Written by: Zuo Ye
The big boy turned into a little girl; the awakened Musk angrily shifted to the Republican Party. Today, I realize who I am. After completing Elden Ring on October 28, 2022, Musk purchased Twitter for $44 billion.
People are not clear about Musk's true feelings at the time. The entire Silicon Valley and the Democratic Party have been bound for over 30 years. Even if some are dissatisfied with the Democratic Party, they generally engage in a balancing policy, donating to both parties. A businessman like Musk, who is all-in for Trump, is indeed very atypical.
But at least, his longtime friend Peter Thiel can understand all this. Peter Thiel is a sponsor of Vance, and Musk's gamble is indeed Trump. It could be said that rather than this election being a victory for Trumpism, it is more of a comeback for Musk - Peter Thiel.
Ultimately, Musk is a businessman who hopes that the costs incurred will yield more profits, especially since gambling on politics has direct consequences that can lead to periodic liquidations. Winning this election means what about four years from now, or eight years later? Only by becoming a true controller can one remain invincible. Musk's thinking is quite simple: become the spokesperson for the entire high-tech industry in the United States, become the new benefactor of the working class, and naturally he can weather political fluctuations.
This article aims to roughly estimate how much Musk has invested in this election and what direct and expected returns can be achieved.
‘How many times the benefit of farming?’ It is said: ‘Ten times.’ ‘How many times the gain of jewels and jade?’ It is said: ‘A hundred times.’ ‘How many times the gain of being the ruler of a country?’ It is said: ‘Countless.’
Twitter valued at $44 billion, but it was not purchased with cash directly; instead, Tesla stocks were used as collateral for loans, such as the $800 million provided by Sequoia.
America PAC; PAC stands for Political Action Committee, which allows Musk to exceed the limits on individual small donations, as well as some other donations. Musk's personal donations range from $110 million to $177 million.
The two largest expenditures are detailed above, with direct donations around $100 million. However, the purchase of Twitter is clearly aimed at assisting Trump's political campaign and is included in the calculations.
Next, there is the potential profit for Musk. First, everyone is excited about Tesla's stock price surge, with his personal net worth soaring 10% in a single day. Musk personally holds 20.5% of Tesla's shares, while before the Twitter acquisition, he held about 22%. He had a period of selling after acquiring Twitter, and the market generally believes this debt belongs to Musk personally.
Let's calculate again: of the $44 billion for acquiring Twitter, $13 billion is attributed to Twitter's debt. Musk sold stocks worth $23.08 billion at market price around the time of the acquisition. Considering that Musk's acquisition of Twitter is purely political speculation, the $23.08 billion + $1.77 billion = $23.257 billion is his actual investment cost for this election, as Twitter's commercial value is significantly lower compared to Facebook, Instagram, WhatsApp, and other social products.
Calculating based on a cost of $23.257 billion, it is clear that Musk's return on investment cannot be calculated as (2900-2620)/1.77 = 158 times over five days. If such a good business existed, then all speculators in the financial market would go crazy. Musk's actual profit should be (2900-2620) - 23.257 = $4.743 billion, which is more reasonable.
Of course, no matter how you calculate it, it's all for fun. Everyone shouldn't get too hung up on it. Interestingly, Musk's additional profits mainly come from Bitcoin, Dogecoin, and expected future government contracts, as well as short-term investment returns; these might be the real big gains.
The wisdom of humanity is encapsulated in two words: hope and waiting.
Musk has been preparing for the Republican - Trump victory for two years, but he has been pulling orders for SpaceX for over ten years, primarily government contracts. This is similar to how Tesla initially survived by selling carbon credits. A business of a certain scale cannot avoid relationships with government and enterprises. Considering these factors, let's see theoretically how much Musk could earn after this election.
Image Description: Elon Musk's personal timeline, image source: https://www.officetimeline.com/blog/elon-musk-timeline
First, Musk holds Bitcoin through Tesla, currently possessing 11,509 Bitcoins. This is the remaining portion from the 43,200 Bitcoins purchased for $1.5 billion in 2021, with an average purchase price of around $35,000. Although Tesla has sold some of it, experiencing both losses and gains, the current value of this portion of Bitcoin is $860 million. Due to frequent price fluctuations and the fact that for a billionaire like Musk it is not a significant amount, we can tentatively consider it as an expected profit of $1 billion.
Secondly, the earnings from Dogecoin cannot be calculated. Although Elon Musk is likely to hold Dogecoin, it cannot be confirmed or verified. It can only be considered as part of the stocks/coins related to Musk, which is really impossible to quantify.
Finally, regarding government orders, contrary to what many may think, the proportion of U.S. government fiscal spending relative to GDP has remained stable at around 40-50%. Government contracts are crucial for various large companies, especially high-tech enterprises. For instance, the recently neutral Amazon CEO Bezos lost out on $10 billion in government cloud service orders to Microsoft's cloud because he offended Trump. To add, although Gates donated $75 million to Harris, Microsoft has also donated a lot to the Republican Party and has cut its DEI (Diversity, Equity, and Inclusion) department, showcasing a flexible political positioning.
Currently, Musk's companies include SpaceX, Twitter (X), Tesla, The Boring Company, Neuralink, and xAI, with rocket launches and Starlink communication services being the primary products that can obtain government contracts. For example, by the end of Trump's first term in 2020, Musk had received around $8 billion in government rocket launch contracts, mainly from NASA and the Air Force.
Currently, with Boeing's struggles (two astronauts are still in space), and Bezos's Blue Origin's slow progress, during Trump's second term, rocket launch contracts will significantly increase. In June of this year, NASA awarded SpaceX a contract worth $843 million.
Additionally, the U.S. government will also strengthen support for the next generation of communication networks, and Starlink has already obtained a $70 million contract from the U.S. Space Force, with these services expected to increase further with Trump’s presidency.
Conclusion
If Zhang Juzheng is a model of being skilled in statecraft but clumsy in personal gain, then Musk embodies Lü Buwei, who believes that engaging in business is less effective than political venture capital. With $23 billion and two years of planning, just Tesla's stock price alone has returned the cost within five days, and he has made nearly $5 billion in profit.
In the long term, government contracts and subsidies over the four-year period will also become more tangible with the increasing realization of D.O.G.E. Although the big brother has declared a $2 trillion reduction in government spending, it certainly does not include his own government contracts.
