The question is not whether he's been successful. He has been, the question is whether this is the peak valuation akin to Cisco during dotcom and whether he is over leveraged at this point.
Some of that depends on whether Twitter can partially self-fund the acquisition itself over time.
Most likely it can, that much more so if Musk negotiates a lower price. Debt is very inexpensive right now, especially for large corporations with a strong balance sheet. If Musk owns all of Twitter, he gets their $6 billion in cash and their balance sheet has no consequential debt issues.
Twitter is operationally profitable, despite being very poorly run in terms of cost structure. Their margins on sales should be far greater than at present; they have a bloated employee count and have for a very long time. There's no reason Twitter can't spit off $1b in operating income on $5b in sales.
Further, Musk has ~$9b in cash (per Bloomberg), lots of very rich friends (eg Ellison, Google founders, VC billionaires, etc etc) that believe in him, and lots of assets in Tesla and SpaceX he can borrow $10b-$20b against if needed.
That said - I don't think levering himself to the moon is wise and I don't think paying $40b+ for Twitter is smart. Particularly at this point in time (with the global economy shaky, the US economy contracting in real terms, China's economy shaky, and financial markets sinking).
Survivorship bias is a hell of a drug. The real test to see whether it's wisdom or luck is to predict the next Tesla. I don't think many people who point to their Tesla stock performance as vindication could come up with a repeatable theory of investing. If they could, their TSLA gains would be nothing next to their next investments.
That's how I know people who make that argument don't actually know anything. It's like someone still talking about that great touchdown in high school at 50. Where's the next one?
You don't see Elon Musk bragging about his $22 million from Zip2.
Those companies don’t come often, but you don’t need many winners to be all set.
I saw Google before the rise, Amazon, Apple, Bitcoin and Tesla. I only acted on Tesla after seeing all the other ones before but didn’t put my conviction into action.
It’s not very hard: you read HN daily/weekly and listen to the trends. Pick one that keep coming and interest you and dig deeper, you are not in a hurry as HN is way early in the cycle, the danger is being too early and giving up before it catch up. (Bitcoin)
Pick one big potential winner, calculate the expected value as good as you can Good/Bad scenario, place your bet, let the time do it’s thing.
An example of a bet I didn’t do: Bitcoin was 1$, I knew that if it worked very well it could go to 1M$. Let say you think that the probability of success is 20%: (1M$/1$)*20% = 200 000 to 1. You then place let say 5k$ on bitcoin and forget about it for 10 years.
At the moment, I don't see a trend that catch my attention beside AI and for the moment I think Tesla will be the winner in that trend.
