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SpaceX bond worth 10% less than issue price – heading for junk bond status

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Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#21

Post by asim »

Quite honestly IPOs and the stock market in general is a Ponzi scheme. This is something I would never have said before. I am not a skeptic. I invested in the markets for years and made money on Amazon, Google, twilio, and so many others. But I also lost a lot of money buying near or after the IPO. The game is rigged. Those who put money in post IPO in the 12 months after are left holding the bag for years. It takes 10+ years to recover that. The people who invested pre IPO, the VCs, the bankers, etc. they are getting a good deal. In the case of VCs they are taking early risk. Not at the late stage. But earlier. In many cases it's been a long hold. Again 10+ years. But anyone coming in at the IPO you are buying at a peak when someone decided that's the perfect time to hype it. We're all catching a falling knife. Doesn't matter if the business fundamentals are sound. They become disconnected from realities of the market when it all gets tulip crazy.

These things have a way of working themselves out. But look at almost all IPOs and the next 12 months the stock is down 50+% so I'd rather wait. And honestly when I buy, it's to hold 10+ years, not make a quick buck and it's because I believe in the value. You can believe in SpaceX but also still believe the market and the dynamics of IPOs is almost criminal for retail investors.

It's almost as bad as crypto token sales tbh.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#23

Post by georgeecollins »

rtkwe wrote: post #10
lenerdenator wrote: post #8

Good thing there's a strong corporate governance model at SpaceX where the c-suite is fully accountable to an independent board of directors, who could use their majority voting power to remove that c-suite at will. Could you imagine the abuse of power that could happen if one person held over 50% of the voting power at such a company?

Are super shares like Zuckerberg's and Musk a new thing? Genuinely curious if they're a recent invention or something that's quietly happened for a while because it seems like a large inversion of the deal of going public, lose some control of the company in exchange for a large amount of cash but these nonvoting/supervoting share splits seem to completely upend what I understood to be part of the deal for access to…

Ford has them. What it has meant for Ford-- and will probably mean for Facebook-- is that Zuck's heirs will control the company, for better or for worse.

The common justification for this is that for a media company (NYT) you want a person or family to take responsibility for the editorial content, not a pure profit seeker. Facebook has it both ways and typically denies it has editorial control.

IMO, the flaw of markets is that they are short sighted. Sometimes this allows states to outmaneuver them with a longer view. Current exhibit A: China. Historically state intervention has been worse in the long run. But who knows. If we went into a depression a lot of people may think state intervention is a better system, as many admired the USSR during the Great Depression.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#24

Post by dgritsko »

lenerdenator wrote: post #8

Good thing there's a strong corporate governance model at SpaceX where the c-suite is fully accountable to an independent board of directors, who could use their majority voting power to remove that c-suite at will. Could you imagine the abuse of power that could happen if one person held over 50% of the voting power at such a company?

You dropped your "/s".

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#26

Post by londons_explore »

notahacker wrote: post #13
rsynnott wrote: post #7

Earlier quoted context omitted.

These are bonds that were issued a few weeks ago.

yeah, as the article said bond prices have fallen slightly over the time period but this is much more bond buyers seeing increased risk SpaceX isn't going to have the cashflow or ease of further equity raises to pay them back in the long run. (With it being bonds the upside of "but what if SpaceX actually does become bigger than the present US economy" is capped too)

I don't see a future in which those bondholders don't get paid back.

The company has plenty of revenue, and if needed can just turn off the r&d tap and become a boring company. Terrible for the shareholders obviously, but the bond holders will be fine.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#27

Post by aftbit »

asim wrote: post #21

Quite honestly IPOs and the stock market in general is a Ponzi scheme. This is something I would never have said before. I am not a skeptic. I invested in the markets for years and made money on Amazon, Google, twilio, and so many others. But I also lost a lot of money buying near or after the IPO. The game is rigged. Those who put money in post IPO in the 12 months after are left holding the bag for years. It takes…

>Doesn't matter if the business fundamentals are sound.

The business fundamentals are rarely sound for modern IPOs, especially anything Elon adjacent. His companies are just as bad as crypto token sales in terms of their hype. Heck, some of the stock price appreciation of Tesla _was_ driven by their ownership of crypto for a year or two.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#28

Post by rhplus »

rtkwe wrote: post #10
lenerdenator wrote: post #8

Good thing there's a strong corporate governance model at SpaceX where the c-suite is fully accountable to an independent board of directors, who could use their majority voting power to remove that c-suite at will. Could you imagine the abuse of power that could happen if one person held over 50% of the voting power at such a company?

Are super shares like Zuckerberg's and Musk a new thing? Genuinely curious if they're a recent invention or something that's quietly happened for a while because it seems like a large inversion of the deal of going public, lose some control of the company in exchange for a large amount of cash but these nonvoting/supervoting share splits seem to completely upend what I understood to be part of the deal for access to…

Some media companies had them before the 1980s. New York Times issued dual class in 1969 so that the owning family maintained editorial control.

Berkshire Hathaway is possibly the most famous from the 80s/90s. The class A shares are significantly more expensive and proportionately even more powerful than the class B shares. The lower price version was important back when physical exchanges didn’t support fractional shares as they do today.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#29

Post by an0malous »

asim wrote: post #21

Quite honestly IPOs and the stock market in general is a Ponzi scheme. This is something I would never have said before. I am not a skeptic. I invested in the markets for years and made money on Amazon, Google, twilio, and so many others. But I also lost a lot of money buying near or after the IPO. The game is rigged. Those who put money in post IPO in the 12 months after are left holding the bag for years. It takes…

Stocks, especially without dividends and negligible voting rights, are basically baseball cards for companies.
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