SpaceX Bond Yields Rocket Toward Junk Status as Value Drops

A stupid/naive question. Why does this affect SpaceX? They have their money(The IPO) Any third party trading value does not change that. Sure there may be individuals, officers of SpaceX who hold these instruments who will be negatively affective, but the company itself?

My best guess, it makes it harder to get loans in the future.

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?

https://archive.is/tnSeY

Here's what this means for SpaceX for those of you uninitiated in bond-math:

1. SpaceX issued long-term bonds whose coupon (ie, "interest rate") was 6.5%.

2. Those bonds are now trading for less than their face value. That means that if you buy one of those bonds on the secondary market, you will get a return (yield) of 7.387% (if the price of a bond goes down, but the coupon stays the same, the yield goes up).

3. This doesn't affect SpaceX directly, but it tells you that if SpaceX were to issue new bonds today, they would have to offer 7.4% coupon on them, not 6.5%. Note that even though that was caused by a 10% drop in the bond value, it's a 13% increase in cost of borrowing!

SpaceX is a cash-flow negative company that depends on debt and selling equity in order to pay the bills. They will have to issue bonds again, and those bonds will be more expensive.

Note that the shortest maturity bonds don't have to be repaid for 5 years, so the impact on cash is not going to manifest for a while...at least 5 years time (assuming they did another bond offering tomorrow). In that sense it's a nothingburger.

The immediate impact it could have is if spacex depends on issuing new, shorter-term debt (lines of credit, etc) whose price could be impacted by the market's perception of their riskiness.

Isn't it realistically only worth talking about SpaceX stock a few years out? The random walk the stock will do after an IPO seems very uninformative.

Is really anyone surprise about this?

To be honest a company that shifts goal posts constantly, that has Government as the only backer, that inflates revenue and talks about Base in Mars and the expansion of human consciousness is the definition of Red Flag.

The bond so quickly after the IPO is just another scheme of the kind of people this is being targeted to. As son as you dig slightly deeper into the BizPlan and numbers you realize how much of the entire SpaceX IPO and Bond are scams.

I can't comprehend for the life of me that people put their life savings in what Elon Musk is doing. Are people not seeing how he's lying about the future all the time?

He said he aimed to have 5000 Optimus robots out by end of 2025, 50000 by 2026 and 10 times that in 2027.

He promised in 2015 that full autonomous driving would arrive in 2 years and we aren't there yet 11 years later. He even said in 2016 that there would be coast-to-coast autonomous driving in 2017.

He promised manned missions to Mars by 2024-2025 in multiple interviews between 2011 and 2016.

He promised in 2016 that there would be solar roofs expansions by 2017 that didn't pan out, he promised AGI by 2025 in 2024.

Elon Musk has repeatedly lied about outcomes of his ventures, gotten crazy valuations based on those exaggerations and now people are starting to finally wake up that he isn't as good as his ego.

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Anyone still buying anything the right-arm-raising guy is controlling is out of his or her mind.