1) Accounting basics: assets are written down to closer to liquidation value when impaired. Collateral for a loan to an A-credit company can be casually assumed to be available for repossession, but the chaos at $tsla should make any lender unwilling to continue.
2) When the possibility of repossession and liquidation looms, the lender must imagine what it actually costs to repossess and liquidate, and what net value would remain. Broken used cars with no backing company, spare parts, or warranty won’t sell for much.
3) An auto plant in one of the highest-cost locations imaginable, filled with $billions in equipment not easily sold to others. Solar panels installed on roofs in hundreds of thousands of homes, with clients ready to stop paying leases. After legal costs, salvage values zero.
4) Looming liabilities for broken promises made to receive gov’t loans and subsidies, the tidal wave of lawsuits and regulatory penalties, the zeroing out of goodwill and brand value built up by years of blue-sky talk, the run on refunds for deposits....
5) Desperate moves to forestall collapse. The Schroedinger’s Cat inside the box of non disclosure (being charitable) $tsla built to sell more equity and bonds. Metastable: so long as belief was strong, more money could be borrowed and spent to maintain the illusion. /end

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More from @JebKinnison

Jan 2
While I do not specialize in social media law, I have been an Internetizen since about 1980, so I have worthwhile opinions on the topic. Much reasoning on censorship is motivated by wanting to stamp out what the Party perceives to be Wrongthink, disallowing dialogue. 1/n
The Internet world began as an interconnection of disparate nets (hence the name.) Financed by DARPA, the first TCP/IP network bridged the differing software standards of IBM, Unix, TOPS-10/Multics, and other proprietary nets. Talk between academics and private R&D got easier 2/n
Down the hall from me at BBN, Ray Tomlinson had worked out the email system, chose the '@' convention for email addresses, and regretted that this minor and easy bit of contract work was his claim to fame. But email and Usenet fostered global discussion. 3/n
Read 13 tweets
May 11, 2019
1/ A short review for newbies: the 2018 $tsla narrative was a rapid ramp to 500K Mod3s per year and explosive profit growth that would pay off the waiting suppliers and build out more capacity on the way to driving ICE cars out of the market.
2/ $tsla accounting categorized enough costs of production into capex and overhead (goodwill repairs, lemons kept as “loaners” or inventory and stored in numerous dusty lots) to make profit *margins* on cars sold look healthy, above 20%.
3/ High margins made it look like ramping production would explode future profits and enable expansion and debt repayment using the flood of cash. Thus “we don’t need to raise.” This allowed sell-side analysts to build models justifying +$300 $tsla stock price.
Read 19 tweets
Apr 22, 2019
I sympathize with this guy. He’s as nervous as I would be under this much pressure. He’s mentioning some of my old work colleagues. We were thinking about specialized NN processors in 1985. I’ll jot a few notes in a tweetstream...
“Neural Network Complier”: sic. Yes, this is how you do it. There’s nothing wrong with this presentation, just full of genuine geek detail which I understand. If you are looking for unique features that give an advantage, nothing so far.
He’s concluding. Their NIH NN processor sounds plausible as a research project. No propietary advantage, and can’t afford to keep up progress on it. Continuous emphasis on “all cars have or wil have” FSD hardware, designed to get cars sold now instead of waiting for better.
Read 56 tweets
Mar 23, 2019
1: IANAL and this case is in an area of law where I haven’t studied precedents. So the Musk responses sound superficially reasonable (“I never agreed to preclear everything, none of my tweets/all hands letters/closed conference calls were material.”) $tsla
2/ Normally we’d view the settlement doc like a contract. Musk alleges he understood it to mean he could judge himself what was material (and as he said on 60 Minutes, might get it wrong!) But...
3/ The settlement was under Butswinkas’ overall supervision. Since he resigned the day after the 7:15-500k tweet and then eliminated all record of ties to Tesla soon after, it’s reasonable to assume he and other attorneys explained to Musk...
Read 9 tweets
Mar 6, 2019
1/ Short treatise on $tsla price hysteresis: Functionally overpriced products sell to status niche valuing rarity, via fashion signalling (“I can afford to blow money for show.”)
2/ A price drop to increase sales must be large enough to generate news to reach buyers who weren’t able/interested at previous price point. Sales spike briefly as marginal buyers are attracted by news, then decay back to equilibrium level.
3/ This process can repeat a few times before pattern is noticed and each sales spike will be lower. And the residual image of exclusivity starts to wear down as more and more downmarket products are seen with declasse people.
Read 11 tweets
Feb 20, 2019
1/ News from the Future! Chair Robyn Denholm announces she will step down from $tsla, new chairman will be 23-yo MBA from Leavey (Santa Clara U) who will take a leave of absence from Starbucks.
2/ But seriously. If there was any doubt $tsla has violated terms of SEC settlement, it’s gone now. Failure to return to court to ask for permanent bar of Elon Musk’s participation in publicly traded companies will signal that “too big to discipline” is SEC policy....
3/ With negative effects on US markets. True, it does continue convergence with Chinese practice. Though in China he might end up in prison or dead if he failed to comply with the leader’s wishes.
Read 5 tweets

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