Ed Elson
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Prof G Markets · The $3.5T Bailout: Elon's Plan To Merge Tesla And SpaceX
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Where Is AI Risk Still Not Priced in?
Ed Elson says AI risk is already priced into public stocks, and the risk that is not priced sits in private markets. Over the past month he cites Nebius down 31%, CoreWeave down 52%, Oracle down 15%, Micron down 18%, and the semiconductor basket down 15%. Nvidia's stock is up, he says, but earnings rose faster, so the forward multiple has been cut in half over the past year. He reads that as investors discounting how long the profits last.
He still calls the buildout a boom and bust, closer to the railroads of 1873. Buyers grabbed chips, then learned that data centers, power, and grid connections take longer, and billions of dollars of chips are sitting in a warehouse. Public investors are
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Why Does Scott Galloway Call Elon Musk a Traitor?
Scott Galloway calls Elon Musk a traitor to the West. He says a democracy let an unelected person decide geopolitical strategy and battlefield technology that threatens the West, and he describes Musk as someone who sleeps with a loaded gun beside the bed and is addicted to ketamine.
Ed Elson lays out the episode Scott Galloway is pointing at. Drones in Ukraine that rely on Starlink and Starshield, both SpaceX products, started falling because Starlink was turned off, and reports, including the Wall Street Journal, say Elon Musk did it. Musk's account, Ed Elson says, is that the decision belongs to the government, and Donald Trump said he was not responsible. Ed Elson adds that Musk has not
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Do Tesla Shareholders Give Up Votes in a SpaceX Merger?
Ed Elson says Tesla shareholders would give up their votes in a SpaceX merger. He says the larger point of the deal is to consolidate power. SpaceX has a dual-class structure in which Elon Musk has 80% of the votes, while at Tesla Musk has about 20%, and Ed Elson says that 20% is why shareholder lawsuits and the move from Delaware to Texas have been a fight.
His prediction is that the currency is non-voting SpaceX shares. Converting Tesla stock into those shares would, he says, remove the shareholder protections that have gotten in Musk's way and leave Musk with 80% control of the combined company. Tesla holders would also be buying a $2 trillion valuation Ed Elson calls extremely precariou
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How Would a Tesla and SpaceX Merger Work?
Ed Elson says a Tesla and SpaceX merger would probably mean SpaceX buys Tesla and pays Tesla investors in SpaceX stock. Shareholders would convert Tesla shares into SpaceX shares at a price the boards set. RBC predicts a 20 to 30 percent premium.
He says that premium can disappear. The payment is SpaceX stock, so a holder can look 20 percent richer and then lose the premium if SpaceX falls 20 percent the next day. Ed Elson says that could easily happen because the float is still about 15 to 20 percent, while NVIDIA and Microsoft, which he calls actual multi-trillion-dollar companies, have floats near 100 percent. A smaller float, he says, is easier for very large shareholders to move. He ca
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Why Is Tesla Stock Lagging the Market?
Ed Elson says Tesla stock is down 13% over the past year, and on a five-year window it has underperformed the S&P by about three times, because the car business is in decline. Revenue fell again last quarter, and car deliveries fell too. The story people are excited about is the robotaxi, and Ed Elson says that robotaxi is millions of miles behind Waymo.
He calls a merger with SpaceX brand laundering, or multiple laundering. The SpaceX story moves from satellites to orbital data centers, then asteroid mining, then colonies on Mars, and he says investors are buying it. He and Scott Galloway agree Tesla is way overvalued at more than 300 times earnings, against an auto-industry average of 17.
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Why Would Elon Musk Merge Tesla Into SpaceX?
Scott Galloway says Elon Musk would merge Tesla into SpaceX because when Musk merges one company into another, it is an acknowledgement that the first company is about to crater. He says Musk bailed out SolarCity, a company Musk chaired and that Scott Galloway thinks was owned by Musk's cousins, by stuffing it into Tesla. He says Musk then stuffed Twitter into xAI, which was folded into SpaceX. When one of the companies is failing, Scott Galloway says, Musk makes another one adopt it.
He calls Tesla the patient and SpaceX shareholders the organ donor. Tesla shareholders would trade a declining car company for a stake in Starlink and AI, which he compares to trading a Buick for a piece of a
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What Are the Odds of a Tesla and SpaceX Merger?
Ed Elson says prediction-market traders put the odds of a Tesla and SpaceX merger before 2028 at 81%. He says Elon Musk confirmed that special committees at both companies are studying a deal, and he quotes Musk that there is a lot of merit to combining the companies because they are pretty much in the superintelligence singularity. Ed Elson puts SpaceX at $2 trillion and Tesla at $1.5 trillion and guesses the combination would be a $3.5 trillion company.
Scott Galloway says that 81% is the wrong question. He puts an 80% chance on the boards approving the deal and calls the vote a formality, because on decisions that involve Tesla or SpaceX the bride, the groom, and the officiant are the sa
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Which Company Has the Biggest AI Upside?
Scott Galloway says the biggest risk-adjusted upside in AI right now is Mark Zuckerberg and Meta. Meta is delivering AI to consumers, has the biggest moats, has the capital for the arms race, and is already using AI inside the company.
Anthropic is supposedly worth $2 trillion, which Scott Galloway calls a ridiculous dislocation between private and public markets. Meta is competing neck and neck with Anthropic and also has one of the most profitable businesses in the world. The downside is heavy spending on capital expenditure, which looks a little crazy. If the strength of the recommendation algorithm is a function of AI and machine learning, the return shows up in the earnings. Nvidia is
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Why Are Amazon's AI Chips Sitting in Warehouses?
Ed Elson says Business Insider reporting shows Amazon spending billions of dollars a month on NVIDIA server racks and GPUs it cannot immediately install, so a lot of the racks are sitting in warehouses waiting to be used. He calls the warehouse a concrete sign that the hyperscalers maybe did overbuy, because the chips were supposed to be generating cash today.
Since September, eight data center listings have been pulled, postponed, or repriced. Firmus canceled an IPO. SP Energy delayed an IPO. Elise, another data center company, went public and the stock fell more than 30% on day one. Ed Elson says credit markets are souring on AI. Credit default swap spreads are exploding and hitting recor
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What Is the Nathan Fielder Movie a Metaphor for?
Ed Elson says the woman in the Nathan Fielder movie is a metaphor for the current moment because she is the quintessential tech founder and grifter. She got away with convincing huge amounts of people with a lot of money that what she was doing was legit. Ed Elson says the conversations show she truly is lying. He calls that his take, and he says the end of the movie leaves the question up for debate.
Scott Galloway has not seen the movie. He finds her frightening, in the vein of the clown from It, and he is going to wait until it comes out on streaming. Ed Elson says the movie was fascinating, calls her an extremely interesting person, and says Nathan Fielder really got that out of her. Ed