valuations of SpaceXAIGrokTwitter and Tesla are very different animals than the valuations of NVIDIA or TSMC or ASML or Apple or the assembled hyperscalers of the world. Don’t get me wrong. There is truth in this thing that I saw 2.5 months ago: Douglas McCormick: Elon Musk’s Trillion Dollars Aren’t Real—& That’s the Point : ‘Musk is a trillionaire for one reason: investors… agreed to buy in…. The price paid is their business and their risk…. $75 billion funds the next generation of rockets, satellites, factories and AI—long-horizon, high-risk innovation…. The valuation is the investors’ concern; the innovation it underwrites is everyone’s…. Tesla forced the global auto industry to electrify…. SpaceX broke a government monopoly on space access [and] cut launch costs by an order of magnitude…. Entrepreneurs capture only a sliver of the value they create; the rest spills to consumers, workers and imitators… All of that is true. As is this: Musk’s wealth… is unrealized equity in companies he still runs, and he draws no salary…. It is the market’s estimate of promises he hasn’t yet kept…. For Musk to keep this fortune…things must actually happen…. He is,… more exposed to failure than any person alive… with no salary, limited liquidity, and no exit that doesn’t destroy the very thing he’s selling…. Either Musk delivers a wave of growth larger than anything we’ve seen… or he fails, and the fortune… disappears…. That is not… hoarded wealth. It is… the most audacious performance bond in history… But what underpins MuskWorld and its market value right now? MOAR dreams of a techno-utopian future—this time, a hard-right TechBro one. And I confess I continue to be completely baffled and flummoxed by the confidence some people—those invested and not frantically but quietly looking for an exit—have with MuskWorld, not as a place where engineers can do interesting things, but as a source of wealth for people who commit their money for the ride, and realistically hope to get it back, and more. A whole lot of energy in the financial services industry is devoted to separating fools from their money. This is a difficult task. There is no lack of fools. But there are many fewer monied fools. Doctors and dentists will always be with us, but the more institutionalized kind of fool learns from its mistakes: corporate treasurers who think they are profit centers; sweetly naive German banks; and the like. I'll give Elon Musk credit for discovering that some young men have money and that the SEC has no teeth, if you're brazen enough. Perhaps we should consider the Twitter acquisition as less a social media company and more history's most successful investor relations marketing. Musk's predecessor is Bezos. Amazon has a gigantic market cap, assets, and liabilities, but no dividends, stock buybacks (net issuance, actually), or even much of a free cash flow. Everything is reinvested. Amazon is over 30 years old, but always fashions itself as a startup in some new enterprise. Sometimes it works. If China has a fetish with GDP growth, America has a fetish on market cap growth. Neither model is quite capitalism, but at least China isn't pretending.